The Senate Committee on Banking, Housing, and Urban Affairs approved housing finance reform legislation offered by Committee Chair Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) on May 15 by a vote of 13 to 9. The measure was incorporated as an amendment in the nature of a substitute to S. 1217, the Housing Finance Reform and Taxpayer Protection Act of 2013, authored by Senators Bob Corker (R-TN) and Mark Warner (D-VA).
NLIHC and many other stakeholders had hoped the Johnson-Crapo measure would be approved with more support than was reflected in the ultimate vote. The Johnson-Crapo version of the bill provided for $3.75 billion a year for the National Housing Trust Fund when fully phased on. Unfortunately, the bill was unable to garner support from six key Democratic senators on the Committee: Senators Jack Reed (D-RI), Charles Schumer (D-NY), Robert Menendez (D-NJ), Sherrod Brown (D-OH), Jeff Merkley (D-OR), and Elizabeth Warren (D-MA). The mark-up was initially scheduled for April 29, but was delayed in the hope that the concerns of the undecided senators could be addressed through continued negotiations. However, the six senators on the Committee ultimately chose to hold a unified position and oppose the bill because of a variety of outstanding concerns (see Memo, 5/9). Without the support of at least some of the six senators, it is now unlikely that the measure will further advance through the Senate in the 113th Congress.
At the mark-up, Senator Warren noted that her “no” vote does not mean that she is satisfied with the status quo, and indicated that she will continue to work with others on the Committee toward incorporating changes that will improve access to the system for smaller lenders, and to better assure that access to the market for all credit worthy borrowers.
Senator Brown expressed optimism about the direction in which Federal Housing Finance Agency Director Mel Watt intends to take the agency. Senator Brown indicated that he and others on the Committee plan to meet with Mr. Watt in the near future to further discuss issues related to housing finance system.
Senator Richard Shelby (R-AL), who also opposed the measure, said “no doubt, housing finance reform is long overdue.” Senator Shelby added, however, “I fear that while this legislation is well intended it may complicate an already complicated problem by expanding the role of government.”
Senator Heidi Heitkamp (D-ND), who voted “yes” on the measure, expressed great frustration that the measure is not expected to move to the Senate floor in the near future. Senator Heitkamp said it will be a good day in the Senate “when we pass the bill on the Senator floor. The mark-up, I guess is historic, but where I am from we work until we get it done.” Senator Heitkamp referred to the measure as a great “intellectual work product” and praised the bipartisan nature of the bill’s evolution. “Let’s pass the bill out of Committee and go back to the negotiating table,” she said.
Amendments to the measure were minimal. The manager’s amendments were approved unanimously. Senator Pat Toomey (R-PA) offered three amendments, two of which were withdrawn, including an amendment that would have diverted funds to the affordable housing funds provided for under the bill, including the National Housing Trust Fund (NHTF), to scale up the Mortgage Insurance Fund also created under the bill to the required 2.5% capital reserve level. Senator Toomey said in withdrawing the amendment that he understood that the treatment of the NHTF in the bill was part of a carefully negotiated agreement, and as such, other senators would not be able to support the amendment. Senator Toomey indicated he would pursue the changes included in the amendment at a later time.
White House Press Secretary Jay Carney issued the following statement after the mark-up:
“The Administration welcomes today's strong bipartisan vote in support of the Housing Finance Reform and Taxpayer Protection Act of 2014 through the Senate Banking Committee. Today’s vote is an important step toward achieving a more sustainable housing finance system that helps protect the American dream of homeownership, and we applaud Chairman Johnson, Ranking Member Crapo and Senators Corker and Warner for their leadership on this issue. Today’s vote marks important progress toward completing one of the biggest remaining pieces of post-Recession reform of the financial system.
The President has been clear about his commitment to preserving the American dream of sustainable homeownership for all creditworthy borrowers. That means ensuring that affordable rental options are widely available, and preserving access to mortgage credit during severe downturns while protecting taxpayers from substantial losses in the housing sector. We have worked closely with the Senate Banking Committee to provide policy, technical, and analytical support throughout the process to achieve these goals, and going forward, we will continue to work with the Senate to address affordability and access to broaden support for reform.”
Watch an archived webcast of the markup at: http://1.usa.gov/1nSDhUr