Senate Banking Committee Hearing Highlights Progress on Housing Finance Reform


SunTrust Mortgage CEO Jerome Lienhard and other witnesses call for action on balanced GSE reform legislation

WASHINGTON, D.C. – September 13, 2013 – (RealEstateRama) — Today’s hearing by the Senate Banking Committee demonstrated a growing consensus on the need to enact housing finance reform legislation. Jerome Lienhard, CEO of SunTrust Mortgage, and other witnesses including economist Mark Zandi, agreed on the need for housing finance reform that protects the taxpayer; allows originators of all sizes to participate; and creates a system with private capital that also ensures transparency and maintains investor confidence in the system. Witnesses agreed that the bipartisan legislation by Senators Bob Corker and Mark Warner is a positive place to start in developing comprehensive reform.

In his testimony on behalf of SunTrust, Lienhard highlighted the need for more private capital in the principal loss position; the need to retain “the basic plumbing of the system that draws in enormous sums of investment capital and provides borrowers with rate certainty.”

“If changes are made to the credit function guarantee, it must work well for investors. It must also operate transparently and with scale,” Lienhard said. “To the extent that private capital is intended to stand before any taxpayer-backed guarantees, the entities and instruments must be subject to regulatory oversight.”

Lienhard testified as a witness during the committee hearing “Essential Elements of Housing Finance Reform.” Other witnesses at the hearing also called for reform that would create a system based on more private capital, but with a catastrophic government backstop that ensures liquidity for popular and stable products like the 30 year fixed rate mortgage.

“This hearing demonstrates that there is a growing recognition of the need for bipartisan legislation to reform the secondary mortgage market and that reform efforts should move forward now,” said John Dalton, President of the Housing Policy Council “We appreciate Jerome’s contributions to the debate on housing finance reform on behalf of SunTrust and other regional banks and we appreciate his leadership and contributions to HPC’s efforts to advance housing finance reform.”

HPC, which represents 31 of the nation’s largest mortgage servicers, insurers and originators, supports a new housing finance system that includes a steady wind-down of government-sponsored enterprises Fannie Mae and Freddie Mac and creates several privately capitalized insurers to replace the GSEs. The new system should be based on several layers of private capital to protect the American taxpayer and include a backstop federal guarantee.

Congress is currently working on two different housing reform bills – one introduced in the Senate by Senators Bob Corker and Mark Warner and the PATH Act by Congressman Jeb Hensarling in the House.
A full version of Jerome Lienhard’s remarks is available here.

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The Financial Services Roundtable represents 100 of the largest integrated financial services companies providing banking, insurance, and investment products and services to the American consumer. Member companies participate through the Chief Executive Officer and other senior executives nominated by the CEO.
Roundtable member companies provide fuel for America’s economic engine, accounting directly for $92.7 trillion in managed assets, $1.2 trillion in revenue, and 2.3 million jobs.

Lisette Mondello
(202) 589-2418

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