WASHINGTON Sen. Elizabeth Warren, D-Mass., urged Banking Committee leaders Thursday to give the panel's members ample time to consider a pending bill to overhaul the housing finance system before bringing the legislation to a markup.
Committee Chairman Tim Johnson, D-S.D., and Mike Crapo, R-Idaho, the ranking member, announced an agreement earlier this week on legislation to wind down the government-sponsored enterprises Fannie Mae and Freddie Mac and replace them with a new government backstop for the secondary mortgage market. Legislative text for their plan, which is based on an earlier bill introduced last summer by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., is expected to be released as early as Friday. The committee is reportedly aiming to bring the bill for a markup before the Senate departs for its spring recess on April 11.
But Warren, a member of the committee who could prove to be a key vote in determining whether the bill reaches the Senate floor, advised Johnson and Crapo against rushing a markup until the committee has had time to engage in a "full, open discussion" on the proposal.
"I hope that after the members of the committee have had an opportunity to read the full bill, they will also have plenty of time to dig into the details and talk with folks like you who have a lot of knowledge about these issues," she told housing advocates at a conference hosted by the National Community Reinvestment Coalition.
Warren said she would "reserve judgment" on the legislation until she reviews the text and considers some key issues of concern.
"We're talking about reshaping a multi-trillion dollar market that affects every American, and these issues are in fact so complicated that it took months for the Banking Committee's leadership to come to an agreement," she said. "Housing finance reform was too important to rush a committee deal on, and in my view, it's also too important to rush a markup on. We should have a full, open discussion before we decide to set out on a new path, and that means members of the Banking Committee should have real time to dig in and consult with people before a markup."
She reiterated some of the priorities that she would like to see in a new housing system. Those include ensuring access for lower-income and rural families and limiting the role of the biggest banks so they do not crowd out smaller lenders.
Warren also took issue with Johnson and Crapo's support for eliminating the GSEs' affordable housing goals, the mortgage giants' longstanding benchmarks for serving lower income residents. Under the new legislative framework, the goals would be scrapped in favor of capitalizing two affordable housing trust funds: the National Housing Trust Fund and the Capital Magnet Fund.
The Massachusetts senator said the housing goals, which have been blamed in some corners for being a cause of the financial crisis, have in fact been "scapegoated." She argued that while the trust funds proposed in the Johnson-Crapo plan are a positive step, they fall short of replacing the housing goals.
The goals and the trust funds "aim at two different challenges: the affordable housing goals help promote homeownership among lower-income and minority families, while the housing trust funds focus mainly on making rental housing more affordable," she said. She added that the funds likely cannot reach all of the 33 million families reportedly helped by the goals between 2002 and 2009.
In the preliminary release of their agreement, Johnson and Crapo said although the plan would eliminate the housing goals, the new system would still "facilitate the broad availability of credit for eligible single-family and multifamily borrowers, monitor consumer and market access to credit, and provide market based incentives and transparency to serve underserved areas."
Whether those measures prove enough to curry the support of Warren and the other progressives on the committee remains to be seen.
"The financial crisis exposed deep problems in our housing finance system, but lower- and middle-income families did not cause those problems, and they should not be asked to bear the brunt of reform efforts," Warren said. "America has been a more prosperous and more socially mobile country because of the benefits of widespread home ownership. We must not lose sight of that fundamental fact as we continue to debate housing finance reform."