Your Independent Community Bankers of South Dakota have been actively engaged on the issue of housing reform. We would like to thank Senator Johnson and his banking committee staff for engaging with the ICBSD Board of Directors via conference calls to discuss specifics of housing-finance reform and how that proposed reform will specifically impact community banks in South Dakota.
What we are watching play out in D.C. appears to be a rare bipartisan effort of Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho) in reaching an agreement on core principles for reforming the housing-finance system and secondary mortgage market.
The message that we have been sending on behalf of all community banks in South Dakota is a message of continued access to a financially strong, reliable and impartial secondary mortgage market. We must continue to find ways to make sure community banks are able to provide competitive mortgage products in their respective markets.
We have also advocated and continue to ensure that community-based banks will continue to have the ability to service mortgages for local customers, should they choose to do so.
The ICBSD is continuing to ensure any congressional reforms to the housing government-sponsored enterprises will allow community banks to sell loans through entity that does not compete with community banks, does not allow for community bank customer data to be shared for cross-selling of financial services, preserves the Federal Home Loan Banks as a community bank access point to the national secondary market, and ensures pricing of any government guaranty is fair and equal for all market participants regardless of volume of loans.
ICBSD will continue to monitor the bill and advocate that any changes do not result in the consolidation of the housing-finance system to only a select few mega-financial institutions.
In our analysis of the bill, we have some real concerns with the following four points contained within the bill:
1. The lack of information and confidence regarding the liquidity of the new mortgage backed securities issued through the new system. Will our community banks still have access to bank qualified mortgage securities that have the risk weighting as current GSE MBS?
2. Vertical integration of a provider to serve as Guarantor as well as an Aggregator or Originator is a major concern and would effectively kill any hope of a small lender mutual that our community bank members would participate in and would lead to a market completely dominated by the largest banks.
3. Required capital must be clearly defined, it must be real capital
4. The newly created FMIC cannot become another bank regulator, placing more regulatory burden on our already over-regulated banks.
The ICBSD is and will continue ensure community banks across South Dakota have a voice and input regarding housing-finance reforms. We appreciate Senators Johnson’s on-going communication with the ICBSD and look forward to continuing to work with his office to ensure continued access for community banks and to avoid further concentration of the banking industry and the too-big-to-fail institutions.
McCurry, a native of MN and resident of Mitchell, SD, holds a Bachelor of Arts degree in Communications / Marketing from the Minnesota State University, Mankato. Prior to joining the ICBSD as President and CEO, he directed the marketing, sales and government relations efforts at Santel