Senate Banking Committee Approves Two Housing Bills
On Thursday, July 28, the Senate Banking, Housing and Urban Affairs Committee marked up two housing-related bills: the Federal Housing Enterprise Regulatory Reform Act of 2005 (S. 190, a.k.a. GSE reform bill) and the Meeting the Housing and Service Needs of Seniors Act (S. 705). Both bills were reported favorably by the committee and now await action on the Senate floor.
There are key differences between the Senate and House versions of the GSE reform bills. The Senate Committee bill does not include an Affordable Housing Fund like H.R. 1461. Also unlike H.R. 1461, the Senate bill limits on the size of Fannie Mae and Freddie Mac’s investment portfolio for reasons other than safety and soundness–a provision which the Senate Banking Committee Democrats do not support. Alan Greenspan, Chairman of the Federal Reserve, testifying on July 20 before the House Financial Services Committee, said H.R. 1461 does not do enough to limit Fannie and Freddie’s portfolios, which he argues pose a threat to the financial system. Mr. Greenspan did not cite any concerns with H.R. 1461’s Affordable Housing Fund proposal, however. Additionally, H.R. 1461 sets more aggressive multifamily housing goals for the GSEs.
S.705, introduced by Senator Paul S. Sarbanes (D-MD), would establish a high level executive office to better coordinate housing programs and related services so that senior citizens can age in place and access needed related services. It creates the “Interagency Council on Meeting the Housing and Service Needs of Seniors,” which is modeled on the Interagency Council on Homelessness.
Update on House GSE Reform Bill
House Financial Services Committee Chairman Rep. Michael Oxley (R-OH) is pushing for H.R. 1461, the Federal Housing Finance Reform Act of 2005, to be considered on the House floor at the earliest possible date. Rep. Oxley has proposed several changes to the bill to ensure that money allocated to the Affordable Housing Fund contained in the bill will be used solely for affordable housing production, prohibiting political activity, advocacy, and lobbying. However, full House action on H.R. 1461 has been delayed because of a jurisdiction claim by the House Judiciary Committee, which was granted authority to review the bill until September 16 due to the criminal penalty provisions it would impose.
Also, the Congressional Budget Office (CBO) issued a cost estimate report for H.R. 1461 on June 30. In the report, CBO estimates that between 2006 and 2015 the Affordable Housing Funds’ revenues would increase by about $5.1 billion and direct spending would increase by $5.4 billion, for a net increase to the federal budget deficit of $300 million. To address the CBO cost estimate, Rep. Oxley has been circulating a number of proposed compromises including sunsetting the funds after five years and/or reducing the amount of Fannie and Freddie’s after-tax profits going to the fund.
House Holds Hearing on the Future of Terrorism Insurance
On Wednesday, July 27, the House Financial Services Committee held a hearing to discuss the future of terrorism insurance. Those testifying before the committee included insurance authorities from the city governments of New York City and D.C., insurance industry groups, and consumer groups. Most supported the Terrorism Risk Insurance Act of 2002, which is set to expire on December 31, 2005. However, witnesses were divided in their support for reauthorizing the law, with some wanting private insurers to handle the terrorism insurance market without government support and others wanting the act reauthorized with certain modifications.
