Chairman Hensarling Opening Statement at PATH Act Markup
Jul 23, 2013 -
Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today's full committee markup of the Protecting American Taxpayers and Homeowners Act:
“The Financial Services Committee meets today to consider legislation that will create a truly sustainable housing finance system for the American people. The Protecting American Taxpayers and Homeowners Act is the product of 12 hearings since January during which our committee heard from more than 50 witnesses. The PATH Act was announced and circulated to members almost two weeks ago.
“I thank members for their input and suggestions. I particularly want to express my gratitude to the gentleman from New Jersey, Mr. Garrett the lead sponsor, as well as the gentleman from Texas Mr. Neugebauer and gentlelady from West Virginia Mrs. Capito for their outstanding leadership in crafting this proposal.
“It’s been nearly five years since the financial crisis, which was caused in large part by federal policies that incented, mandated, and browbeated financial institutions to loan money to people to buy homes they ultimately could not afford. In a phrase, an unsustainable finance housing system. It’s been three years since the Dodd-Frank Act failed to do anything about Fannie Mae and Freddie Mac and their record taxpayer-funded bailout. It’s time to move forward with this plan and give Americans the housing finance system that is worthy of them.
“First, they need a plan that’s designed for homeowners, current and would-be, so every American who works hard and plays by the rules can have opportunities and choices to buy homes they can afford to keep.
“Secondly a plan that’s designed for hardworking taxpayers, so they never again have to bail out corrupt financial government enterprises like Fannie Mae and Freddie Mac, whose top executives engaged in accounting shenanigans to trigger huge bonuses for themselves.
“America needs a housing policy that is sustainable over time, not one that causes endless boom-bust cycles in real estate that harm our economy and where hardworking American families can see both their homes and their savings drop precipitously in value.
“The PATH Act offers the path towards a better system.
“First, it ends the costly bailout of Fannie and Freddie and permanently moves us from a system where the fate of our economy depends upon their success or failure.
“Second, the PATH Act reforms the FHA, which is so over-extended, it is projected to need its own taxpayer-funded bailout of nearly $1 billion. Over time, FHA has experienced severe mission creep. Instead of helping those it was intended for, today our FHA insures mortgages for millionaires and homes valued as high as $729,750 – far beyond the reach of those truly earning low and moderate incomes. Our plan would return FHA to its original mission of helping first-time homebuyers and low- and moderate-income families.
“The PATH Act also tears down barriers to private capital and frees Americans from a government-dominated system that puts Washington elites in charge of deciding who can buy a home. The PATH Act gets government out of the way, helps increase competition, enhances transparency and gives consumers more freedom to choose the mortgage that’s right for them.
“Now, I’ve heard my Democrat colleagues not share enthusiasm for this particular plan. Some claim it would end the ability of the federal government to respond in a time of crisis or credit crunch. Under the PATH Act, the FHA is specifically given countercyclical powers and the Fed clearly still retains their 13(3) emergency powers.
“Some would claim the PATH Act eliminates the 30-year fixed mortgage. Actually, the 30-year fixed exists today without a government guarantee and the PATH Act won’t change that.
“Others claim that the PATH Act would completely end the government guarantee in housing. And yet the FHA, the Federal Home Loan Banks, the VA, and rural housing programs that exist today will continue to exist with the PATH Act.
“Now I’ve heard my friend and Ranking Member claim that their ideas were not taken into account. With all due respect, I do not recall any that were offered. A couple of Members on your side of the aisle have indeed put forward ideas; worthy ones and they are to be complimented. But if you plan to offer no alternative, then you are left protecting the status quo. The status quo where we have heard testimony can make home ownership twice as difficult and twice as expensive. If you choose to offer a substitute, and I hope that you do, then certainly I look forward to putting it under the same scrutiny that your side will put on the PATH Act.
“Ultimately the PATH Act will change a system where government controls 90 percent of the housing finance market, where Washington elites decide who can qualify for a mortgage, and where hardworking taxpayers who struggle to pay their own mortgages are forced to pay for somebody else’s while they are continually on the hook for $5 trillion in mortgage guarantees.
“Americans deserve better. They deserve a housing finance system that is sustainable and built to last. The PATH Act is the path forward.”