FOR IMMEDIATE RELEASE
ICBA Calls for Bank-Like GSE Regulation
Arbitrary Portfolio Limits Could Close Secondary Market to Community Banks
Washington, D.C. (May 17, 2007)—The Independent Community Bankers of America (ICBA) called on Congress to pass the government sponsored enterprise (GSE) reform bill now before the House and urged lawmakers to include an ICBA-supported bi-partisan provision that would make federal regulatory power over the GSEs more comparable to that of the nation's banking regulators.
"The GSE legislation — Federal Housing Finance Reform Act of 2007 (H.R. 1427) — helps community banks provide home loans to their customers on terms as favorable as those provided by major national lenders," ICBA wrote in a letter to all members of the House. "This is very important to communities throughout the nation. Improving the GSE regulatory system will make it possible for the GSEs to continue this important role."
ICBA supports the Bean/Neugebauer/Moore/Miller amendment - named for Reps. Melissa Bean (D-Ohio), Randy Neugebauer (R-Texas), Dennis Moore (D-Kan.) and Gary Miller (R-Calif.) -which clarifies that the new regulator's authority over the portfolios of Fannie Mae and Freddie Mac should focus on the risk to the enterprises themselves and align federal regulatory power over the GSEs with that of the government's authority over banks.
ICBA is concerned that without the amendment, arbitrary limits could be placed on the GSEs' portfolio growth based on poorly defined concerns about systemic risk. Arbitrary limits on portfolio growth could lead Fannie Mae and Freddie Mac to give preference to their large volume customers. "Community banks with relatively low origination volumes would be shut out and not have a secondary market outlet," ICBA said.
The House is expected to begin debating H.R.1427 today.
Read ICBA's letter at www.icba.org.