Chairmen Agree on Independent GSE Regulator
The chairmen of the House and Senate committees with jurisdiction over the housing GSEs appear to be on the same page regarding the basics elements of a new bill to restructure the GSEs' regulators. The top priority for both lawmakers-Senate Banking Committee Chairman Richard Shelby (R-AL) and House Financial Services Committee Chairman Mike Oxley (R-OH)-is independence, which is also ICBA's top priority.
Last week, Shelby said the new regulator would be a "stand alone" body outside the Treasury Department and would be "free of any political influence." This week, Oxley agreed. "What we need is a strong independent regulator," Oxley said. "When we start to get farther afield … it is much harder to get a consensus." Last fall, Oxley cancelled a markup of a GSE regulator bill over differences with the administration regarding powers of the new regulator and the role of Treasury. Oxley wanted the new agency to be free from political influence; Treasury wanted control of the new agency.
Shelby and Oxley also diverged from the position of Federal Reserve Chairman Alan Greenspan on limiting the asset growth of Fannie Mae and Freddie Mac. "I differ with him on that," Shelby said. "If a financial institution is well regulated and well managed, the market will determine its growth. I don't think we should put artificial caps on it." Oxley said, "I'm inclined to agree with Senator Shelby on that, but I haven't really made up my mind. Once you get into micromanaging that, it tends to be a slippery slope."
Shelby expressed optimism that a GSE reform bill could be signed into law this year. Oxley said if the Senate passes a strong bi-partisan bill, it will create momentum that could carry it through the House and on to the White House this year. Stay tuned.