Senator Seeks Feedback on How to Preserve GSE Multifamily

Among things one of the authors of Corker-Warner government-sponsored enterprise reform Senate bill wants feedback on is how to structure reform such that it does not disrupt the GSEs’ involvement in the multifamily market the bill seeks to preserve, he said at a Bipartisan Policy Center meeting Wednesday.

This piece of the business “didn’t get Fannie or Freddie into trouble,” said Sen. Mark Warner, a Virginia Democrat.

Sen. Bob Corker, a Tennessee Republican, expressed regret that the acting director of the GSEs’ regulator, Ed DeMarco, may be replaced soon by Rep. Mel Watt, a North Carolina Democrat, who has faced opposition from Corker and other Republican senators, citing his lack of experience.

But Warner said Watt “has a deep background in this area.”

One thing the two said they do agree on is what they call the bill’s pragmatic approach, which aims to take a middle road between those who call for the GSEs’ dissolution and those who call for their continuation.

“I think our bill strikes the appropriate balance,” Corker said.

Warner said a BPC paper on GSE reform “influenced a lot of our thinking.”

He said he has heard some argue for maintaining the status quo when it comes to the GSEs but believes the public sector risk exposure involved makes this “totally unpalatable,” but said they need to be preserved.

“We need that government backstop,” he said. Warner added that “the human capital expertise in those institutions has a very important role to play” in their new structure.

Corker said he believes this is a good time to try to move the legislation forward as the legislative calendar is “fairly open” and officials are concerned this is “the one piece of unfinished business” in financial reform not addressed by the Dodd-Frank Act.

But “the window is closing,” he said.