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.