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The Private Mortgage Market Investment Act

Testimony before House Subcommittee on Capital Markets and Government-Sponsored Enterprises

SOURCE: AP/ Paul Sakuma

CAP Senior Fellow Janneke Ratcliffe testified before the House Subcommittee on Capital Markets and Government-Sponsored Enterprises on November 3rd, 2011, to discuss the Private Mortgage Market Investment Act.

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CAP Senior Fellow Janneke Ratcliffe testifies before the House Subcommittee on Capital Markets and Government-Sponsored Enterprises. Read this testimony (CAP Action)

Good morning Chairman Garrett, Ranking Member Waters, and members of the subcommittee. I am Janneke Ratcliffe, a Senior Research Fellow at the Center for American Progress Action Fund and the executive director for the Center for Community Capital at the University of North Carolina at Chapel Hill.

Thank you for the opportunity to testify today about the draft Private Mortgage Market Investment Act, which addresses a number of the important challenges that must be overcome to restore a well-functioning system of housing finance in America. I am honored to speak as a member of the Mortgage Finance Working Group, a group of mortgage finance experts convened by CAP who have authored a plan for responsible mortgage finance reform. Though I will summarize many aspects of that proposal in this testimony, I speak only for myself in any views expressed here today. I also offer my thanks to CAP’s John Griffith for his assistance in preparing this testimony.

I will speak today about the discussion draft and how the regulatory framework it offers might fit in the broader mortgage finance system. The Mortgage Finance Working Group proposal, like most others, aims to have private capital at-risk play a much greater role in the market than it is playing today. In order for that to happen, investor confidence in non-guaranteed securities must be restored, and the bill lays out several steps that will be helpful to that objective.

Most importantly, this bill recognizes that the federal government is critical to a well-functioning mortgage market—even a purely private one—for both writing the rulebook and refereeing when the game begins. If implemented a decade ago, many of these thoughtful oversight measures likely would have staved off the bubble and bust of the mid 2000s and resulting financial crisis. I’m pleased to see the regulation of private mortgage-backed securities finally garnering the congressional attention it deserves.

CAP Senior Fellow Janneke Ratcliffe testifies before the House Subcommittee on Capital Markets and Government-Sponsored Enterprises. Read this testimony (CAP Action)

Janneke Ratcliffe is a Senior Fellow at the Center for American Progress.

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