The Senate Banking Committee may delay a pending vote on reform of government-sponsored enterprises Fannie Mae and Freddie Mac as it looks to acquire further votes, National Mortgage News reported April 14.
Reportedly, Chairman Tim Johnson, D-S.D., and Sen. Mike Crapo, R-Idaho, are working to obtain four additional votes in support of the bill — which so far has 16 supporting votes — before the scheduled April 29 vote.
“With any of these things, once you put it out there, you try to meet the deadline, but there's no hard and fast reason why that has to be the day,” Edward Mills, an analyst at investment bank FBR Capital Markets, told National Mortgage News. “Where it stands right now, there's not a lot of question about whether the bill can pass the committee — it's the margin.”
Johnson and Crapo introduced their reform bill in March. Essentially, the legislation would eliminate the two GSEs and replace them with a completely new housing finance system. Their bill is based heavily on legislation introduced in 2013 by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va.
While the bill maintains a government guarantee in the mortgage market in the event of a major economic crisis leading to catastrophic losses, Senate Banking Committee members still feel they need more support from Democrats in order to get the bill to the Senate floor before November’s elections.
National Mortgage News reported that there are six Democrats who have yet to sign the legislation. They include Sens. Jack Reed, R.I.; Charles Schumer, N.Y.; Robert Menendez, N.J.; Sherrod Brown, Ohio; Jeff Merkley, Ore.; and Elizabeth Warren, Mass.
“The true question is whether a delay would allow Johnson and Crapo to onboard the liberal contingent of the panel,” Isaac Boltansky, a policy analyst at investment firm Compass Point Research & Trading, told National Mortgage News. “There is no doubt that the liberal contingent on the Banking Committee is the most watched group for the ongoing GSE reform effort — they are the ballgame.”
The Democrats in question have been remaining largely mum, save for Elizabeth Warren, who has expressed ongoing concern for access to credit for low-income families and rural residents. While she appears to be the hardest liberal to woo, some analysts feel that having her onboard with the proposed legislation actually could alienate Republican supporters.
“We continue to believe it may be better for the bill if high-profile progressives like Sen. Elizabeth Warren oppose the bill for not doing enough on affordable housing,” Jaret Seiberg, a policy analyst at investment firm Guggenheim Securities, told National Mortgage News. “It may just be too hard for some Republicans to realize that they can support something that a progressive supports.”
Banking industry groups also are concerned about the bill and have been asking that it include prohibitions on aggregators or originators from also serving as guarantors in the new system.