Shelby’s Bill Is the Right Way Forward on Financial Reform

By William M. Isaac

However, I am concerned about the legislation’s controversial provisions relating to Fannie Mae and Freddie Mac, which have little if any nexus to regulatory reform. Deciding what to do with Fannie and Freddie is an extremely important public policy task for the government, and the next step should not be tucked away in an unrelated regulatory reform measure. Disturbingly, some provisions contained in the proposed Senate bill would undermine the Housing and Economic Recovery Act of 2008, the statute that governs the government-sponsored entities.

In 2008, when Fannie and Freddie fell into distress, Congress passed HERA and established the Federal Housing Finance Agency as an independent conservator for them. As conservator, the FHFA is required to “preserve and conserve” Fannie and Freddie for their shareholders. But that’s not at all what has happened.

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