WASHINGTON -- At press time, a Senate panel was considering a bill that would make help available to those hurt by the subprime mortgage crisis.
The measure, sponsored by Senate Banking Committee Chairman Christopher Dodd (D-Conn.), would provide federal loan guarantees to borrowers with loans worth more than the value of their homes. It would also overhaul regulation of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
Under Dodd's proposal, the Federal Housing Administration would insure mortgages for borrowers deemed less worthy of getting credit if banks forgive some of their debt. It would also increase regulation of Fannie Mae and Freddie Mac, the government-sponsored corporations that buy mortgages from credit unions and banks.
Senate Republicans have opposed the bill as too expensive. Senate rules could be used to prevent its passage even though Democrats hold a majority.
The House passed a similar measure last week, but the margin was not large enough to override President Bush's promised veto.
CUNA and NAFCU have expressed support for providing relief to victims of the subprime mortgage situation. Both have, however, expressed concern that the regulation of Fannie and Freddie don't go so far and leave them with less money to buy mortgages, thus hurting the flow of money to credit unions.
CUNA President Dan Mica last week urged members of the Senate Banking Committee to be sure that any changes don't create unnecessary regulatory burdens that would hinder the development of products that benefit credit unions.
Earlier, NAFCU urged lawmakers not to increase the companies' minimum capital levels or impose caps on the growth of their portfolios.
Fannie Mae and Freddie Mac currently hold combined capital of $83 billion but have considerable debt. Recently, Fannie Mae announced a $2.2 billion loss for the first quarter.