WASHINGTON A bipartisan group of senators led by Sen. Bob Corker (R-TN) is leading a new effort to draft legislation designed to reform the housing finance system, including a plan to wind down the government-sponsored enterprises.
The proposal has been deemed by some as an “ambitious solution” to Fannie Mae and Freddie Mac, which were seized by the government in September 2008, and is widely expected to mirror a recent proposal aired by Edward DeMarco, acting director of the Federal Housing Finance Agency. “Sen. Corker is involved in meaningful conversations with his colleagues to develop a sustainable and pragmatic housing finance model that would finally resolve the GSEs, and he is hopeful that we can deal with this issue in the next few months,” said Laura Herzog, a spokesperson for Corker.
Corker hinted at a Senate Banking Committee hearing in April that his office was collaborating with other lawmakers on a GSE bill that could be in place “very, very soon.”
Representatives from the offices of Sens. Mark Warner (D-VA), Jon Tester (D-MT), and David Vitter (R-LA) confirmed they are working with Corker on GSE reform legislation. Other Senate Banking Committee members are likely to join the effort as well.
In March, Sens. Corker, Warner, Vitter and Elizabeth Warren introduced a bill that would prevent the government from using any increase in guarantee fees by Fannie and Freddie to offset government spending. It also would ban the sale of preferred shares of the firms without congressional approval.
The new proposal is expected to build on a suggestion first outlined by DeMarco earlier this month, which called for the creation of a specially-chartered financial institution that would pool capital from shareholders and guarantee principal and interest payments to mortgage-backed securities holders. The model is similar to Fannie and Freddie’s pre-conservatorship model, but likely would swap an implicit guarantee for an explicit one or set up government insurance structures to address certain challenges.
