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Washington, DC - Yesterday, the U.S. House of Representatives passed H.R. 1427, the Federal Housing Finance Reform Act of 2007, by an overwhelming bipartisan vote of 313 to 104. The bill will overhaul the regulatory oversight of the government sponsored enterprises (GSE) of Fannie Mae, Freddie Mac and the Federal Home Loan Banks, and create a new, independent regulator with broad powers analogous to current banking regulators. The regulator’s primary responsibility will be to ensure the safety and soundness of the institutions. In addition, the bill creates an off-budget and non-taxpayer financed affordable housing fund, which will dedicate hundreds of millions of dollars for the construction, maintenance and preservation of affordable housing with the first year of the fund to be dedicated to the hurricane stricken areas of the Gulf Coast, and billions of dollars over the next five years for affordable housing nationwide. The bipartisan bill was originally introduced by Chairman Frank, along with Reps. Richard Baker (R-LA), Mel Watt (D-NC) and Gary Miller (R-CA).
“We will now have a strong new regulator to restore confidence in the GSEs. It will keep housing finance affordable and begin the important task of providing needed housing in the Gulf Coast,” said Rep. Barney Frank, Chairman of the House Committee on Financial Services.
“This is a great step forward in a long-standing effort to build a stronger wall between the trillion-dollar liabilities of these financial giants and the taxpayers’ pockets. I am particularly proud of the fact that in the first year after enactment this legislation will provide significant resources to post-hurricane Louisiana to help rebuild, recover, and redevelop our communities,” said Rep. Richard Baker. “While I am disappointed by an amendment weakening the regulator’s authority over the companies’ investment portfolios, my vote for passage of the bill is to keep this important process moving forward, and I will work with the White House, the Treasury, members of the Senate, and Chairman Frank and others in the House to improve the final legislation.”
“The bill approved today creates a fully empowered, independent, world-class regulator that can deal with any safety and soundness issues that might arise. GSEs have been at the forefront of creating affordable housing opportunities for American families and this bill will ensure that these successes continue for years to come,” said Rep. Gary Miller.
“The real benefit of this bill is that it will get the regulator and the GSEs out of limbo and provide a big stimulus for more affordable housing,” said Congressman Watt.
H.R. 1427 is the product of both bipartisan legislation in the 109th Congress and careful discussions and compromise with the Department of Treasury. The bill also comes after a series of exhaustive deliberations in the House of Representatives under an open rule, a committee process that considered over 30 amendments and legislative hearings on GSE reforms and proposals, where regulators and expert witnesses testified before both the Financial Services Committee and the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
Recent events have shown the importance of stable and well-regulated mortgage markets. H.R. 1427 builds on the significant work done in the last two Congresses to create a strong and independent regulator with broad supervisory powers, while at the same time strengthening the mission and affordable housing responsibilities of the enterprises.
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