WASHINGTON — The Senate Banking Committee passed major legislation to overhaul the housing finance system on Thursday, but observers say a quiet death likely awaits it due to a lack of greater support from key lawmakers.
The bill by Chairman Tim Johnson, D-S.D., and Sen. Mike Crapo, R-Idaho, the ranking member, drew a final vote of 13-9, after weeks of negotiations to bring more Democrats on board. That effort was unsuccessful, but the legislation still passed with bipartisan support.
The plan to unwind Fannie Mae and Freddie Mac and build a new secondary mortgage market backed by an explicit government guarantee is based on earlier work by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., and several other members of the committee.
"After the housing crisis we experienced, real reform is clearly necessary to stabilize the housing system and renew the faith in the American dream of homeownership for generations to come," said Johnson in a press release. "Even though the support was not unanimous, every member on the committee was actively engaged in this collaborative process, and passing this legislation out of committee is only the first step. I look forward to continue working with my colleagues to keep this important process moving forward."
Both CUNA and NAFCU lauded the bill's passage out of committee.
"We applaud the efforts of Senate Banking Committee Chairman Tim Johnson and Ranking Member Mike Crapo and the members of the Banking Committee in advancing housing finance reform," said NAFCU President Dan Berger. "We still have concerns about the bill and its impact on credit unions, including the potential cost of the proposal and whether it would be workable. It is important that any ultimate housing finance reform package work for credit unions and their 97 million members, and we look forward to working with the full Senate to address our concerns should the legislation come to the Senate floor."
CUNA President Bill Cheney noted the importance of housing finance reform for credit unions. "It's critical that government-sponsored enterprise (GSE) reform ensures equal and competitive access for credit unions and other small lenders to the housing finance market — and avoids further concentration of the primary and secondary mortgage markets to Wall Street and the largest of lenders. This legislation takes significant steps toward accomplishing both. Our thanks to Chairman Johnson and Ranking Member Crapo for their leadership."
The legislation passed along with two packages of managers' amendments that included suggested changes by lawmakers, the Obama administration, regulators and others.
--Lisa Freeman contributed to this article
