SOURCE: Center for American Progress
CAP Executive Vice President Sarah R. Wartell testifies before the House Committee on Financial Services. Read the testimony (CAP Action).
Mr. Chairman and members of the committee, I am honored to have the opportunity to share some thoughts on GSE reform.
This testimony benefits from more than two years of conversations with the Mortgage Finance Working Group, sponsored by the Center for American Progress. The members of this working group began gathering in 2008 in response to the U.S. housing and financial crises in an effort to collectively strengthen their understanding of the causes of the crises and to discuss possible options for public policy to shape the future of the U.S. mortgage markets. I am grateful for all I have learned from these colleagues, but of course I speak only for myself in the views expressed here. I also offer my thanks to CAP’s David Min and Lauren Bazel for their assistance in preparing this testimony.
The invitation to appear today spoke of the committee’s goals of building a stable housing finance system based on private capital and minimizing taxpayer losses. I share these objectives. What is more, I agree that the current situation is unsustainable. We find ourselves—in the aftermath of badly designed mortgages, mispriced risk, excessive leverage, and lack of supervision that triggered the financial crisis—with government bearing the credit risk on the vast majority of residential mortgage lending. Private capital must be encouraged to bear as much of the load as possible in our housing finance system going forward. We can begin that process by carefully restoring the private sector’s appropriate role in our home mortgage market place.
CAP Executive Vice President Sarah R. Wartell testifies before the House Committee on Financial Services. Read the testimony (CAP Action).