Apr 18 2013
FHFA Acting Director DeMarco Praises Bipartisan Bill to Reform Fannie and Freddie
“Jumpstart GSE Reform Act” introduced by Corker, Warner, Vitter, Warren
WASHINGTON — Federal Housing Finance Agency Acting Director Edward DeMarco today praised the “Jumpstart GSE Reform Act” at a Senate Banking Committee hearing on FHFA oversight. The “Jumpstart GSE Reform Act,” sponsored by U.S. Senator Bob Corker, R-Tenn., and Senators Mark Warner, D-Va., David Vitter, R-La., and Elizabeth Warren, D-Mass., was introduced in March.
In his prepared remarks, Acting Director DeMarco stated, “The first time I appeared before this Committee as Acting Director, Senator Corker asked me a question I couldn’t answer: how do we transition away from this mess to a better system. Over the past three-and-a-half years I have thought about that question. My prepared statement provides my answer. Our strategic plan for the Enterprise conservatorships and the specific plans in the 2013 scorecard set forth a transition path and FHFA’s efforts to-date to get that transition going. But we can’t complete the transition until we know the final destination. And for that, the country needs Congress to give us that destination. I am thankful for recent action by this Committee towards that end, particularly the budget resolution that prevents further use of g-fees to fund the government. And I am supportive of the bipartisan Jumpstart GSE Reform Act. Much remains to be done.”
The “Jumpstart GSE Reform Act” would prohibit any increase in the guarantee fee – which is required to be charged by government-sponsored enterprises Fannie Mae and Freddie Mac – from offsetting other government spending. Additionally, the bill would prohibit the sale of preferred shares without congressional approval and structural housing finance reform. The preferred shares were purchased by the U.S. Treasury Department during the 2008 financial crisis and are within Treasury’s discretion to sell or otherwise dispose of. Any premature actions outside of structural reform will only build obstacles to a new housing finance system that protects taxpayers from future bailouts.
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