June 29, 2017

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FSR’s Ed DeMarco Urges Congress to Act on Housing Finance Reform

As Congress restarts its legislative efforts, DeMarco highlighted the extensive amount of common ground among the leading reform plans which will provide a strong foundation on which to legislate.

FSR’s Ed DeMarco Urges Congress to Act on Housing Finance Reform
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FSR’s Ed DeMarco Urges Congress to Act on Housing Finance Reform

Releases five principles for reform at Senate Banking Committee hearing

 

WASHINGTON – The Financial Services Roundtable’s (FSR) Housing Policy Council (HPC) President Ed DeMarco today testified at a Senate Banking Committee hearing on housing finance and urged Congress to enact comprehensive reform that protects taxpayers while creating a stronger and more stable mortgage market for consumers.

“Housing finance reform is a top priority for the Housing Policy Council. While the housing finance system continues to function with Fannie Mae and Freddie Mac in conservatorships, the status quo is untenable for many reasons and only Congress has the authority to make the permanent changes needed to put the system on a sound footing for the long term,” DeMarco noted in his testimony.

As Congress restarts its legislative efforts, DeMarco highlighted the extensive amount of common ground among the leading reform plans which will provide a strong foundation on which to legislate.

“Enacting comprehensive housing finance reform will put the country on a better course to ensure future homebuyers have broad access to credit and that our financial system can deliver this credit with much less systemic risk than in the past. Comprehensive housing finance reform can also ensure that taxpayers are protected and that Congress will not need to consider another bailout, even if we face a deep recession and a nationwide collapse in house prices as we did last decade,” DeMarco added.

In his testimony, DeMarco outlined the following principles HPC centers its reform views on:

  1. Fix what is broken and preserve what works in support of consumers and the market.
  2. The transition from the old system to the new one should avoid disrupting consumers and markets.
  3. Private capital should bear all but catastrophic mortgage credit risk so that market discipline contains risk. The government should provide an explicit, full faith and credit guarantee on MBS but with a pre-set mechanism to ensure any catastrophic losses that call upon taxpayer support will be repaid fully.
  4. Government should provide a regulatory framework that is clear and equitable across all participating companies and ensure that participants in the housing finance system operate in a safe and sound manner.
  5. The government-protected GSE duopoly should be replaced with a structure that serves consumers by promoting competition, affordability, transparency, innovation, market efficiency, and broad consumer access to a range of mortgage products.

 

DeMarco noted “the good news that there are numerous common elements across the leading reform proposals” and that “HPC stands ready to support the Committee as it crafts legislation.”

 

To read DeMarco’s full written testimony, click here.

 

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About The Author

The Financial Services Roundtable represents the largest integrated financial services companies providing banking, insurance, payment and investment products and services to the American consumer. Member companies participate through the Chief Executive Officer and other senior executives nominated by the CEO. FSR member companies provide fuel for America’s economic engine, accounting for $92.7 trillion in managed assets, $1.2 trillion in revenue, and 2.3 million jobs.

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