Rep. Maxine Waters' plan to let banks control a sole entity to issue government-backed mortgage securities is dead-on-arrival, but her proposal still significantly alters the housing reform debate.

A different housing finance bill in the Senate—which envisions private-market competition for securitizing loans—has greater bipartisan support and is scheduled for a Banking Committee vote next month. But Waters' bill, which would create a single cooperative—in which banks have an equal vote, regardless of their size—to issue securities, may still influence liberal Democrats and other lawmakers skeptical of the Senate legislation but who are crucial to getting a final bill passed.

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