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Public Statements

Federal Housing Finance Reform Act Of 2007

Floor Speech

Location: Washington, DC

FEDERAL HOUSING FINANCE REFORM ACT OF 2007 -- (House of Representatives - May 17, 2007)


Mr. HOLDEN. Mr. Chairman, I rise in support of H.R. 1427, the Federal Housing Finance Reform Act of 2007.

Appropriate regulation for Fannie Mae, Freddie Mac and the Federal Home Loan Banks is crucial to the overall health of housing and communities throughout America. I commend both Chairman FRANK and GSE Subcommittee Chairman KANJORSKI for their diligent and thoughtful work on this legislation.

An issue of concern to me and many in my district is the effect of the legislation on the FHLBank System. Their inclusion in this bill is not due to a perceived lack of proper regulation, but from a widely held desire to place the three housing GSEs under one ``world-class'' regulator capable of monitoring their complex financial information. Despite their similar benefit to the housing market and use of complex hedging transactions, the GSEs are different, and I believe the new regulator must recognize the differences in their business models, products, and missions.

This legislation recognizes these differences by creating separate divisions within the new regulator: one for the FHLBanks, and for Fannie Mae and Freddie Mac. In fact, the bill also makes clear that the mission of FHLBanks is different, and not only deals with housing finance but economic and community development as well.

In addition to the Affordable Housing Program (AHP), which has provided $5 million in funds supporting over 1,000 units of housing in my district, the FHLBank of Pittsburgh operates a number of programs that support community and economic development.

Their ``Banking on Business'' (BOB) program helps eligible small businesses with start-up and expansion costs. Each dollar in BOB funding typically leverages an additional six dollars in financial resources to small businesses in the region, thereby creating or retaining jobs. Since 2000, FHLBank Pittsburgh has funded more than $27.5 million in BOB funding to assist small businesses in their three-state region, creating or retaining more than 3,821 jobs.

In my district alone, the FHLBank Pittsburgh has provided over $1.5 million in BOB financing, supporting 18 small businesses and leveraging over $17 million in additional funding. The BOB program works in partnership with leading community banks in a number of very important efforts. For example, Leesport Bank used BOB to provide $180,000 for Hamburg Industries, Inc. to assist in expansion costs. Hamburg Industries, Inc. is a manufacturer of brooms, mops and brushes in Hamburg, PA. Legacy Bank used BOB to lend $21,000 to Math Inc. to assist in start-up costs. Math Inc. is engaged in manufacturing countertops, cabinets and architectural millwork for commercial applications. Further, First National Community Bank provided $200,000 in BOB funds to Keystone Potato Products, LLC to assist in start-up costs. Keystone Potato Products, LLC. is a dehydrated food producer in Hegins, PA.

The Pittsburgh Bank also operates the Community Lending Program (CLP), an $825 million non-competitive revolving loan pool that offers loans to member financial institutions for community and economic development projects that create housing, improve business districts, and strengthen neighborhoods. In my district, CLP has provided over $40 million for 16 projects. One of these involved Mid-Penn Bank, a leading community bank in my district, using the CLP to provide $4.5 million in low-cost FHLBank funds for the rehabilitation of Cole Crest: a low income elderly, disabled, and family apartment complex in Steelton, PA. The funds were provided through Mid-Penn Bank as an alternative to traditional bond financing, saving the Dauphin County Housing Authority significant costs over the life of the loan.

As a Member of Congress representing a rural region with community and economic development needs, I appreciate the partnership between the Federal Home Loan Banks and the community banks of my district. The mission of the Federal Home Loan Banks in the area of economic and community development is vital, and I applaud the clarification of that mission in H.R. 1427.

I want to add my voice to those in the Congress advocating that the new regulator encourage this mission by applying a new emphasis on community and economic development to all Federal Home Loan Banks' activities. I see this language as fostering a statutory and regulatory environment that will support and encourage further development of new ways to support economic development, public finance and infrastructure in a partnership with Federal Home Loan Banks, their members, and local governments that will bring needed help to the small and rural communities of my district.


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