In a statement for the record before today’s Senate Banking Committee hearing on housing finance reform, ABA recommended nine principles to guide the reform of Fannie Mae and Freddie Mac, which have been in conservatorship for over a decade. The principles cover a range of issues, from the scope and limits of the GSEs’ mission, to capitalization and guarantee requirements, underwriting standards, risk transfers and the GSEs’ relationship to the Federal Home Loan Banks and their programs.
“Legislation should establish directed and limited activities, strong capital standards and a clear set of benchmarks for implementing and meeting those standards,” ABA said. The association added that reform should have clear statutory guidance and not be “overly complicated or uncertain in ways which could disrupt the housing finance system.”
Testifying before today’s Senate Banking Committee hearing were Treasury Secretary Steven Mnuchin, Housing and Urban Development Secretary Ben Carson and Federal Housing Finance Agency Director Mark Calabria.