GSE reform legislation introduced
Just before their hearing on Government Sponsored Enterprises (GSEs), the two principal House Chairs, GSE Subcommittee Chair Richard Baker (R-LA-6) and full Financial Services Committee Chair Michael Oxley (R-OH-4) introduced H. R. 1461 (link in PDF), entitled the “Federal Housing Finance Reform Act of 2005.” With as many pages as the most stable isotope of uranium, this is a major drafting effort, one that will certainly attract continuing attention. Some very fast highlights:
- Creates a new regulatory entity (”New Regulator”), the Federal Housing Finance Agency (FHFA) — no connection whatsoever to soccer’s governing body — that replaces OFHEO and the Federal Housing Finance Board.
He won’t be the regulator … but he knows plenty about mismanagement!
- Allows the New Regulator to direct GSEs “to dispose of or acquire any asset or obligation … consistent with safe and sound operation of the enterprise.”
The “or acquire” is very intriguing ….
- Does not explicitly cap GSE balance sheet growth — but allows the New Regulator discretion to do that.
- Does move the affordable housing goal function into the New Regulator.
The scale and comprehensiveness of the proposal — and its co-sponsorship by the full Committee Chair, a clear signal — suggests that it will likely become the magnet for all proposals, attracting amendments from many directions. Its evolution will thus encapsulate the debate and changing perceptions.
When I’ve been through the proposal in detail, I’ll score it against Fed Chairman Alan Greenspan’s recommendations, and the even blunter testimony of Treasury Secretary John Snow.
(Hat tip: Mike Cohen, NCSHA)
