WASHINGTON—NAFCU and the Independent Community Bankers of America Thursday have written to Federal Housing Finance Agency Director Mel Watt urging the agency to allow the government-sponsored enterprises (GSEs) to rebuild their capital buffers.
NAFCU and ICBA said they agree that internal reforms are not enough and that the time has come for Congress to act on comprehensive housing finance reform to create a more healthy and sustainable secondary market, NAFCU stated. However, they urge the FHFA do all within its power to ensure the GSEs–Fannie Mae and Freddie Mac–are able to maintain capital that can provide stability in the event of short-term losses.
“Allowing the GSEs to rebuild their capital buffers to avoid another draw of taxpayer support would maintain investor confidence, which is essential to the safety and soundness of the secondary market, and would prevent any further market disruptions,” NAFCU President and CEO Dan Berger said. “This would ensure the GSEs the continued ability to provide liquidity to credit unions, community banks and other lenders to support a vibrant housing finance system.”
“It is essential that the GSEs maintain a modest capital buffer–perhaps only enough to cover losses in a single quarter–so that they are not forced to draw on the Preferred Stock Purchase Agreement commitments at the expense of taxpayers,” ICBA President and CEO Camden R. Fine said. “Such an occurrence would not only erode investor confidence but would also taint the public’s perception of the housing finance system and the secondary market, putting the future of the housing finance system at risk. This self-inflicted outcome must be avoided.”