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User and Registration Fees on New Debt Issues by GSEs
Issue
Imposition of "user fees" on the debt issues or retained portfolios of mortgage-backed securities and non-mortgage investments of the Federal Home Loan Banks (FHLBanks) and other housing GSEs. Removal of the current exemption from the Securities and Exchange Commission (SEC) securities registration fees for Federal Home Loan Bank and other housing GSE debt issues.
Position Statement
ABA opposes the imposition of user fees and registration fees on new debt issues.
Explanation
The Congressional Budget Office (CBO) frequently has recommended, as a spending and revenue option for Congress, that the FHLBanks be charged securities registration fees. In addition, the CBO has suggested that fees be imposed on their investment securities portfolios.
A faulty argument has been made that the exemptions were originally granted to help the then-new organizations gain acceptance by the securities markets and that because acceptance has been achieved, imposition of such fees would create a more level playing field between the GSEs and others in the market. This interpretation is incorrect; the purpose of these "user fees" is to cover the cost of the SEC reviews, which are designed to protect investors. Because of the government/private partnership relationship of GSEs, such reviews are not required or performed. Therefore, imposition of "user fees" or registration fees is neither warranted nor justified. Imposing this burden and cost would unnecessarily constrict funds available for housing and community lending, especially from banks.
These fees, which would be passed on to investors, would be a de facto tax on home ownership and community lending.
Contact for further information: Joe Pigg (202) 663-5480.
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