The topic of housing finance reform has been revived as of late as analysts and stakeholders debate what would be the most effective way to end the government’s conservatorship of Fannie Mae and Freddie Mac. From dissolving the GSEs and replacing them with a government corporation to completely privatizing the enterprises, opinions differ as to how effective GSE reform should look.
The National Association of Federal Credit Unions (NAFCU), a trade union representing the interests of the nation’s 106 million credit union members, has some ideas of its own. NAFCU President and CEO Dan Berger wrote a letter to House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Ranking Member Maxine Waters (D-California), and Senate Banking Committee Chairman Richard Shelby (R-Alabama) and Ranking Member Sherrod Brown (D-Ohio), urging the lawmakers to keep certain principles in mind when Congress is drafting a plan for GSE reform.
Berger said he believes that a “healthy, sustainable, and viable” secondary mortgage market must be maintained and that credit unions should have “unfettered, legislatively-guaranteed access” to that market. Berger wrote that he believes there should be competition in every aspect of the market, and that the Federal Home Loan Banks—of which GSE regulator Federal Housing Finance Agency (FHFA) is also conservator—are important to the market because they “provide credit union members with a reliable source of funding and liquidity.”
He said the NAFCU would support merging Fannie Mae and Freddie Mac into one entity if the needs of credit unions could still be met—but he does not support the full privatization of the GSEs because he is concerned that doing so would shut out community-based institutions from the secondary market.
Berger said he believes that while the federal government should play a “pivotal” role in the secondary market, at the same time, “the GSEs should be self-funded, without any dedicated government appropriations.”
“NAFCU understands that this is a complex issue that is expected to be a priority in the next Congress and with the incoming Trump Administration,” Berger wrote. “We welcome the opportunity to work with you as you move forward on comprehensive, thorough, and prudent changes to our nation’s housing finance reform system.”
Click here to view Berger’s complete letter.