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The highly partisan committee vote makes it unlikely that the full Senate will vote to approve the legislation this year.
The Administration has also publicly come out in opposition to the final bill passed by the committee because it believes its provision on receivership is not strong enough.
On a provision of the committee-approved legislation that would give a sitting Congress 30 days to block the appointment of any receiver by a regulator, Sarbanes voiced strong reservations that this could harm the housing market. “We are literally playing with dynamite here, and we need to recognize that,” he said.
Sen. Charles Schumer (D-NY) went a step further, charging that the bill “opens the door to the complete privatization of Fannie and Freddie — the end of the GSEs as we know them.”
“While we appreciate Chairman Shelby’s efforts to craft legislation that would address the nation’s housing concerns at the same time as it assures the soundness and safety of institutions that are indispensable to our housing finance system,” commented Rayburn, “the bill that emerged today unfortunately falls far short of protecting a priority for housing in America.
“Under the structure and governance established by this legislation, decisions on the housing mission of Fannie Mae and Freddie Mac have been put into the hands of a single regulator who will be politically appointed and whose focus may be on concerns that do not necessarily reflect the best interests of housing,” Rayburn said.
“While the bill’s receivership provisions have been improved by language that would enable the Congress to contravene a decision by the regulator to place a GSE in receivership in the remote event that it became financially insolvent,” he said, “the bill would still make investment in these institutions less attractive, resulting in higher mortgage interest rates and higher monthly housing costs.
“The introduction of affordable housing goals into this legislation is a notable improvement over the previous version of this bill, but this is more than offset by new minimum capital requirements and a regimen of unnecessary regulations that would stifle innovations in the mortgage market.
“As we stated earlier this week, the shortcomings of this bill are so great that they cannot be corrected through amendments, and for that reason we cannot support it.
“Enactment of this legislation faces a steep uphill climb and we have every intention of making that upward path as rocky as possible to help ensure its defeat.”
To read the legislation, go to thomas.loc.gov, and enter S. 1508 in the box at the upper left.
For more information, e-mail Michael Strauss at mstrauss@nahb.com or call him at 800-368-5242 x8252.
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