April 16 (Bloomberg) -- Civil rights groups should back a bipartisan Senate effort to remake the nation’s housing finance system “despite its imperfections,” U.S. Housing and Urban Development Shaun Donovan said today.
“This bill represents real progress,” Donovan said at a conference organized by the National Council of La Raza and the National Organization for the Advancement of Colored People. “That’s why we have got to push forward.”
The two groups and other civil rights organizations have expressed reservations about the Senate bill because it would replace mandated lending in low-income and minority communities with less-enforceable financial incentives for lenders.
The groups’ hesitance could sap support for the measure among Democrats in the Senate, where the Banking Committee is set to take an initial vote on it at the end of April. Broad support from Democrats on the panel will be necessary to persuade Senate Majority leader Harry Reid, a Nevada Democrat, to schedule it for a vote of the full body.
The measure, written by Senator Tim Johnson, the South Dakota Democrat who leads the banking panel, and Mike Crapo of Idaho, the committee’s top Republican, would wind down U.S.- owned Fannie Mae and Freddie Mac and replace them with a government reinsurer of mortgage bonds.
“I think this is the single best chance that we will have” of completing a housing-finance overhaul, Donovan said in an interview after his speech. “It may very well be the only chance we have this decade.”
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