The legislation introduced by Senators Mark Warner (D-VA) and Bob Corker (R-TN) to reform the mortgage securitization market is gaining strong bi-partisan support and momentum. Four Republican members of the Senate Banking Committee have now endorsed the Housing Finance Reform and Taxpayer Protection Act, S. 1217, Senators Mike Johanns (R-NE) Mark Kirk (R-IL) Jerry Moran (R-KN) and Dean Heller (R-NV). Senator Saxby Chambliss (R-GA) is also a co-sponsor of S. 1217. They join four Democratic members of the Committee, Senators Heidi Heitkamp (D-ND), Joe Manchin (D-WV), Jon Tester (D-MT), and Kay Hagan (D-NC) behind the bill. This is very string bi-partisan support for the legislation.
Noting the growing bi-partisan support for S. 1217, Senator Warner issued a statement saying that now is the time to act on the legislation. He said that fixing the government’s role in mortgage finance is the final piece of unfinished business remaining from the financial crisis. The bill would require that private market participants absorb the first 10 percent of losses on any mortgage-backed security that purchases a government reinsurance wrap. If this standard had been in place during the crisis, said Senator Warner, taxpayers would have taken no losses at all. The legislation also would dissolve Fannie and Freddie within five years, and transfer their responsibilities to a more modernized and streamlined agency. All of this is done with a duty to maximize returns to the taxpayer, via the Treasury, as Fannie and Freddie’s assets are sold off.
Over the past year, the Senate Banking Committee has held 10 public hearings on this important issue, noted Senator Warner and he and Senator Corker are optimistic that S. 1217 represents a solid framework that can move forward as thoughtful, bipartisan reform.