Congresswoman Maxine Waters, Ranking Member of the House Financial Services Committee, made the following opening statement today at the full committee hearing, titled “Beyond the GSEs: Examples of Successful Housing Finance Models without Explicit Government Guarantees.” Ranking Member Waters in her statement reveals “that while other countries may invest fewer resources in homeownership than the U.S., these foreign nations also make more significant investments in public and assisted rental housing. This is something that the majority on this Committee is not interested in pursuing.” The complete text of her opening statement follows.

As prepared for delivery:

Mr. Chairman, thank you for holding this hearing this morning on international approaches to housing finance.

The hearing is titled, “Examples of Successful Housing Finance Models Without Explicit Government Guarantees.” However, if we are to be honest, it should more properly be titled, “Examples of Other Housing Finance Models With Other Forms of Government Guarantees.”  

Because while the United States is among only a handful of countries that explicitly guaranteed their mortgage-backed securities, we are not alone in terms of providing government support for housing finance. 

As our witness today will point out, covered bonds, which are utilized more robustly in Europe, enjoy preferential status in terms of regulatory and capital treatment in ways that in fact mirror the Federal Home Loan Bank System. And as the actions of European governments and the European Central Bank in the wake of the 2008 crisis demonstrate, the covered bond market also enjoys implicit guarantees both in terms of the general market, and for the issuers of those bonds.  

Of course, no one suggests that the U.S. model for housing finance is perfect or that it is not in need of reform. Quite the contrary. That is why I continue to engage stakeholders on the future of the secondary mortgage market, and why I call on the Chairman to begin a discussion of the specific, bipartisan reform proposals, of which there are now several.

I am focused on pursuing reform proposals that preserve the beloved 30-year, fixed-rate mortgage here in the United States.  I think the recent crisis has demonstrated that this is a stable product, which has actually outperformed the exotic mortgages that proliferated in the lead-up to the financial crisis.  If we eliminated a government role in housing finance, these exotic products would likely again predominate.

So while I think it is useful to consider international approaches to housing finance, I also believe it is disingenuous to suggest that foreign nations do not make significant government investments in housing. And I think we must acknowledge the important role that the 30-year, fixed-rate mortgage has played across generations of American homeownership, and the need to preserve this unique product.

Finally, I think it is important to note that while other countries may invest fewer resources in homeownership than the U.S., these foreign nations also make much more significant investments in public and assisted rental housing. This is something that the majority on this Committee is not interested in pursuing.  In fact, we already see that sequestration is pushing renters out of Section 8 housing operated by the Los Angeles City Housing Authority.

Thank you and I yield back the balance of my time.

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