Bipartisan Support Sought for Sweeping Changes to U.S. Financial Regs

Boxing Gloves Copyright Ljupco Smokovski — Copyright: Ljupco Smokovski

Senate Banking Committee Chairman Richard Shelby (R-AL) said this week that he is continuing to work with his colleagues on reaching bipartisan consensus on his "work in progress" draft of the “Financial Regulatory Improvement Act of 2015.” The draft bill changes a number of provisions of the Dodd-Frank Act of 2010, takes baby steps towards legislation that addresses reform of Fannie Mae and Freddie Mac (the GSEs), and increases oversight of the Federal Reserve. The bill appears to have no provisions that directly impact the multifamily industry even though it’s far-reaching.

The legislation provides regulatory relief for community banks, redefines the Systematically Important Financial Institution or SIFI designation for larger banks, changes the Financial Stability Oversight Council, and modifies membership access to the Federal Home Loan Banks. It includes various pieces of legislation that drew bipartisan support in the last Congress.

The Fannie and Freddie portion of the bill includes provisions in Senator Bob Corker’s (R-TN) proposed “Jumpstart GSE Reform Act of 2013,” which prohibit Treasury from “selling, transferring, relinquishing, divesting or in any way disposing of” its senior preferred stock holdings in the GSEs. They also include a prohibition on using guarantee fees (G-fees) - that Fannie and Freddie charge lenders - to offset government spending. Other sections included in the bill addressing GSE reform only impact the single-family market. In an interesting contradiction, the Senate bill to extend the highway trust fund looks to the G-fees to pay for some of the costs of extending the fund.

In the past, NMHC/NAA have spoken out in opposition to raising G-fees to pay for unrelated spending by Congress. The G-fees are there to protect against credit losses and to protect the taxpayer. We will be continuing to closely monitor activities on the bill when Congress returns to Washington in September.

Dave Borsos dborsos@nmhc.org

Bernard Fulton bfulton@nmhc.org

Bipartisan Support Sought for Sweeping Changes to U.S. Financial Regs

July 31, 2015

Staff Resource

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