Sen. Bob Corker is a folksy, charming guy. The co-author of a reform bill to “resolve” the crisis at Freddie Mac and Fannie Mae, he told our Mortgage Regulatory Forum recently that he would resist attempts to weaken a 10% private capital requirement for the GSEs in his bill.
The Republican senator from Tennessee illustrated his point by saying, “I was a debt junkie once in my private life, too.”
It may be that the co-author of the Corker-Warner reform bill won’t get his way. What is our federal government (under either political party) except the biggest debt junkie in the land?
Efforts to detox always seem derailed by a new war somewhere or by a clunky non-fix like the sequester. At best we can hope the new GSE(s) will be debt jugglers.
The good news is Corker thinks it “likely” that there will be action on Freddie Mac and Fannie Mae in this Congress. (The “draw” on the taxpayers by the Federal Housing Administration might make one want to include the stability of Ginnie Mae as well, perhaps as the surviving federal housing entity.)
Corker acknowledges that the reform bill working its way through the House of Representatives doesn’t look much like the Corker-Warner bill. But he is hopeful that the final House bill “may move closer to the Senate version.” And he warned “the biggest threat is inaction.”
Many of the sessions at our valuable conference looked toward operational risk and compliance challenges, both now and in the future. The Consumer Financial Protection Bureau had three speakers at the show, including director Richard Cordray. The CFPB seemed to want to let lenders know what to expect from bureau exams and how to deal with the nine servicing rules it announced earlier this year and issued a final rule on just recently.
Attendees of the show seemed to be eager to learn what was necessary to be in compliance with an avalanche of new rules and regs being heaped on them (some of them with deadlines as soon as Jan. 10 of next year). Some were apprehensive, others more sanguine.
But in looking back over the checkered past of boom, bust and subsequent regulation, it has never been the case that the new regulatory landscape made it impossible for lenders to be profitable. The same thing will happen again.
