American Land Title Association
Home  >  News Room
News Room


SoftPro is the nation's leading provider of Real Estate Closing and Title Insurance software


Government News

Rep. Baker Calls GSE Proposal ?Meaningful First Step? Toward Taxpayer Victory

October 19, 2000

WASHINGTON ? U.S. Rep. Richard Baker, Chairman of the House Banking Capital Markets Subcommittee, issued the following statement regarding an enhanced disclosure and capital risk management proposal by Freddie Mac and Fannie Mae:

"I am pleased to be joined today by Freddie Mac and Fannie Mae to announce our agreement to a proposal that I believe represents a meaningful first step toward a major victory for American taxpayers. More significant perhaps, and beyond our discussions on the housing GSEs, this proposal, in my opinion, lays the groundwork for a new high watermark of corporate responsibility, market transparency, market self-discipline, and proactive protections against systemic risk.

"Before allowing others here to outline the specifics of the proposal I want to take the opportunity to offer special commendation to Freddie Mac and Fannie Mae for coming forward with this serious offer. Although it may be a minimum standard of conduct to engage in responsible communication, that doesn?t mean it always occurs. I appreciate Freddie?s and Fannie?s openness to the fact that the enormous opportunities afforded them by Congress also bring with them enormous responsibilities.

"My interest in the housing GSEs spans many years, but when I began my legislative crusade in February of this year I had two main goals in mind: first, to accomplish some modicum of enhanced transparency so that markets would have sufficient and clear information of a kind that promotes discipline and thereby ushers in taxpayer reassurance; second, to reform housing GSE safety and soundness regulation to be stronger, more independent, and fully equipped with powers and resources to adequately meet its goal.

"A mere eight months later, I stand here with the GSEs themselves to announce that, together, we are beginning to see eye-to-eye about how to accomplish both goals.

"This proposal plows new ground for a new, cutting-edge model for financial institution self-regulation, one that, if met by other institutions, would soothe market uncertainties the world over. The GSEs should be commended, then, and their investors should be at ease, that they have demonstrated such a commitment to financial risk management. But more importantly, they should be commended for moving beyond the mindset of "managing political risk" and toward cooperation in creating sound public policy.

"Which brings me to the questions of what has not yet been accomplished, and where do we go from here. The voluntary adoption of these components is reassuring. However, in agreeing to this proposal I have not relinquished my congressional obligation to make sure that a real regulator is put in place to monitor the situation. While implementation is voluntary, as Chairman of the subcommittee of jurisdiction it?s my duty and intent to monitor the implementation of this proposal and judge it accordingly.

"I have begun to address the question of a new regulator, and I have discussed the possibility of oversight taking place within the Treasury or even the Office of Thrift Supervision. But these are details for another day. I have concerns that the current regulator is not funded in the same manner as other financial institution regulators, which has resulted in a regulatory mismatch with the sophistication of the GSEs. Further, with the entry of the FHLB system into the mortgage finance plan, there is a need to harmonize regulatory standards for all housing GSEs. It may be advisable to authorize the creation of a comptroller of the GSEs, or to just move regulatory responsibility into the Department of Treasury. I will continue to consider these options, with the expectation that an announcement will be made by the end of the year on this issue.

"Also, there is not a ?new products approval? process in this proposal. I am concerned about the current regulatory capacity to monitor new products. I fully expect the GSEs to exercise very thorough review before initiating a new line of business and to use their valuable subsidy to facilitate home ownership. But vigilant oversight is required on this issue.

"Suffice it to say I will be introducing legislation calling for the creation of a new regulatory body whose features will include at least the following characteristics: that it is independent; that it has resources established apart from the appropriations process; and that it has prompt corrective action authorities and power to enact them.

"In closing I want to express my appreciation to Freddie and Fannie and for their good work, but also for their courage in making a good faith public offer, and I might add, in writing. This is an important discussion about legitimate areas of concern, to protect taxpayers and on which there was virtual agreement by every financial regulator. This has not been just a lot of political noise accompanied by headline risk. This agreement is a substantive response to legitimate public policy concerns.

"I extend my appreciation for the ability of Freddie and Fannie to put forward such a responsive proposal. I look forward to working with them in the days ahead in our continuing effort to mold good public policy. After all, good public policy will not only be good for the taxpayer, but the marketplace as well. And in this case, good public policy will be welcome news to homebuyers everywhere."

Source: House Committee on Banking and Financial Services



Print Friendly


How To Find Us:
American Land Title Association
1828 L Street, NW, Suite 705
Washington, DC 20036-5104
P. 202.296.3671 F. 202.223.5843
www.alta.org
service@alta.org
Copyright © 2004-2014 American Land Title Association. All rights reserved.
SecurityMetrics for PCI Compliance, QSA, IDS, Penetration Testing, Forensics, and Vulnerability Assessment