Sen. Heidi Heitkamp is striking an optimistic tone for mortgage finance reform, saying she’s hopeful that a Senate Banking Committee plan to overhaul the market could make it to the chamber floor for a vote this year.
The North Dakota Democrat predicted that the banking panel would hold a vote on a bill by Chairman Tim Johnson, D-S.D., and Sen. Mike Crapo, R-Idaho, the ranking member, in coming weeks, adding that supporters are then likely to push hard for a floor vote.
The committee leaders unveiled a bill earlier this month to unwind Fannie Mae and Freddie Mac and establish a new system of mortgage securities backed by the federal government. The plan builds on earlier legislation by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., co-sponsored by eight additional banking panel members, including Heitkamp.
"If we can get this out of the Banking Committee, which I believe we can, there will be a tremendous amount of pressure to bring this to the floor. That’s the next discussion—can we bring this to the floor? And I think we can," Heitkamp told attendees at an American Bankers Association conference in Washington on Tuesday.
Still, the most immediate hurdle for the legislation is the pending committee vote, which has yet to be scheduled. The bill will need not just a majority vote, but likely near-unanimous support to move forward to the Senate floor.
Heitkamp said the markup is likely to take place the week of April 7, before Congress departs for a two-week break on April 11. Lawmakers who want to make tangible progress on a housing finance reform this year are down to the wire, before attention turns fully to the midterm elections in November.
"My prediction is that we will in fact have a markup before the Easter recess. Some people are saying as early as next week, but I would find that difficult, because I think that anytime you take a product that a lot of people have invested a lot of intellectual capital in, a lot of their time in, and you rework it and you tweak it, there’s going to be some discussion about some of the tweaks," she said. "Hopefully those things will get smoothed out so we won’t have a long and drawn out markup process—we'll be able to move forward."
The lawmaker also poured cold water on a conservative plan currently stalled in the House that would get rid of the government-sponsored enterprises but that would not establish a government guarantee for the secondary market. The Protecting American Taxpayers and Homeowners Act, introduced by Rep. Jeb Hensarling, R-Texas, the chairman of the House Financial Services Committee, has not yet come to a vote on the floor despite being passed out of the committee, due in part to a split in the Republican caucus over whether a federal backstop is needed. Industry groups have lobbied hard against the PATH Act, and have generally been more supportive of the approach now adopted by Johnson and Crapo.
"Thanks in part to a number of the folks who show up and talk about what we need to do in mortgage lending, the PATH Act has had a hard time finding a way to the floor of the House," Heitkamp said. "I don't see the PATH Act moving forward."
She added that with momentum behind the Senate effort gaining, lawmakers in the House could find themselves pressured into signing onto something like the Johnson-Crapo bill. Hensarling has said he is open to negotiating with the Senate, but has not wavered on his support of a system without a government guarantee thus far.
"What happens over in the House—your guess is as good as mine. But with the pressure and with the coalition that's been built around [the earlier Corker-Warner bill], I think you will in fact see a lot of effort to just simply take this to the House and have the House agree to it," said Heitkamp, adding that President Obama would also likely sign such a bill into law.