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Reactions to Obama’s plan to restructure the housing market

Resource type: News

Washington Post | [ View Original Source (opens in new window) ]

By Sarah Halzack.  The Obama administration released a white paper on Friday that proposes winding down mortgage giants Fannie Mae and Freddie Mac and lessening the government’s role in the housing finance system.

The Post’s Zachary Goldfarb has a full report on the plan and its potential impact.

The long-anticipated report has prompted responses and assessments from politicians and industry groups in Washington and beyond. Here’s a look at some of them.

Senate Banking Committee Chairman Tim Johnson, a Democrat from South Carolina, didn’t stake out a position on Obama’s plan but said in a statement that he is studying it:

“I am reviewing the new report, and look forward to working with my colleagues and the White House to find bipartisan consensus around sound policy solutions that protect homeowners, investors, renters and the American taxpayers.”

On the other side of the aisle, Rep. Randy Neugebauer (R-Texas), chairman of the House Financial Services Subcommittee on Oversight and Investigations, said he is pleased that Obama’s proposals reduce the role for government in the mortgage industry:

“I am encouraged with the Obama Administration’s acknowledgement that there needs to be significantly more private market participation and private capital in the housing finance market, and their proposed steps to wind down Fannie Mae and Freddie Mac. There are many aspects of the plan that are aligned with my own suggestions.”

John Taylor, president and chief executive of National Community Reinvestment Coalition, gave a mixed assessment of the proposal:

“There is universal agreement with the principle that people who cannot afford homeownership shouldn’t be put in an unsustainable loan. However, the Administration’s proposal may be overly narrowing the window of opportunity for many blue collar and low- and moderate-income people from realizing their dream of homeownership. We appreciate the Administration’s efforts to address the critical need for expanded affordable rental housing.

Tom Deutsch, head of the American Securitization Forum, offered this take:

“We are pleased the Administration understands the importance of proceeding thoughtfully and deliberately in reducing the government’s role in the housing market. We also want to make sure that whatever emerges from this process enables the private sector to fully utilize securitization vehicles. Securitization is key to ensuring the housing market and American homebuyers have access to adequate liquidity at a reasonable cost.”

An alliance of civil rights organizations was critical of two of the options the administration laid out and expressed reservations about the third. The following is an excerpt from a joint statement issued by National Council of La Raza, National Fair Housing Alliance, Center for Responsible Lending, The Opportunity Agenda, NAACP, National Coalition for Asian Pacific American Community Development, National Urban League, National People’s Action, the Kirwan Institute, Bazelon Center for Mental Health Law, PolicyLink and Poverty & Race Research Action Council:

“In its report, the Administration pledges to ensure that all communities and families have access to capital needed for sustainable homeownership and a range of rental options. Of the three options that the Administration proposes, the first two, which call for complete and near-complete privatization, will entirely fail to meet this goal and will instead marginalize communities of color. Congress should reject these two options. The third option, offering catastrophic reinsurance, inspires more confidence than the first two, but lacks important details as to how it would serve all Americans well. As the debate moves ahead and final decisions are made, our civil rights organizations will fight to secure sound lending policies for all Americans, ensuring that the families who have long been poorly served by the market will finally have a fair shot.”

NAACP, National Council of La Raza, National People’s Action, National Urban League, The Opportunity Agenda are Atlantic grantees.

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