Congressman Barney Frank, Ranking Member of the House Financial Services Committee, released the following statement regarding the Administration’s white paper on housing finance:

 “The administration’s white paper is a thoughtful beginning that sets the stage for a constructive discussion of the future of housing finance.”

“I am especially pleased that the paper specifically supports funding for rental housing.  It is important that any new legislation include a revenue stream to support rental housing, both to make reasonably-priced rental housing available and to allow the mortgage market to function on the basis of market-based decisions with less reliance on government support for unsustainable levels of homeownership.”

“The central question going forward is how to protect taxpayers without unduly increasing the cost of mortgages to American families.”

“This issue is addressed in part by a law we passed during the last Congress, the Wall Street Reform and Consumer Protection Act.  This law helps ensure that fewer bad mortgages are made, that there is more disclosure, and that mortgage securitizers must maintain a percentage of the securities and thus hold part of the risk.  The law is designed to increase confidence in the value of mortgage-backed securities, provide liquidity to the mortgage market, and help keep the price of mortgages at a reasonable level.”

“Even with this law in place, it is not clear whether private markets by themselves will provide enough capital to make reasonably-priced mortgages available to families that can afford them.  There is consensus that the past system has failed and that in the future there should be no public/private hybrid entity. The administration presents three possible options with various degrees of government involvement; these ideas provide a solid foundation for serious discussion.  I welcome the opportunity to hear the opinions of market participants, consumers, and my colleagues, so that we may thoroughly discuss the issue as a whole and craft responsible legislation.”

“I hope this constructive step forward by the administration will inspire the Republican majority in the House to join us and the administration in moving concretely toward a solution to the serious problem of housing finance.  When they were in the minority, Republicans introduced and advocated strongly for a bill which they told us would address this issue.  They have since backed away from their own legislation and now that they are in the majority have offered no specific plans for moving forward.  I hope this will change soon and I look forward to working constructively on a bipartisan basis.”

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