As expected, President Barack Obama said this week that he would wind down Fannie Mae and Freddie Mac and replace them with a privatized system in a speech that also voiced support for the Corker-Warner Senate bill that would do the same.
Speaking Tuesday at a construction company in Phoenix, Obama laid out his four core principles for housing finance system reform, with his first objective being to limit the government’s role and allow private capital to take a bigger role in the market.
He made a passing reference to credit unions when he said that “private lending should be the backbone of the housing market, including community-based lenders who view their borrowers not as a number, but as a neighbor.”
Industry trade associations picked upon the remark.
“We appreciate the president’s leadership on seeking solutions to reform our housing finance system and his recognition of the importance of community-based lenders such as credit unions,” said NAFCU President/CEO Dan Berger.
“In any future housing finance system, it is critical that credit unions continue to have unfettered access to the secondary mortgage market and attain fair pricing based on the high quality of their loans,” Berger said.
CUNA President/CEO Bill Cheney also made note of the nod, saying his organization was gratified to see Obama recommended that credit unions and other small institutions have the same opportunity to compete in any future secondary mortgage market. Cheney also said that much of Obama’s plan is consistent with CUNA’s principals for housing finance reform.
The era of bailouts for GSEs is over, Obama said while making his second point. And in his third point, which would placate congressional Democrats who have voiced concerns about the fate of the 30-year, fixed-rate mortgage in GSE reform, Obama pledged to preserve access to the product.
“That’s something families should be able to rely on when they make the most important purchase of their lives,” he said.
Finally, the president said he would strengthen the Federal Housing Administration to help Americans achieve homeownership, and added that the government should continue efforts to support affordable rental housing and fight homelessness, another concern congressional Democrats voiced during reform hearings.
The primary spokeswoman of those Democratic concerns has been Rep. Maxine Waters (D-Calif.), House Financial Services Committee Ranking Member. In a statement, she praised Obama’s plan, specifically lauding his mention of the 30-year fixed-rate mortgage and protection of renters as well as homeowners.
Her gavel-wielding committee nemesis, Financial Services Chairman Jeb Hensarling (R-Texas), said in a statement he also supports Obama’s initiative, another sign that GSE reform has bipartisan support.
“Our plan, the Protecting American Taxpayers and Homeowners Act, puts private capital at the center of the housing finance system; ends the bailout of Fannie Mae and Freddie Mac; and sustains the 30-year fixed rate mortgage–all goals the president today says he supports,” Hensarling said. “Last month, the committee passed this legislation and I look forward to continued debate this fall.”
Obama also said he’s glad the Senate finally confirmed Richard Cordray to head the Consumer Financial Protection Bureau, and scolded the upper chamber for delaying confirmation of Rep. Mel Watt (D-N.C.) to fill the director’s position at the FHFA.