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Improved GSE Reform Bill Heading to the House Floor
By a solid bipartisan vote of 45 to 19, the House Financial Services Committee last week approved legislation that would create a strong independent regulator with oversight of the housing government-sponsored enterprises (GSEs) Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
H.R. 1427, the Federal Housing Finance Reform Act of 2007, would strengthen and safeguard the financial health of the GSEs while supporting their ability to fulfill their vital housing mission.
Financial Services Committee Chairman Barney Frank (D-Mass.) has indicated that he would like to move the bill to the House floor before the Memorial Day recess.
Introduced on March 9, the bill was crafted with input from the Treasury Department in order to receive bipartisan support from the Administration and members of Congress.
NAHB Executive Vice President and CEO Jerry Howard testified before the committee on March 15, outlining the association’s position on several key elements of GSE reform, including GSE portfolio limits, minimum capital requirements and a potential bias against for-profit developers in the allocation of funds for the new Affordable Housing Fund established by the bill.
As the House panel considered the measure last week, dozens of amendments were offered to address lawmakers’ concerns over specific provisions in the bill and to improve the overall legislation.
After two days of deliberations, the House Financial Services Committee last week approved several amendments that NAHB believes will enhance the bill. These include:
- Portfolio limits. An amendment offered by Chairman Frank and Rep. Gary Miller (R-Calif.) would more precisely define the types of risks that the regulator should consider in overseeing the enterprises’ portfolios. Specifically, it says that standards must be based solely on mission and safety and soundness considerations, and not on any broader concerns such as systemic risk. This is intended to preclude any broad regulatory interpretation of the portfolio criteria as requiring massive portfolio cuts that could severely disrupt the mortgage markets and impede the enterprises’ pursuit of their housing mission.
- Capital requirements. An amendment by Chairman Frank and Rep. Miller directs the regulator to review any increases in minimum capital requirements and to rescind these increases once the issues that led to them have been successfully resolved or no longer exist. This change adheres to the principle that longer-term shifts in the safety and soundness of a GSE should be addressed through the risk-based capital system rather than by changing the minimum capital requirement.
- Affordable Housing Fund. In its first year, the fund will disburse grants for the construction of affordable housing in areas affected by Hurricane Katrina. In its second through fifth and final year, the fund will be used for affordable housing projects nationwide. NAHB believes that the allocation mechanism for the new fund should be based on how well a project meets a community’s housing needs rather than on the tax status of the sponsor. An amendment offered by Rep. Randy Neugebauer (R-Texas) would achieve this by ensuring a level playing field for both for-profit and non-profit groups competing for the funds.
- Regulatory structure. An amendment by Housing Subcommittee Chairwoman Maxine Waters (D-Calif.) adds two independent members to the regulator's advisory board to include a greater emphasis on housing mission. They would be required to have experience in the field of financial services, housing finance, affordable housing or mortgage lending.
- Housing goals. Rep. Stephen Lynch (D-Mass.) won approval of an amendment to add single-family rental housing to the housing goals for Fannie Mae and Freddie Mac.
In the Senate, legislative action on GSE regulatory reform remains quiet. Senate Banking Committee Chairman Chris Dodd (D-Conn.) continues to maintain that this issue is a priority for his committee and that he would like to move legislation by the August recess. However, Dodd has yet to hold hearings on the topic or release draft legislation on GSE reform.
To view the House bill, click here and type H.R. 1427 in the box in the center screen.
For more information, e-mail Scott Meyer at NAHB or contact him at 800-368-5242 x8144.
Mark Your Calendar for the 2007 NAHB Legislative Conference
The 2007 NAHB Legislative Conference provides a unique opportunity for builders to speak directly with their members of Congress and to take a stand on the issues that affect their businesses and bottom line.
The conference is on Wednesday, June 6 and is a day-long event that coincides with the NAHB spring board meeting in Washington, D.C.
Attending the 2007 Legislative Conference offers NAHB members an unparalleled opportunity to:
- Lobby members of Congress to protect your business
- Establish lasting relationships with your elected federal officials
- Share builder concerns in a national forum in Washington, D.C.
- Learn the latest policy developments on the key issues affecting your business
- Demonstrate your industry’s commitment to responsible policies, pragmatic reforms, effective programs and providing the resources necessary to meet our nation’s ongoing housing needs
- Network and share business strategies with your peers
- Learn how to be an effective advocate for your business and your industry
- Make your views known on Capitol Hill
- Do your part to ensure that NAHB’s issues are heard by Washington policymakers
- Galvanize a united front on Capitol Hill
For more information or to register, click here.
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