December 17, 2013
WASHINGTON – Senate Banking Committee Chairman Tim Johnson (D-SD) today gave the closing remarks at the Bipartisan Policy Committee’s event titled “A Forum on the Role of Private Capital in a Reformed Housing Finance System.”
Below are Chairman Johnson’s remarks as prepared for delivery:
“Thank you for that kind introduction. It is good to be with all of you today.
“I want to thank the Bipartisan Policy Center for hosting this event. The BPC has done great work elevating the issue of housing finance reform. Its report on, “Housing America’s Future: New Directions for National Policy”, which Senator Martinez testified about at one of our early hearings, along with the bill put forward by Senators Corker and Warner, have built momentum for reform and shown that there is bipartisan support for a government guarantee. It is efforts like these that provided the Banking Committee a good starting point and it gives me hope that bipartisan consensus is possible.
“From the start, I have believed that if housing finance reform is to succeed, it would need to be well-vetted and have broad, bipartisan support. That’s why I have coordinated closely with Ranking Member Crapo every step of the way. We recognize that this is a complex issue and that meaningful reform requires an in-depth committee process. After all, the housing finance system accounts for nearly 20 percent of the American economy, so the importance of getting this right cannot be overstated.
“With that fact in mind, we put together an extensive series of briefings and hearings where we heard from a wide-range of housing experts and advocates, market participants, regulators, administration officials, and others to get their perspectives on the essential elements Congress must include in legislation to get this right. Housing finance reform continues to be the Committee’s top priority, and because of our inclusive, deliberative process, we have more buy-in on the importance of reform from members on both sides of the aisle, the Administration, those in the housing industry and housing advocates.
“Through this process, we identified a number of areas where additional work was needed. For example – private capital, which was the focus of today’s discussion – has attracted its fair share of attention and debate. Just yesterday, we held a hearing where we learned about concerns with the structure of the government guarantee and how we can transfer credit risk to private capital in a first loss position. Another hot topic has been setting the threshold for the amount of private capital necessary in the first loss position. And there have also been concerns about private capital only showing up in good times, but for the system to work and protect taxpayers, we need to find a way to make sure it will still be there when the going gets tough.
“Beyond private capital, we are also working to address concerns about affordability, regulatory structure, small lender access, multifamily housing, servicing, private label securitization, and developing a thoughtful transition plan.
“Along the way, we have received constructive input from many interested parties. Through our inclusive process, we solicited ideas from all members of the committee, the administration, and stakeholders on all sides, and the feedback we have received so far has been informative and useful as we put pen to paper. Having just concluded our series of hearings yesterday, our full attention is now on drafting and negotiating a bipartisan compromise. But these areas of concern have made it clear we have our work cut out for ourselves.
“To that point, we are not as far along in the committee process as I had originally hoped we would have been at this time. We were thrown a couple of curveballs over the last few months including a 16 day government shutdown and a couple of weeks of unanticipated congressional recess. Though the committee continued to work on housing finance reform through all of this, these curveballs did delay some conversations.
“However, I was never going to let this process be dictated by aspirational, and frankly arbitrary, deadlines. When I set out to tackle housing finance reform, my primary goal was to get it right – not get it done hastily. Today, I remain fully committed to finding agreement with Ranking Member Crapo to move housing finance reform forward in committee, and I continue to be bullish on our chances.
“I take pride in the fact that the Senate Banking Committee is one of the few places in Congress where bipartisan cooperation still takes place. And a large share of the credit for that should go to Ranking Member Crapo who has been an exceptional partner. Equally as important, our staffs also work just as well together, and they continue to work side-by-side, night and day to get us to the finish line.
“The Banking Committee members deserve credit too. Members on both sides of the aisle from our most senior to our newest have all been extremely engaged on this issue which has been critical to maintaining the momentum necessary to push forward with reform.
“While my appreciation for what an immense task this is has grown throughout this process, so has my appreciation for how important it is for us to act. Knowing how many others, like all of you here today, share that appreciation causes me to grow more optimistic each day that we will find a way to move a responsible housing finance reform measure forward.
“Thank you for allowing me the opportunity to speak to you today and thank you all for your meaningful contributions to this important effort.”