FOR IMMEDIATE RELEASE
ICBA Supports GSE Reform
Asks Senate to Adopt Bank Regulator Model
Washington, D.C. (July 14, 2005) - The Independent Community Bankers of America (ICBA) today urged the Senate Banking Committee to adopt legislation to improve the safety and soundness of the housing government-sponsored enterprises (GSEs)-Fannie Mae, Freddie Mac and the Federal Home Loans Banks- without undermining their mission or paving the way for privatization.
"ICBA believes it is essential that any housing GSE regulatory legislation establish an independent, properly funded, world-class regulator," ICBA wrote in a letter, saying that it is essential that "the new regulator maintain the unique structure and mission of the Federal Home Loan Bank System, preserve the GSE status of the enterprises, and protect the stability of the housing markets."
"We urge the committee to adopt a regulatory model comparable to a bank regulator," the letter continues and makes the following recommendations:
- Reject attempts to establish a "bright line" drawing a fixed barrier between the primary and secondary mortgage markets, but instead use a case-by-case approach.
- Adopt reasonable provisions for product and activity approval and a more streamlined notice-based process for new business activities.
- Allow the regulator to base portfolio limits only on safety and soundness.
- Do not require GSEs to register under the Securities Act of 1933 since it will be disruptive to the home lending markets.
- Give the regulator flexible capital authority similar to that of bank regulators.
- Clarify, by including Sen. Enzi's amendment, that the Federal Home Loan Banks' mission includes supporting small business and agricultural lending as authorized by the Gramm-Leach-Bliley Act.
- Clarify the regulator's authority to merge FHLBanks for safety and soundness purposes only.
"Access to the GSEs is vital to community banks' ability to meet the housing finance needs in their communities," said Camden R. Fine, president and CEO of ICBA. "We hope the committee will enact legislation that ensures the safety and soundness of the GSEs without diminishing their ability to help more Americans become homeowners."
The full text of the letter can be found at www.icba.org/pressroom.