Press Releases

McHenry: Inaction on Housing Finance Reform Puts Taxpayers at Risk


 

Washington, October 22, 2019 -

Today, the top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), delivered the following opening statement at a hearing on housing finance reform. Witnesses at the hearing included Treasury Secretary Steven Mnuchin, Housing and Urban Development (HUD) Secretary Ben Carson, and Federal Housing Finance Agency (FHFA) Director Mark Calabria.

Read his remarks as delivered:

“Let me begin by saying this: this is a powerful opportunity for bipartisan cooperation.

“We have a willing Administration who’s engaged in a productive dialogue on housing finance reform for the long term.

“Divided government is not ideal for many things, but it is an ideal moment for difficult policy that divides both parties.

“Housing finance reform divides both parties.

“There is not a partisan only coalition that can produce fundamental housing finance reform.

“Democrats have tried it and failed.

“Republicans, likewise, have tried it and failed.

“In order to have a lasting change to our housing finance system, to put it on a sustainable path for our taxpayers, for our communities.

“It is important we legislate in a bipartisan way and this is an ideal moment to do it. 

“I’m encouraged that Secretary Mnuchin and Secretary Carson have proposed a long-term solution.

“Its a positive first step on a multi-year path toward building a housing finance system that makes the goal of affordable homeownership more achievable.

“And, while by no means perfect, it sketches a path forward and away from the status quo that puts taxpayers at risk and prevents competition within the market.

“Inaction puts taxpayers at risk.

“Let me say that again, legislative inaction, regulatory inaction puts taxpayers at risk.

“In January, I reached out to Chairwoman Waters on ideas on Committee hearings that I thought could be bipartisan. This was one of them.

“I offered that back in January and eleven months later we are here today.

“But 11 years ago, we in the federal government placed in conservatorship and nationalized after their collapse, Fannie Mae and Freddie Mac, causing almost $200 billion in taxpayer bailouts.

“We don’t want to relive that.

“This Administration cannot do it alone and put us on a satisfactory path.

“Today, Fannie Mae and Freddie Mac remain in conservatorship, unreformed and without competition.

“Our current economy is strong. This is the time to do housing finance reform because of the economic conditions as well.

“But with an inevitable downturn at some point in time, and without Congressional action and reform of the GSEs, a bailout of these institutions is more likely than not.

“In fact, until Director Calabria took over, the GSEs had a capital ratio of over 1,000 to 1, meaning that even a small dip in the market would guarantee failure.

“Housing finance is too important to be put at that type of risk.

“Our housing market has been trending upward for at least the last 8 years, so we may be reaching the top of the housing cycle.

“We have serious systemic risk at the GSEs and the Federal Housing Administration.

“It’s important that we legislate for the long term, we know it’s not easy, but it is necessary. We can’t kick the can down the road.

“I want to highlight a few portions of the Administration’s proposal that this committee needs to focus on.  

“One, a new housing finance system must first set clear boundaries between the respective roles of the GSEs and FHA.

“Second, Congress needs to encourage competition by leveling the playing field in creating an open chartering process to provide a path for other companies to attain these benefits.

“I think we can work together and achieve a bipartisan outcome that creates that competition, that certainty in the marketplace, and I think this can make the American people proud and put us on firm economic standing for generations to come.”

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