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.