FOR IMMEDIATE RELEASE
ICBA Urges Careful Consideration on GSE Reform
Washington, D.C. (April 5, 2005) - The Independent Community Bankers of America (ICBA) and five other national trade organizations urged the Senate Committee on Banking, Housing and Urban Affairs to consider the full ramifications of a "bright line" provision in a bill to strengthen the regulatory supervision of the housing government-sponsored enterprises (GSE).
In the letter, ICBA and the other trade groups stated that "it is crucial for the housing GSEs to have an independent regulator with sufficient expertise, powers and authority to ensure that the GSEs operate in a safe and sound manner … However, we are concerned that other counterproductive recommendations are being proposed under the guise, and beyond the scope, of regulatory reform."
Concerns center around the "bright line" provision contained in legislation introduced by Sen. Chuck Hagel (R-Neb.), designed in theory to prevent Fannie Mae and Freddie Mac from participating in activities unless they are determined to be secondary market activities. These concerns over the provision include:
- That the overly broad approach would instantly preclude many existing GSE products and activities designed solely to increase access to mortgage credit, lower the cost of homeownership and foster innovations in home financing.
- That existing cooperative relationships between the GSEs and small and mid-size lenders that provide single-family and multifamily housing financing would be jeopardized.
- That the "bright line" provision would undermine state-of-the-art mortgage underwriting technology and would curtail the development of market-driven mortgage products and programs that meet lender and homebuyer needs.
"Many community banks rely on the GSEs for program and technology innovations to help them meet the housing finance needs in their communities," said David E. Hayes, chairman of ICBA and president and CEO of Security Bank in Dyersburg, Tenn. "We look forward to continue working with the Congress to assure that legislation is ultimately enacted that preserves and protects our nation's remarkably effective housing finance system."
The full text of the letter can be found at www.icba.org/pressroom.