Liberal lawmaker: Start anew on housing reform

Sen. Sherrod BrownSherrod Campbell BrownTrump VA pick faces challenge to convince senators he’s ready for job Overnight Finance: Senate repeals auto-lending guidance, shattering precedent with vote | House passes IRS reform bills | Senate GOP fears tax cut sequel Dem Senator open to bid from the left in 2020 MORE (D-Ohio) said Tuesday that the Senate Banking Committee should start from scratch next Congress on housing finance reform. 

Banking Committee Chairman Tim JohnsonTimothy (Tim) Peter JohnsonSenate GOP rejects Trump’s call to go big on gun legislation Court ruling could be game changer for Dems in Nevada Bank lobbyists counting down to Shelby’s exit MORE (D-S.D.) and ranking member Mike CrapoMichael (Mike) Dean CrapoLobbyist whose wife rented to Pruitt steps down Americans are set for relief from an Obama-era financial rule Watchdog files complaint GOP senator did not report fundraisers held at condo co-owned by lobbyist’s wife MORE (R-Idaho) were able to move a bipartisan housing reform package through Committee in May on a 13-9 vote.

Liberal members — including Sens. Charles Schumer (D-N.Y.), Elizabeth Warren (D-Mass.) and Jeff Merkley (D-Ore.) as well as Brown — opposed Johnson-Crapo because they said it didn't do enough to address affordable housing for lower-income Americans.

The lack of liberal support tanked Johnson-Crapo's chances of garnering a Senate floor vote this Congress and deprived Johnson of a key legislative victory before he retires at the end of this session.

Brown, who will likely be ranking member of the Committee in the next Congress, said that he is "absolutely" interested in taking up housing reform in the next Congress.

Sen. Richard Shelby (R-Ala.) is poised to become the next chairman of the Committee.

But as for whether Johnson-Crapo should be the foundation for housing finance reform? 

"No," Brown said. "I think we start over... You don't start with their bill. That legislation would have led to more bank concentration."

Brown's comments come as the housing industry is trying to gauge how the next Congress will address the housing market — the last remaining major issue left over from the 2008 financial crisis that lawmakers haven't addressed.

Johnson-Crapo was months in the making. It built on a housing-finance plan that was originally formulated by Banking committee members Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.).

The issue clearly divided the centrist Democrats from the more progressive members of the Committee, including Brown and Warren.

Johnson-Crapo would eliminate Fannie Mae and Freddie Mac, the two mortgage finance giants that taxpayers bailed out following the financial crisis. The Johnson-Crapo proposal would create a new government entity that lowers taxpayer risk.

"The status quo is not great but the status quo would've been better than their sort of Rube Goldberg-kind of legislation," Brown said.

On Wednesday, Federal Housing Finance Agency Chairman Mel Watt will testify before the Senate Banking. He could provide more clues about how the administration will look to handle the issue with the Republican-controlled Congress.

"I want to see what he's going to do on housing reform," Brown said.

Earlier this week, Housing and Urban Development Secretary Julian Castro said that overhauling the mortgage finance system remained a top priority for the administration.

"This could be, I believe, a good victory either in the lame-duck session or, more realistically, perhaps in the next term of Congress where there is bipartisan support for housing finance reform, for doing away with Fannie and Freddie as we’ve known them, creating a backstop," Castro said on Bloomberg Television on Monday.