WASHINGTON — The chance of a housing finance reform bill moving in Congress this year is seriously in question after six key Democrats have apparently rejected the plan offered by Senate Banking Committee leaders.
But CUNA is still pushing full steam ahead with its support for the effort.
The six lawmakers — whose support was crucial in getting broad backing for the legislation authored by committee Chairman Tim Johnson, D-S.D., and top Republican Mike Crapo, R-Idaho — were said to be on the fence. But now that they have reportedly given thumbs down for the plan, observers said the bill is likely doomed even if the committee passes it by a slimmer margin.
But CUNA said it's not over 'til it's over.
"There are a couple of things to keep in mind here," said Ryan Donovan, CUNA SVP of legislative affairs during a conference call Monday morning. "This bill enjoys the support of the majority of the committee, so it will make it out of committee. The question is how strong will the vote be coming out of committee. Until there's a vote, we won't know the outcome of the vote."
Moreover, Donovan suggested, the death of this bill hardly means the death of housing finance reform.
"Regardless of the strength of the vote, that doesn't mean housing finance reform is dead," he said. "We're going to stay engaged until the end."
But the potential death of this bill will still be a hit to reform efforts.
"The likelier scenario is that this passes with 12 or 13 votes and dies a quiet death," said Brian Gardner, a policy analyst with Keefe, Bruyette & Woods. "The principals and [Department of Housing and Urban Development] Secretary Shaun Donovan may give an occasional speech praising the bill and creating momentum, but behind scenes it doesn't go anywhere. By late July people realize it's over and finished for 2014, and they turn their attention to other matters."
The committee is still said to be moving toward a vote on the bill soon, but likely does not have enough momentum to make it to the Senate floor this year, if those six lawmakers have moved from "on the fence" to "decidedly against."
"There are a number of issues that have been expressed," Donovan observed. "There are concerns over the role and power of the largest players in the secondary market. And affordable housing issues are also a big concern."
And other factors reduce the likelihood of another legislative push advancing in the near future to reform the finance structure now dominated by the government-sponsored enterprises Fannie Mae and Freddie Mac.
The Johnson-Crapo bill would have wound down Fannie and Freddie, replacing them with a new private securitization platform and explicit government backstop.
With Johnson stepping down next year, the committee gavel will pass to another chairman. That, combined with the distraction of midterm and then presidential election politics, could mean it is anyone' guess when momentum reemerges.
"If Congress fails to enact housing finance reform legislation in 2014, we believe the odds are only 10% for adoption of the legislation in 2015 or 2016," said Jaret Seiberg of Guggenheim Securities in a recent client note.
Talks over the bill reportedly stalled out on last Thursday after the group of six Democrats decided to oppose the legislation absent major revisions, according to several sources. The plan, which builds on earlier work by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., has enough existing bipartisan support from panel members to just pass it out of the committee, with a vote expected in coming days. Democrats' decision not to back the bill was
Lawmakers, staff, stakeholders and Obama administration officials had been negotiating in earnest for weeks leading up to an earlier planned April 29 markup. But that vote was postponed at the last minute in the hopes of bringing on several additional members.
Some familiar with the process expressed surprise at the abruptness of the decision by the six Democrats following what had seemed like productive discussions.
A Senate aide familiar with the talks said that lawmakers were "really close to a deal" before the group of Democrats decided together not to back the legislation.
"Every concern that was raised we'd found a solution for," the aide said, adding that the development suggests lawmakers in the Democratic caucus support preserving Fannie and Freddie. "It begs the question of whether some members are just completely satisfied with the status quo."
