FOR IMMEDIATE RELEASE
ICBA Calls on Congress to Preserve GSEs and Strong Impartial Secondary Market
Washington, D.C. (June 3, 2009)—The Independent Community Bankers of America (ICBA) today called on Congress to support the future of the government sponsored enterprises (GSEs) by insisting that any restructure of Fannie Mae and Freddie Mac ensure the continued existence of a strong, impartial secondary market for residential mortgages so our nation’s more than 8,000 community banks can continue to help the economy recover by providing their customers in cities and towns throughout America with competitive mortgages.
“Community banks continue to be responsible lenders, and many current and prospective homeowners are turning to community banks to meet their mortgage needs,” said R. Michael Menzies, ICBA chairman and president and CEO of Easton Bank and Trust Co., Easton, Md. “Fannie Mae and Freddie Mac have long been important partners in providing community banks with a vital source of housing finance funding, and they continue to play a vital role in supporting mortgage lending and homeownership, particularly in these difficult times when other sources of credit have dried up or offer only above-market rates. As Congress looks to the future of the GSEs, ICBA urges policymakers to ensure the continuation of a secondary mortgage market that does not directly compete with the private sector and provides equitable access and pricing to all lenders regardless of size or volume.”
Fannie Mae and Freddie Mac provide community banks with a critical source of housing finance funding and an impartial outlet to convey community bank mortgages to the secondary market. In 2009, ICBA community bank members have increased the volume of loans sold to the GSEs by 300 percent, as they work to fill the credit gap left by other lenders. Without access to a secondary market, not all of these loans would have been made because community banks would not be able to keep the loans in their portfolios due to interest rate risk. The GSEs have enabled community banks to offer competitive mortgage products to their customers.
Fannie Mae and Freddie Mac play an important role in providing liquidity and market stability and need to emerge from conservatorship with the operational flexibility to hold mortgages based on market conditions, along with their securitization authorities. They should continue to have some type of government ties so homeownership continues to play a crucial role in the financial well-being of American families and the American economy. Also, ICBA proposes that all GSE preferred shareholders be made whole. Any GSE reform cannot ignore restoring appropriate value for community bank holders of GSE preferred stock.
ICBA looks forward to working with Congress as decisions are made about the future structure of Fannie Mae and Freddie Mac.
To read ICBA’s letter to Congress, visit www.icba.org.