FOR IMMEDIATE RELEASE
ICBA Asks Congress to Preserve Funding for the Housing Markets
Washington, D.C. (March 27, 2007)—The Independent Community Bankers of America (ICBA) asked Congress to support key changes to the Federal Housing Finance Reform Act of 2007 (H.R. 1427) that would make the regulatory and supervisory powers of the new regulatory agency comparable to the safety and soundness authorities of banking regulators.
"ICBA believes that if statutory or artificial regulatory limits are placed on growth, Fannie and Freddie would be compelled by business reasons to give preference to their large volume customers and limit the ability of Fannie Mae and Freddie Mac to provide mortgage credit to community bank customers," said ICBA in a letter to House Financial Services Committee members. "Unless the committee makes these changes, the new regulator could weaken the ability of the housing GSEs to provide liquidity to the housing market and undermine Congress's power to set national housing policy."
The House Financial Services Committee is scheduled to mark up H.R. 1427 Wednesday morning. The legislation would reform how the housing government sponsored enterprises — Fannie Mae, Freddie Mac and the Federal Home Loan Banks (FHLBs) — are regulated.
ICBA said the new regulator should be able to adjust capital requirements to protect against specific risks to safety and soundness but should not be permitted to change capital requirements over the long term. A new regulator could be subject to political pressure to adjust program levels by raising minimum capital, reducing the amount of resources available for housing. This would give the regulator an inappropriate degree of authority over U.S. housing levels.
In addition, ICBA strongly supports the provisions in H.R. 1427 that would strengthen the FHLBs' Community Financial Institutions programs that support small business and agricultural lending. The bill would make the programs part of the FHLBs' mission and increase the size of community banks eligible to secure advances under this authority to $1 billion in assets.
Read the letter at www.icba.org.