Republicans in the U.S. House of Representatives are gearing up to overhaul the housing finance system this year and will soon map out ways to monitor Wall Street reform rules, according to a draft agenda circulating on Capitol Hill.
Republicans on the House Financial Services Committee, the panel that oversees Wall Street and financial regulators, will aim to review how the 2010 Dodd-Frank reform law is being implemented, its top Republican said in a document obtained by Reuters.
The legislative debate on the Dodd-Frank financial oversight law was heated and partisan as the Obama administration wrangled for stricter regulations for banks, hedge funds, derivatives traders and other financial market players.
Dodd-Frank has since remained a target for Republicans who have tried to repeal or scale back numerous measures, with limited success. Republicans have also tried to restrain regulators by denying big boosts to their budgets, despite extra responsibilities.
"The Committee will seek to ensure that regulators carefully and transparently assess the costs and benefits of regulations called for by the Dodd-Frank Act in order to strike an appropriate balance between prudent regulation and economic growth," Representative Jeb Hensarling, the committee's chairman, said in the document.
He said one of the "primary tasks" of the committee would include monitoring how regulators work to avoid systemic risk and contagion while simultaneously implementing rules that prevent larger financial institutions from receiving an unfair edge over smaller lenders.
The panel is scheduled to vote on the agenda no later than Feb. 15. The agenda was first reported by Bloomberg News.
Hensarling said Republicans also want to examine possible changes to the housing finance system, which is almost entirely backed by the government.
Democrats on the committee, including ranking member Maxine Waters, are expected to resist Republican efforts to chip away at Dodd-Frank and will to defend the need for a strong government role in the mortgage market.
The committee has already started to scrutinize the financial health of the Federal Housing Administration, the government's mortgage insurer, with a series of hearings that kicked off last week.
Hensarling said the committee will look at the structure of mortgage giants Fannie Mae and Freddie Mac, the two companies seized by the government in 2008 amid fears they might collapse under real estate debts. The bailout has cost taxpayers nearly $190 billion.
Steps that may be proposed to level the playing field between the publicly backed mortgage sector and the private market, which has been flat on its back for years, include scaling back the huge loan portfolios of Fannie and Freddie.
"The Committee will examine proposals to modify or terminate Fannie Mae's and Freddie Mac's statutory charters, harmonize their business operations, and wind down any legacy business commitments," the draft said.
House Republicans want to examine the overall size of the government's role in various aspects of the housing finance system and may seek to find ways to "reduce or constrain" the market share of Fannie Mae and Freddie Mac, or wind the two companies down.
The 21-page document included an outline of a housing finance system in which lawmakers develop what it described as "a vibrant, innovative and competitive private mortgage market."
Republicans will also seek to review the new authority regulators have over the multitrillion-dollar over-the-counter derivatives market, according to the document.
In addition, it said the committee may attempt to ensure the Volcker rule on proprietary trading and investments "does not result in unintended consequences for U.S. economic competitiveness and job creation, depress the value of pension plans and retirement accounts, or drain substantial amounts of liquidity from the U.S. capital markets."
Other priorities include taking a look at the authority of the Financial Stability Oversight Council, credit rating agencies and the structure of the Consumer Financial Protection Bureau.
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