Hagel Statement on Housing Bill
Legislation Includes Hagel GSE Reform Bill
U.S. Senator Chuck Hagel (R-NE) issued the following statement today after voting in favor of the Housing and Economic Recovery Act of 2008, which passed the Senate by a vote of 72-13. This legislation includes the creation of a new independent regulator for Government Sponsored Enterprise's (GSEs) Fannie Mae and Freddie Mac. Hagel's legislation was originally introduced in 2003:
"This legislation will create a strong new independent regulator for Fannie Mae, Freddie Mac and the Federal Home Loan Banks and provide refinancing assistance for troubled homeowners. It will also allow the Treasury to purchase equity in or extend a line of credit to the GSEs. I do have concerns about this allowance, however these authorities are temporary and Secretary Paulson testified last week that they are needed in the midst of the current housing and credit market crisis. I am pleased that the new GSE regulator will have temporary authority to approve, disapprove and modify GSE executive pay packages. Congress should make this authority permanent.
"Fannie Mae and Freddie Mac own or guarantee over $5 trillion in mortgages which the taxpayer could be liable for if either were to fail. Fannie and Freddie have faced billions of dollars in accounting restatements, paid hundreds of millions of dollars in fines and paid billions of dollars in accounting and consulting fees to clean up their financial mess and their problems are still not fixed.
An effective regulator must have the authority to manage GSE portfolios and raise capital requirements for not only safety and soundness risks, but also for any risks posed to the broader market.
"This legislation also authorizes a new state licensing requirement for mortgage brokers and several tax incentives to stimulate our housing market. It will also authorize the Federal Housing Administration to insure up to an additional $300 billion in troubled loans. I do have concerns about the cost of the liability of this proposal. However, I am satisfied my concerns are addressed by paying for this proposal with money from the GSE affordable housing fund. Paying through their affordable housing fund minimizes additional costs to the American taxpayer.
"It has been a long fought process since I first began writing GSE reform legislation in March of 2000 with then Louisiana Congressman Richard Baker. I want to thank Senators Sununu, Dole and Martinez for their leadership on helping push GSE reform legislation throughout the years. Congress chartered Fannie and Freddie with a mission to provide stability in the housing market and promote affordable housing. A new independent GSE regulator will ensure they are conforming to their chartered mission."