On February 9, the House Financial Services Committee held a hearing on GSE reform with a focus on immediate steps to protect taxpayers and end the bailout. On February 11, the Obama administration released a white paper on housing finance reform, outlining its plan to: (i) reduce government support for housing finance and wind down Fannie Mae and Freddie Mac on a responsible timeline; (ii) address fundamental flaws in the mortgage market to protect borrowers, ensure transparency, and increase the role of private capital; and (iii) target the government’s support for affordable housing in a more effective and transparent manner. The proposal also sets forth longer-term reform choices for structuring the government’s future role in the housing market. Congressional Hearing Link. Treasury Release. White Paper. HFS Testimony and Archived Webcast.
housing finance reform
House Hearing on GSEs and Housing Finance Reform
On September 15, the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises of the House Financial Services Committee held a hearing on the status of Fannie Mae and Freddie Mac and with respect to housing finance reform. Treasury Assistant Secretary for Financial Institutions Michael S. Barr confirmed the Administration’s commitment to delivering a comprehensive proposal for reform of Fannie Mae, Freddie Mac, and the broader housing finance system to Congress by January 2011.
Edward J. DeMarco, Acting Director of the FHFA also called for legislation to restructure and strengthen the nation’s housing finance system and to resolve the Fannie Mae and Freddie Mac conservatorships. Both emphasized the importance of a transition period to avoid further disruptions in the housing finance system that could occur if the GSEs were to suddenly exit the market.
Treasury/HUD Conference on the Future of Housing Finance
On August 7, Treasury Secretary Geithner made opening remarks at the Conference on the Future of Housing Finance. Secretary Geithner outlined four key questions underlying the approach to housing finance reform: (i) what role the government should play to provide stability in the housing finance system, (ii) what role the government should play in providing financial support to improve access to affordable housing, (iii) how to manage the securitization market, and (iv) how to manage the transition into a new housing finance system. Secretary Geithner also highlighted the need for government involvement in providing a form of guarantee or insurance in a reformed system, noting that any government guarantee should be priced to cover the risk of losses and structured to minimize taxpayer exposure. HUD Secretary Donovan followed Secretary Geithner’s remarks and focused on policy issues and the broader social impact of housing finance. Secretary Geithner’s Remarks. Secretary Donovan’s Remarks.
Obama Administration Announces Conference on Housing Reform
On July 27, the Obama Administration announced it will host a “Conference on the Future of Housing Finance” on August 17 at the Treasury Department. The conference will assemble academic experts, consumer and community organizations, industry groups, market participants, and other stakeholders for an open discussion about housing finance reform. The Administration seeks to provide Congress with a comprehensive housing finance reform proposal by January 2011, and will use over 300 comment letters received in response to Treasury and HUD’s solicitation of public comment on the future of the housing finance system to help develop its proposal. Treasury Release.
Note: To search for the Comment Letters on the website provided in the Treasury Release, please select “Public Submissions” under the Document Type drop-down menu, and search for keywords “housing finance”.