I recently had the privilege of returning to my old stomping ground, the Senate Committee on Banking, Housing and Urban Affairs, to testify on a subject that is vital to our nation’s economic recovery: housing finance reform.
Interestingly, the title of the hearing took the form of a question: “Bipartisan Solutions for Housing Finance Reform?” Of course, the BPC Housing Commission’s report, with its detailed recommendations on a new finance system for both the single-family and rental markets, is tangible proof that bipartisan solutions are indeed possible.
In my testimony, I had the opportunity to outline the five key objectives of the new housing finance system proposed by the commission:
- a far greater role for the private sector in bearing credit risk;
- a continued, but more limited, role for the federal government as the insurance backstop of last resort;
- the ultimate elimination of Fannie Mae and Freddie Mac over a multiyear transition period;
- access to safe and affordable mortgages for all borrowers; and
- a Federal Housing Administration that returns to its traditional mission of primarily serving first-time homebuyers and borrowers with limited savings.
While Senators and witnesses expressed a variety of different perspectives at the hearing, what struck me most was the fact that the commission’s report has helped re-energize the discussion on the Hill about the future of our nation’s housing finance system. Senators on both sides of the aisle repeatedly emphasized that the moment had finally arrived for Congress to provide some clear guidance on the ultimate disposition of Fannie Mae and Freddie Mac and to put our nation’s housing finance system on a more sustainable path.
With the recent introduction of the “Jumpstart GSE Reform” legislation, sponsored by the bipartisan team of Senators Bob Corker (R-TN), Mark Warner (D-VA), David Vitter (R-LA), and Elizabeth Warren (D-MA), momentum seems to be building in Congress to tackle this difficult subject. Let’s hope these good efforts continue.