Tuesday December 11, 2012
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Banking & Financial Services
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In a growing state like Idaho, financial institutions play a vital role in the development of our local economy by facilitating capital formation processes that are so necessary for job creation. Without available credit, companies cannot grow and consequently will not hire additional American workers.
As a member of the Senate Banking Committee, I will continue to push for reforms that modernize and rationalize the federal financial regulatory system to handle the challenges of the 21st century markets, while protecting consumers and taxpayers against the risks that caused our recent economic collapse.
Although I have been pushing for financial regulatory reform long before we had the credit crunch and the credit crisis, I voted against H.R. 4173 in 2010 because it failed to address crucial elements of the crisis. Furthermore, it would restrict access to credit, discourage capital formation, and yet once again create a large, new, expensive government bureaucracy unreasonably extending the federal government’s control over the economy – hurting Main Street, not Wall Street.
We need to fix our nation’s broken housing finance system and reduce the government’s involvement in the housing market from current levels where the GSEs and FHA are guaranteeing about 95% of all new mortgages. At the heart of the 2008 crisis were massive failures in our mortgage underwriting and securitization system. The most expensive government bailouts will be those of Fannie Mae and Freddie Mac – the largest housing lenders that purchased home loans, packaged them into investments and then guaranteed them against default.
In the 111th Congress, I offered an amendment that would have ended the unlimited bailouts of Fannie Mae and Freddie Mac and provided for a true accounting of the costs. Although my amendment received a majority of votes, it failed because the procedural vote needed 60 votes to pass. The main goals of GSE reform legislation should be to reestablish a housing finance market that has long-term stability in which private capital is the primary source of mortgage financing and the taxpayer is protected in the event of another housing collapse.
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