Elizabeth Warren, allies may kill Johnson-Crapo

by Ryan Smith09 May 2014
Six key Democrats have refused to support a bill that would wind down Fannie Mae and Freddie Mac, according to reports.

Support from the six senators was crucial, and their opposition deals a serious blow to the bill, according to a Bloomberg report. The legislation, written by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho), would replace Fannie and Freddie with a new federal mortgage insurer and move more risk onto the shoulders of private capital.

However, the six key senators – Elizabeth Warren (D-Mass.), Charles Shumer (D-N.Y.), Sherrod Brown (D-Ohio), Jeff Merkley (D-Oregon), Robert Menendez (D-N.J.) and Jack Reed (D-R.I.) – said the bill needed major revision, according to Bloomberg. They  felt the structure of the new federal reinsurer was problematic and that the bill didn’t contain sufficient support for affordable housing goals. But changing the bill to address those issues could erode Republican support, Bloomberg reported.

That means federal mortgage reform is “effectively dead” until at least 2015, Isaac Boltansky, policy analyst for Compass Point Research and Trading, told Bloomberg.

“The Johnson-Crapo package will still likely clear the committee, but without any of the six targeted Democrats signing on it is highly doubtful that the measure will get a floor vote,” Boltansky said.

Sean Oblack, a spokesman for Johnson, said in a statement that the senator would continue trying to build support for the legislation.

“We have made significant progress bridging the divide among those previously undecided, and the committee vote is just a first step,” Oblack said. “Those involved in the negotiations have indicated they are interested in continuing to work together to try and find common ground, so the Banking Committee will keep working after favorably reporting out the bill next week.”

COMMENTS

  • by Joel Epstein | 5/9/2014 11:06:21 AM

    Thank you Sen Warren. The best thing the government can do is release the GSE's from bondage. Put some safe guards in there to avoid a repeat of 2008 and let them do what they do best. Provide private capital and liquidity in the market place.

  • by Jeff Bode | 5/9/2014 11:15:33 AM

    I am glad the Democrats have been able to bring some sense into the housing sector. The Republicans solution was let the big banks do this and charge what they want without competition.

  • by Nathan Sims | 5/9/2014 11:59:17 AM

    A viable housing market is essential to America's economic strength and growth. Key elements to home ownership for the average American are reasonable down-payments, low interest rates and 30 year fixed mortgages. Fannie and Freddie have contributed greatly toward making this happen. They no doubt need some major overhaul but I hope our Senate and House leaders don't through out the baby with the bath water.

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