Rep. Royce Named Conferee to Reg Reform Bill

Statement

Rep. Ed Royce (R-CA), a senior member of the House Financial Services Committee, was named today as a conferee to the regulatory reform legislation. Following the announcement Royce issued the following remarks:

"Today we begin the conference on legislation that fundamentally alters the structure of the U.S. Financial Services sector. After the near collapse of this sector, and the subsequent government bailouts that occurred, there is no question that reform is desperately needed. However, in failing to include the reform of the two Government Sponsored Enterprises at the heart of the housing crisis -- Fannie Mae and Freddie Mac -- this legislation falls short.

"It was Fannie Mae and Freddie Mac that were at the center of the housing market and largely responsible for the proliferation of subprime and Alt-A mortgages throughout the financial system. Because of affordable housing mandates enacted by Congress in 1992, Fannie and Freddie became the largest purchasers of these junk loans; ending up with well over $1 trillion worth. No regulatory reform effort will be complete or truly effective without addressing the two institutions most responsible for the collapse of the housing market.

"Additionally, this legislation creates an industry of Too-Big-to-Fail firms. By labeling firms as systemically important, we will separate our financial system between those with a government backstop and their competitors. As a result, designated firms will see greater access to credit and a much lower cost of capital compared to their Too-Small-to-Save counterparts.

"Financial regulatory reform is a critical step for the future health of our capital markets. As we move forward with this Conference Committee we must address these glaring shortfalls and deliver a regulatory reform package that addresses the root causes of the housing and financial collapse while putting our economy back on a path toward prosperity."

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