Senators Robert Corker (R-TN) and Mark Warner (D-VA), key members of the Banking Committee, have introduced broad and sweeping bi-partisan legislation to completely overhaul the mortgage-backed securities markets and reform the government-sponsored enterprises. The Housing Finance Reform and Taxpayer Protection Act, S. 1217, which has garnered strong support from the securities industry, would create the Federal Mortgage Insurance Corporation (FMIC) as an independent federal agency to capitalize the housing finance system by separating credit risk from interest rate risk, and bringing in private capital to take on both.
The FMIC Director will be appointed for a five-year term by the President, with the advice and consent of the Senate. The FMIC Director will be a voting member of the Financial Stability Oversight Council. The Act authorizes a five-member FMIC board of directors. In what appears to be an obvious nod to the controversy surrounding the President's recess appointments of a NLRB members and CFPB Director Richard Cordray, the legislation specifically provides that, if the Senate has not confirmed an FMIC Director, the President is authorized to name an Acting Director. The President cannot name anyone Acting FMIC Director. The Act specifies that the Acting Director must either be the nominated Director-designate or a member of the FMIC board of directors. In either case, the Acting Director will have full statutory powers and duties until such time as the Senate confirms a Director.