Washington, DC — Today, in reaction to the incorporation of Senator Richard Shelby’s financial deregulation bill and language submitting the CFPB to annual appropriations into appropriations legislation, NCRC President and CEO John Taylor made the following statement:
“It is deeply disturbing that on the week of the fifth anniversary of the Dodd-Frank Act, some members of the Senate are moving to strip away important parts of the law. The Shelby provisions inserted into the appropriations bill roll back key elements of Dodd-Frank that ensure the safety and soundness of the nation’s banking system and provide consumer protections. They would undermine key safeguards and the increased regulatory oversight for some of the nation’s largest and most systemically important bank and non-bank financial institutions, and rob the CFPB of the independence needed to carry out its responsibilities on behalf of consumers. The 229-page banking reform policy rider included as a part of the appropriation bill also has a number of stealth provisions on the Government Sponsored Enterprises (GSEs) that limit the paths forward for the housing finance system.”
“The U.S. Senate should tread very lightly on diminishing the role Fannie Mae and Freddie Mac play in furthering homeownership in America, a role more important than any two other institutions. Congress and the White House have already taken a major step by prohibiting predatory lending via Dodd-Frank. The next step is promoting greater transparency in lending and increasing capital reserves for Fannie and Freddie. The worst thing the Senate can do is lessen the role Fannie and Freddie play in the secondary mortgage market and pave the way for the nation’s largest financial institutions to dominate it. Those institutions simply would not serve the low- and moderate-income communities across the country in the same way. We are concerned about provisions that would invite the nation’s largest financial institutions into the secondary mortgage market through the “common securitization platform.” For decades, Fannie and Freddie provided a well-functioning secondary mortgage market that created homeownership opportunities for working families. While some key reforms are needed, the GSEs should be recapitalized and must continue to play the role they have played in providing a deep and liquid secondary mortgage market, with robust affordable housing goals.”
“Recapitalization of the GSEs is a necessary step. Critics of Fannie and Freddie suggest that recapitalization would increase the chances of another bailout – this is false. In fact, the opposite is true. By preventing the GSE’s from recapitalizing, the chances that the entities would require an additional capital injection in the future are significantly increased, even though they are turning significant profits – which in fact are being used to plug holes in the budget. This is not prudent budgeting practice, or sound housing finance policy. The GSEs should be allowed, and indeed required to recapitalize.”
“While members of Congress give lip service to the problem of wealth disparity, their efforts to reduce consumer protections by weakening Dodd-Frank and reduce opportunities for working people to become homeowners, reveal the true lack of commitment many members of Congress have to working people.”
On May 12, NCRC released a statement opposing the Shelby bill.
On May 20, NCRC sent a letter to the Banking Committee Chairman, Senator Shelby, and Ranking Member, Senator Sherrod Brown, outlining its opposition to the Shelby bill.
On May 21, NCRC released a statement on the Banking Committee vote on the Shelby bill.
About the National Community Reinvestment Coalition (NCRC): The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development, and vibrant communities for America’s working families.