Liberal lawmaker: Start anew on housing reform

Sen. Sherrod BrownSherrod Campbell BrownWhen the Fed plays follow the leader, it steers us all toward inflation Which proposals will survive in the Democrats' spending plan? Senate Democrats call for diversity among new Federal Reserve Bank presidents 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 JohnsonCornell to launch new bipartisan publication led by former Rep. Steve Israel Trump faces tough path to Fannie Mae, Freddie Mac overhaul Several hurt when truck runs into minimum wage protesters in Michigan MORE (D-S.D.) and ranking member Mike CrapoMichael (Mike) Dean CrapoDemocrats narrow scope of IRS proposal amid GOP attacks Senate GOP signals they'll help bail out Biden's Fed chair Yellen confident of minimum global corporate tax passage in Congress 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.