Today, Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson (D-SD) held a hearing titled "Essential Elements of Housing Finance Reform."
Below is Chairman Johnson's statement as prepared for delivery:
"I would like to thank the witnesses for joining us today as the committee sets out on a path that I hope will lead to comprehensive housing finance reform. Our witnesses are here to help educate us regarding what essential elements must be a part of housing finance reform legislation in order for it to be credible and successful. We must ensure that reform of the housing finance system improves our current system and does not create market disruptions that threaten our housing recovery or unnecessarily increase costs for borrowers.
"During our first housing finance reform hearing this Congress, Ranking Member Crapo and I explored whether a bipartisan solution to reform the housing market was possible. At that time, there was no agreement regarding the role of the federal government let alone what a new structure could look like. I would like to thank Senators Corker and Warner and the cosponsors of their bill for showing that there is bipartisan support for a government guarantee in a new housing system and willingness to move legislation forward.
"Recognizing that there are many details that need to be explored and discussed by the full Committee, and that many Committee Members have input of their own that they would like to include, we plan to hold hearings this fall to explore the finer points of proposed changes. This will give the entire Committee the opportunity to explore the various modifications and wholesale changes that we will consider. Ranking Member Crapo and I are undertaking this in-depth process with the goal of reaching agreement by the end of the year.
"To give a sense of what a massive undertaking this process is, our housing finance market is the second largest and most liquid financial market in the world. So the consequence of getting any major reform wrong cannot be overstated. To that end, it is essential that we fully understand the mechanics of how a new system would function, and how we should smoothly transition from the current system to a new one. Any new housing finance system and the transition to it could dramatically change the way that families qualify and affect who can afford to buy a home.
"I have asked the experts testifying today to help us analyze proposed changes to the system and to help us understand which essential pieces of the current system should be preserved. Better understanding the interaction between the pieces that we would like to preserve -- like the widely available, 30-year, fixed rate mortgage -- and the changes we would like to make is critical in order to achieve meaningful improvements to the current system.