Reports of the death of bipartisan cooperation in Washington appear to be greatly exaggerated, as Democrats and Republicans in the Senate have joined forces to address a pair of long-simmering housing finance issues.
Two Senate Democrats – North Carolina's Kay R. Hagan and New York's Chuck Schumer – have teamed up with two Republican colleagues – Tennessee's Bob Corker and Idaho's Mike Crapo – on legislation to support the development of a U.S. covered-bond market. The United States Covered Bond Act of 2011 (S.1835) seeks to create a legislative framework that expands funding options for U.S. financial institutions.
In presenting their legislation, the senators pointed out that financial institutions in 30 countries issue covered bonds, and that foreign banks have issued $32 billion in covered bonds to U.S. dollar investors during this year. In June, similar legislation was introduced by Reps. Scott Garrett, R-N.J., and Carolyn Maloney, D-N.Y., and passed in the House Financial Services Committee.
‘The U.S. lags behind its global peers in the development of a covered-bond market because we lack a legislative framework for issuers and investors,’ says Hagan, a member of the Senate Banking Committee. ‘With a legislative framework in place, U.S. financial institutions will have a powerful tool that can be used to fund loans to small businesses and households. This bill would level the playing field for U.S. financial institutions and help strengthen our U.S. economy.’
‘Covered bonds can be another stable source of private capital in the U.S., providing additional lending to businesses and families,’ adds Corker, also a member of the banking committee. ‘Our legislation has bipartisan support in both the House and the Senate, and I hope we will have the opportunity to advance it in order to benefit our financial system and, ultimately, the broader economy.’
Elsewhere on Capitol Hill, Sens. Jay Rockefeller, D-W.Va., and John McCain, R-Ariz., have joined up to introduce legislation designed to prevent what they call ‘excessive bonuses’ from being paid to executives at Fannie Mae and Freddie Mac.
The new legislation comes in response to news that 10 executives from the government-sponsored enterprises (GSEs) will receive $12.79 million in bonus pay for this year, even though both entities reported multibillion-dollar losses during the third quarter and will require billions of additional funds from the Department of the Treasury to remain operational.
‘It's outrageous that Fannie Mae and Freddie Mac executives would expect multimillion-dollar bonuses after billions of dollars were spent in taxpayer bailouts and one in every four homeowners' mortgage is underwater,’ says McCain. ‘This amendment makes clear that, so long as Fannie and Freddie are in government conservatorship, bonuses such as these will not be paid out.’
McCain is also calling on the White House to support the amendment.
‘President Obama has previously opposed huge bonuses for Fannie and Freddie executives and denounced such windfalls for leaders of companies bailed out by taxpayers as an 'outrage' and a violation of "our fundamental values,'’ he continues. ‘We hope the administration will live up to its rhetoric and join our effort to stop these absurd and outrageous bonuses.’
‘The American people deserve better, and it's time we make sure that Fannie Mae and Freddie Mac act more responsibly with their money,’ adds Rockefeller. ‘Families throughout the country and West Virginia are still struggling to pay their bills and many face foreclosure. Their money shouldn't support executive bonuses at organizations that have already received billions of taxpayer dollars. This is unacceptable and must change immediately.’