Corker Express Optimism on Housing Finance Reform

Statement

In a hearing today on housing finance reform, U.S. Senator Bob Corker (R-Tenn.), a member of the Senate Banking Committee, expressed optimism about the prospect of legislative action in the near term. The committee heard testimony from David H. Stevens, president and chief executive officer of the Mortgage Bankers Association; Edward J. DeMarco, president of the Housing Policy Council of the Financial Services Roundtable; and Michael D. Calhoun, president of the Center for Responsible Lending.

"What I see happening right now is a real consolidation of ideas," said Corker. "We have had think tanks that lean right, think tanks that lean left, [and] the Mortgage [Bankers] Association come together. It just seems to me that the thinking around what needs to happen with GSE reform is coming to a place where I truly believe we're going to be able to pass a piece of legislation this year."

Corker also outlined a number of commonalities that currently exist as members of Congress, the administration, and a number of stakeholders continue discussions about the best path forward on reforming the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.

Explicit, paid-for guarantee: "It seems to me that the consolidation is coming around the fact that we do need to have an explicit guarantee that is catastrophic… It needs to be paid for. I think there's a recognition that having an implicit guarantee out there that's not paid for is not the right place for our taxpayers."

Taxpayer protection: "I think there's an agreement being generated that private capital needs to be in advance of that [guarantee]… Having a pre-funded fund to deal with the failures of mortgage-[backed securities], not of companies, is a place we need to go."

Access to secondary markets: "I couldn't agree more that access to secondary markets by entities of all sizes need to be there. I think there's been a misunderstanding that people think somehow there is something that's being designed that tilts towards the larger institutions. Nothing could be further from the truth."

Stability through business cycle: "I think we've learned a lot going through this last cycle. That credit needs to be available through all cycles, through all economic cycles, it seems to me that people understand that, and I think the last go round we didn't focus enough on that component."

Simplicity: "Then lastly… I think our last effort was way too complex and had way too many moving parts. I think we've all learned a great deal from that, and as a matter of fact, I think we've learned that the existing infrastructure that we have in place is something we need to build off of."

Stevens, DeMarco, and Calhoun all agreed with Corker about the commonalities that exist.

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