Print this page
Print this page
|
Close this window
Close this window

 

JOHNSON ON CREATING A STRONG SECONDARY MORTGAGE MARKET REGULATOR

November 21, 2013

WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing titled “Housing Finance Reform: Powers and Structure of a Strong Regulator.”

Below is Chairman Johnson’s statement as prepared for delivery:

“I call this hearing to order.

“This hearing continues the Committee’s effort to examine housing finance reform proposals. Today we will explore the current regulatory structure related to the secondary mortgage market and survey the issues related to the proposed regulatory structure in legislation.

“S. 1217 creates a new regulator—the Federal Mortgage Insurance Corporation or FMIC. This new regulator would wear many hats, as the operator of the insurance fund, the regulator of the Home Loan Banks, mutual organization, and Common Securitization Platform, and authorizer of issuers, servicers and guarantors with regard to guaranteed mortgages.

“Because the structure of the housing finance system is complex with a wide range of market participants taking part, it is critical that we have a strong, effective regulator. Any piece of legislation will need to clearly detail the structure, functions, and powers of the new regulator. This regulator will need to coordinate closely with a variety of other federal and state regulators to be effective, and have flexibility to set appropriate standards and rules. In addition, we need to consider whether the new regulator should regulate for safety and soundness, conduct exams, set capital standards, play a counter-cyclical role, crack-down on bad actors through enforcement actions, and resolve failed institutions it regulates.

“We should not forget that we have experience with a weak secondary mortgage market regulator. OFHEO was widely viewed as weak, which contributed to the problems at Fannie and Freddie and Congress created FHFA in 2008 in response. We cannot afford to return to the days of weak regulatory oversight of the secondary mortgage market, so Congress should be clear and explicit about the responsibilities and range of tools any new regulator should have.

“Today’s witnesses bring a wealth of experience to this important conversation. They will outline essential tools needed by the new regulator, as well as important lessons they have learned as regulators of the deposit insurance fund, insurance companies, and the secondary mortgage market.

“We are all aware that housing is a key part of our nation’s economy. A well-equipped, appropriately structured regulator will provide certainty to market participants and ensure a strong and stable housing finance system that provides mortgage credit to Americans across this country.”

-30-

Print this page
Print this page
|
Close this window
Close this window