For Immediate Release
October 25, 2017
ABA Media Contact: Sarah Grano
(202) 663-5470
Email: sgrano@aba.com​
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ABA to Congress: GSE Reform Essential to Stability of Housing Finance

​WASHINGTON — The American Bankers Association outlined a set of key principles that should guide GSE reform, and explained why legislative action is needed to preserve access for lenders of all sizes and from all regions of the country in testimony before the House Financial Services Committee today. Brenda Hughes, senior vice president and director of mortgage and retail lending for First Federal Savings of Twin Falls, Idaho, testified on behalf of ABA. 
 
Hughes testified that GSE reform and bank access are critical issues affecting our country, as Americans have used long-term, fixed-rate mortgages for 70 years. Hughes noted that this product’s availability relies on Fannie Mae and Freddie Mac providing access to the capital markets for primary market lenders.
 
“These legislative reforms are critical,” Hughes said. “Congress has an essential role in providing the certainty necessary to ensure long-term stability of the housing finance system.”
 
Hughes reviewed ABA’s guiding principles for GSE reform, which were developed with input from bankers at institutions of all sizes across the country, and are fully detailed in her written testimony. 
 
“Reform need not be radical or extreme, but comprehensive. Legislation need not create an entirely new secondary market structure,” said Hughes. “In fact, guided by these key principles, we believe that relatively tailored legislation that takes a surgical approach to making necessary alterations to the current system is desirable and can achieve needed comprehensive reform.”
 
She explained that GSEs must be strictly confined to a secondary market role; agree to support all segments of the primary market; carry an explicit, fully-priced and fully transparent guarantee from the federal government for all mortgage backed securities; be capitalized appropriately; and have sound and fair underwriting standards. Additionally, any reforms need to preserve the “To Be Announced” (TBA) market, consider and protect the vital role played by the Federal Home Loan Banks, allow Credit Risk Transfers required by FHFA to be continued and expanded, and require any affordable housing efforts undertaken by the GSEs to be delivered through and driven by the primary market.
 
Hughes emphasized the need to act quickly on legislative reforms so that past abuses are not repeated.
 
“Congress should not defer action any longer,” said Hughes. “Nine years of conservatorship is more than enough.”
 
For a copy of Hughes’ full written testimony, please click here.
 
The American Bankers Association is the voice of the nation’s $17 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $13 trillion in deposits and extend more than $9 trillion in loans.
 
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