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Legislators go in circles on GSE reform

At a hearing today, Representative Ed Royce (R-CA) introduced a bill to eliminate the National Housing Trust Fund (NHTF) before a subcommittee of the Housing and Financial Services committee and it passed by a vote of 18-14, along party lines. The bill will be considered by the full committee next.

Although Chairman Garrett (R-NJ) set the stage for a bipartisan exchange on the future of the NHTF, the conversation quickly turned to finger-pointing and what ultimately seemed like an opportunity for members to take positions without actually making any decisions on comprehensive GSE reform.

The NHTF was established as a provision of the Housing and Economic Recovery Act of 2008 and to be funded by annual contributions by Fannie Mae and Freddie Mac. Since the two GSEs went into conservatorship, the fund has not yet been capitalized.

Representative Barney Frank (D-Mass.) voiced his frustrations over Republican inaction on GSE reform, going so far as saying, they “have a resistance to create rental housing assistance” because of an inclination towards homeownership, even if income doesn’t allow for it. Chairman Garrett (R-NJ) said the fact that this hearing was being held shows that Republicans are open to discussing GSE reform. However, Frank was skeptical that a hearing on the NHTF is an effective use of the subcommittee’s time.

On the other side of the aisle but in similar vein, Campbell disagreed with the purpose of the hearing all together, saying that the subcommittee should be debating comprehensive GSE reform, referencing his own bill (Campbell/Peters) and the Miller/McCarthy bill, both of which have received little attention. Campbell warned that by having conversations on eliminating the trust fund without substantive dialogue on the future of Fannie Mae and Freddie Mac, the stability of the housing market is at risk. His comments went mostly unacknowledged.

Trying to find a middle ground, Representative Al Green (D-TX) introduced an amendment that preserves the NHTF, but eliminates the required annual contributions of Fannie Mae and Freddie Mac to fund the program. The amendment did not pass.

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