Senator Bob Corker, a member of the Senate Banking Committee, today issued the following statement on the release of the nonpartisan Congressional Budget Office (CBO) report on the Housing Finance Reform and Taxpayer Protection Act of 2014 (S.1217), which passed the Senate Banking Committee on May 15 in a 13-9 bipartisan vote.
“Today’s CBO report further confirms that the bipartisan bill passed by the Senate Banking Committee in May is a win-win for the American taxpayer and should serve as the framework for how our housing finance system should look in the future,” said Corker. “This bill not only protects taxpayers against future losses, but it also reduces the deficit by $58 billion over 10 years and creates a more competitive, dynamic housing finance system. It is time for our country to move beyond the status quo and finally end the failed model of private gains and public losses.”
According to the report, “CBO estimates that enacting the bill would decrease federal deficits by $58 billion over the 2015-2024 period.” Additionally, “CBO expects that the government would take on less risk under FMIC guarantees than it would from continued operation of the GSEs under current law.”
In 2008, Fannie Mae and Freddie Mac were taken into government conservatorship and given a $188 billion capital injection from taxpayers to stay afloat. As a result, the private market has almost completely disappeared, and so nearly every loan made in America today comes with a full government guarantee. Despite this unsustainable situation, there still has been no real reform to our housing finance system since the financial crisis.
In June 2013, Corker and Senator Mark Warner (D-Va.) introduced S.1217, which gained the support of 10 Senate cosponsors, to strengthen America’s housing finance system by replacing government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, with a privately capitalized system that preserves market liquidity and protects taxpayers from future economic downturns.
In addition to Senators Corker and Warner, Chairman Tim Johnson (D-S.D.), Ranking Member Mike Crapo (R-Idaho), Senators Tom Coburn (R-Okla.), Mike Johanns (R-Neb.), Jon Tester (D-Mont.), Dean Heller (R-Nev.), Heidi Heitkamp (D-N.D.), Jerry Moran (R-Kan.), Kay Hagan (D-N.C.), Mark Kirk (R-Ill.), and Joe Manchin (D-W.V.), voted in favor of passing S.1217 out of the Senate Banking Committee.