March 16, 2011
JOHNSON STATEMENT ON HOUSING REFORM HEARING
WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing entitled “The Administration’s Report to Congress: Reforming America’s Housing Finance Market.”
Below is Chairman Johnson’s statement as prepared for delivery:
“I would like to thank Secretary Geithner and Secretary Donovan for coming before the Committee to discuss the Administration’s white paper: Reforming America’s Housing Finance Market. In February, I issued a committee agenda which stated housing finance reform would be one of my top priorities. Today’s hearing provides us an opportunity to start a long term discussion with top Administration officials about the future of housing policy in America.
“We are here today to get down to the work of determining how our housing finance system should function. I want to emphasize that the purpose of this hearing is NOT to lay blame for the housing crisis – nor is it to revisit every vote taken in this Committee before and during the crisis. We are not here today to merely point fingers and score political points. There is plenty of blame to go around. Members of both parties, Democratic and Republican Administrations that shunned regulation and pushed homeownership, loan originators, investors, regulators, and the GSEs themselves all contributed to the formation of the housing bubble and its collapse. Despite some persistent talking points to the contrary, the Financial Crisis Inquiry Report – including the dissenting views of Keith Hennessey, Douglas Holtz-Eakin and Bill Thomas on page 437 – concluded that “Fannie Mae and Freddie Mac did not by themselves cause the crisis” – in fact, others point out they lagged behind Wall Street.
“However, because Fannie Mae and Freddie Mac, along with the Federal Housing Administration, provided a backstop to the private market, mortgages continued to be available even as credit dried up in other sectors. According to Moody’s Chief Economist, Mark Zandi, “this government backstop is one of the most important reasons why the economy suffered a Great Recession, and not another Great Depression.”
“Today, Fannie Mae, Freddie Mac and the FHA account for more than 90 percent of the mortgages in the country. Determining the proper level of government involvement in the mortgage market is just one of the questions before this Committee, and it is one that we need to thoroughly and carefully examine. As we consider our options in reforming the housing finance system, there are other questions we must answer:
· Do we want to preserve the availability of affordable, 30-year, fixed-rate, prepayable mortgages?
· Should lenders have equal access to the secondary market?
· Will a new structure provide equal access for all qualified borrowers and market segments – including rural areas – to the mainstream housing finance system?
· Should we have stable, liquid, and efficient mortgage markets for single family and multifamily housing?
· How will a new structure protect taxpayer dollars?
“We must find workable solutions that protect current homeowners and preserve the option of responsible homeownership for future buyers.
“The report before us today is a valuable starting point for this discussion and I would like to thank Secretary Geithner, Secretary Donovan and the staff at the Treasury Department and HUD for their work putting it together. I look forward to your testimony, and to a constructive discussion of the challenges ahead of us.”
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