April 29 (Bloomberg) -- Treasury Secretary Jacob J. Lew urged Congress to overhaul the U.S. housing-finance system, saying it could boost job growth, as lawmakers delayed consideration of a bill to wind down Fannie Mae and Freddie Mac.
“We need to start reform now -- and we need legislation to achieve the fundamental reforms that protect both consumers and taxpayers,” Lew said in testimony prepared for a hearing before a House Appropriations subcommittee today. “We still face a housing-finance system that does not adequately meet the needs of the American people. Far too many potential homeowners do not have access to credit.”
Senate Banking Committee leaders today indefinitely delayed a bipartisan bill to dismantle Fannie Mae and Freddie Mac as rifts among the panel’s Democratic majority threaten to stall the measure.
“The longer we put it off, the easier it is to forget the damage to the economy,” Lew said. “A resurgent housing sector would boost the economy and generate new jobs, and a successful reform to housing finance would reinforce that cycle.”
Senator Tim Johnson, the South Dakota Democrat who leads the committee, and Senator Mike Crapo of Idaho, the top Republican, postponed a work session set for today as they try to win the support of at least a few of the half-dozen Democrats on the panel who haven’t yet embraced it, according to a committee aide who spoke on condition of anonymity.
The White House and industry groups including the National Association of Realtors are lobbying for quick action on the bill, while civil-rights organizations and investors who would benefit from the continued existence of Fannie Mae and Freddie Mac are urging a delay. An impasse would leave the two companies operating indefinitely under federal control.
While some signs point to a recovering housing market, Lew said more progress could be made.
“The pent-up demand from years of low household formation combined with generally housing affordability can spur a step up in new construction to reverse the downward trend we have seen in home sales since mid-2013,” he said.
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