Senator Bob Corker, a member of the Senate Banking, Housing and Urban Affairs Committee, Thursday released the following statement after voting in favor of The Financial Regulatory Improvement Act of 2015. The bill passed the committee by a vote of 12 to 10.
“I am pleased the banking committee has taken the first step in reforming our financial system and reducing the overwhelming regulatory burden facing community banks today,” said Senator Corker. “It is my hope that we will reach a bipartisan consensus before this legislation is considered by the full Senate that will give hardworking Americans access to credit while protecting taxpayers from another financial crisis, and I stand ready to work with colleagues on both sides of the aisle who are willing to make modifications that will produce a bill that can be signed into law.”
The legislation includes three housing finance provisions long championed by Senator Corker.
“I want to thank Chairman Shelby for including several very important housing finance provisions in this legislation,” added Senator Corker. “There is bipartisan, bicameral consensus that the fate of Fannie Mae and Freddie Mac should be determined by Congress, and Title VII of this bill reaffirms that the ball is in Congress’s court to decide the future of our housing finance system and put an end to the terrible practice of using g-fees to pay for other government spending. While I still would like to see this committee tackle comprehensive housing finance reform, if that is not an option in the near term, some of these provisions will help.”
Jumpstart GSE Reform Act: Title VII includes language that would prohibit any increase in the guarantee fee (g-fee) from offsetting other government spending. Additionally, the language would prohibit the sale of Treasury-owned senior preferred shares in government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac without congressional approval. Corker first introduced the Jumpstart GSE Reform Act in 2013 with Senators Mark Warner (D-Va.), David Vitter (R-La.), and Elizabeth Warren (D-Mass.).
Common Securitization Platform: Title VII also includes language that would require the Federal Housing Finance Agency (FHFA) to adopt changes to the Common Securitization Platform (CSP) to ensure it is open to not only the GSEs, but also private sector participants. Corker has argued that an open platform would “enhance the ability for small and mid-sized lenders to access the secondary mortgage market and help facilitate greater competition in the market going forward.”
Risk-Sharing: Language included in Title VII will require FHFA and the GSEs to continue to expand risk-sharing programs and increase reporting on risk-sharing plans and timelines, which will cause the private sector to assume more credit risk in the mortgage market, a goal shared by both parties.
While Senator Corker voted for the legislation, he expressed concerns about the bank holding company designation process outlined in Title II of the legislation.
“The way this legislation is currently written, the process by which the Financial Stability Oversight Council would designate systemically important financial institutions is so arduous that the regulators believe it could take years to actually designate a single firm, so I am skeptical that we should provide FSOC new authorities at this time,” said Senator Corker. “While I supported the legislation today, I hope we are able to find a more rational middle ground on this issue before this legislation is considered by the full Senate.”
Click here to watch Corker’s remarks at the committee’s executive session to mark-up the legislation.