U.S. Senate Banking Committee Ranking Member Pat Toomey (R-PA) proposed a framework to end the conservatorship of the government-sponsored enterprises ("GSEs").
The guiding principles are as follows:
- transition from the GSE "duopoly" towards a competitive secondary market that incorporates other sources of private capital that bear mortgage credit;
- end the conservatorship of Fannie Mae and Freddie Mac;
- foster a liquid secondary mortgage market that provides affordable long-term fixed-rate mortgage loans, including 30-year loans;
- ensure that "significant" first-loss private capital stands in front of government support, and that taxpayers are "appropriately" compensated for such support;
- promote equitable access to the secondary mortgage market; and
- ensure that all reforms are incremental and realistic.
SIFMA applauded the guiding principles, particularly because they include a government guarantee for the continued liquidity of the TBA mortgage-backed securities market.
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