FOR IMMEDIATE RELEASE
ICBA Supports GSE Reform
Urges Portfolio Limits Based on Only Safety and Soundness
Washington, D.C. (May 24, 2005) - The Independent Community Bankers of America (ICBA) praised the House Financial Services Committee's efforts to improve the regulation of the housing GSEs, as the committee begins its mark up of H.R. 1461, but urged rejection of proposed amendments that are designed to pave the way for privatization.
In a letter, ICBA supported establishing an independent regulator for the GSEs and said it is "essential that Congress ensure that the new regulator will maintain the unique structure and mission of the Federal Home Loan Bank System." ICBA asked the committee to "adopt a regulatory model comparable to a bank regulator, focused on maintaining the GSEs' safety and soundness."
ICBA made the following specific recommendations:
- Eliminate the "Bright Line" provision that would impose a rigid distinction between primary and secondary market activities;
- Adopt reasonable provisions for product and activity approval;
- Reject portfolio limits not based on safety and soundness;
- Clarify the regulator's authority to merge FHLBanks only on safety and soundness grounds;
- Give the regulator flexible capital authority;
- Let Fannie Mae and Freddie Mac continue to be able to purchase all conforming loans from any size lender.
"The housing GSEs have played an important role in helping community banks provide competitive mortgage financing to millions of consumers and helping raise our nation's homeownership to record levels," said Camden R. Fine, ICBA president and CEO. "Congress needs to take care to consider the full ramifications of any new legislation to ensure it does not weaken the GSEs and ultimately the ability of American homebuyers to secure financing."
See the full letter at www.icba.org/pressroom.