Politics and Government
Several New Bills Would Sharply Curtail Role of Fannie Mae and Freddie Mac
House Republican leaders last week introduced eight bills that represent immediate steps that Congress could take to build a private-sector based housing financing system.
“These proposals, along with similar plans announced by the Obama Administration in February, would further destabilize a housing market that is already struggling and impede economic recovery,” said NAHB Chairman Bob Nielsen.
“The historical track record clearly shows that the private sector is not capable of providing a consistent and adequate supply of housing credit without a government backstop,” Nielsen said.
“Housing can be the engine of job growth this country needs, but it can’t fill that vital role if Congress and the Administration make damaging, ill-advised changes to the housing finance system at such a critical time,” he said.
Following is a summary of the eight bills unveiled last week:
- H.R. 31, The Fannie Mae and Freddie Mac Accountability and Transparency for Taxpayers Act would increase oversight over Fannie Mae and Freddie Mac by establishing an Inspector General within the Federal Housing Finance Agency (FHFA) to submit regular reports to Congress on GSE business activities.
- The Equity in Government Compensation Act of 2011 would suspend the current compensation packages for all employees of Fannie Mae and Freddie Mac and establish a compensation system consistent with the federal government.
The legislation further expresses the sense of the Congress that the 2010 pay packages given to senior executives at Fannie Mae and Freddie Mac were excessive and that the money should be returned to taxpayers.
- The GSE Subsidy Elimination Act would direct the FHFA to phase in a guarantee fee increase over two years to ensure that Fannie Mae and Freddie Mac price such guarantees as if they were held to the same capital standards as private financial institutions.
- The GSE Risk and Activities Limitation Act would prohibit Fannie Mae and Freddie Mac from offering, undertaking, transacting, conducting or engaging in any new business activities.
- The GSE Debt Issuance Approval Act would require the Department of the Treasury to formally approve any new debt issuances by the GSEs.
- The GSE Credit Risk Equitable Treatment Act of 2011 clarifies that Fannie Mae and Freddie Mac would be held to the same standards as other secondary mortgage market participants.
The GSE Mission Improvement Act would permanently abolish Fannie Mae and Freddie Mac’s affordable housing goals.
- The Portfolio Risk Reduction Act would accelerate and formalize the reduction in the size of the GSE’s portfolios by setting annual limits on the maximum size of each retained portfolio and lowering the limits over five years until they have reached $250 billion.