S 1217, the Johnson-Crapo housing reform
bill passed the
Senate Banking Committee today.
Committee chairman Tim Johnson (D-SD) had hoped to send the bill to the
whole Senate with at least 16 of the 22 committee members voting for the
committee's recommendation, but was able to obtain only a 13 to 9 favorable
vote. Several Democrats including
Elizabeth Warren (MA), Jeff Merkley (OR), Sherrod Brown (OH), and Jack Reed
(RI) had spoken out strongly against the bill largely because it lacks a
mandate for affordable housing.
The bill would, like an earlier Senate bill
authored by Mark Warner (D-VA) and Bob Corker (R-TN) and the so-called PATH Act
awaiting a vote in the House, wind down government sponsored enterprises Fannie
Mae and Freddie Mac. Unlike the PATH Act
which would provide loan guarantees only for FHA loans, S 1217 would establish
a new agency, the Federal Mortgage Insurance Corporation (FMIC) which would
regulate a secondary market for selling loans and mortgage-backed securities
and provide a catastrophic guarantee that would kick in only after mandatory levels
of private capital were exhausted.
Observers feel that Johnson needed a
stronger committee vote, especially one with more yes votes from Democrats in
order to convince Senate Majority Leader Harry Reid to bring the bill to the
floor. The PATH Act which was voted on
favorably by the House Financial Services Committee has similarly been waiting
for several months for a full House vote but Speaker John Boehner has thus far
failed to bring it to the floor. Those
observers feel that PATH, if it pass the House would not do so in the Senate
because it virtually eliminates the government from housing finance. Similarly the Senate bill stands little
change in the house because of the catastrophic FMIC backstop.
Prior to the vote but apparently
anticipating its outcome Johnson released a statement which said in part: "When
we opened up this markup two weeks ago it appeared we were very close to
gaining additional bipartisan support for this bill. That being the case, I
consulted with Ranking Member Crapo and other members of the Committee and
decided to recess for a short time to take one last shot at finding additional
support. After exhausting every option to try and strike a deal quickly that
would add votes at the committee level, I have concluded it is best to move
forward with the majority we have now in committee and continue working to
build support for the bill as it moves to the floor."