AFFORDABLE HOUSING | Maxine Waters Leads

Rep. Maxine Waters, Chair, House
Financial Services Committee

January 30, 2019–The following arrived in an email from Dana Chasin and is posted here by permission. Affordable housing is a high priority for House Financial Services Chair, Maxine Waters. Many new Members of Congress on the House Financial Services Committee have backgrounds in housing policy.

Housing policy has been a bedrock issue for Rep. Maxine Waters since the beginning of her tenure in Congress and is high on the agenda of the 116th Congress House Financial Services Committee. The 115th Congress grappled with several ongoing issues in housing policy, such as rental assistance, Native American housing programs, and disaster response, but it did not successfully resolve anything in the area of housing affordability.

Last Congress, Rep. Waters focused on protecting the Community Reinvestment Act (CRA), designed to prevent discriminatory credit practices and guarantee fair housing protections. Waters also introduced a number of housing bills last Congress including:

• Public Housing Tenant Protection and Reinvestment Act of 2017 (H.R. 3160), a bill to reform the public housing demolition and disposition rules to require one-for-one replacement and tenant protections, and provide public housing agencies with additional resources and flexibility to preserve public housing.
• Restoring Fair Housing Protections Eliminated by HUD Act of 2018 (H.R.6220), a bill to restore several fair housing protections that HUD Secretary Ben Carson eliminated. 

Looking ahead to this Congress, Waters has renamed the Housing and Insurance Subcommittee as Housing and Community Development, highlighting her commitment to affordable housing and the CRA. We can expect much of the Committee’s legislative activity on housing to take place in this revamped Subcommittee.

With Republicans in control of the Senate, there is little hope for meaningful bipartisan housing legislation this Congress. Sen. Sherrod Brown, ranking member of the Senate Banking Committee, has expressed a commitment to housing reform, so there may be discussion within SBC on the issue. Sadly, any legislation coming from the House is unlikely to pass in the Senate.

Affordable Housing Advocates

Rep. Waters will be leading the affordable housing agenda on House Financial Services, assisted by a number of new HFSC members that are likely be prominent advocates:

• Rep. Katie Porter (CA-45) was appointed in 2012 to lead California’s independent mortgage watchdog, securing over $18 billion in compensation for homeowners cheated by the big banks.
• Rep. Rashida Tlaib (MI-13) has been a vocal advocate for affordable housing, demonstrated most recently by her impassioned speech on the House floor regarding the impact of the government shutdown on HUD programs.
• Rep. Jesus ‘Chuy’ Garcia (IL-04) passed housing discrimination protections for low-income families, veterans, and people with disabilities in suburban neighborhoods during his time on the Cook County Board of Commissioners. Affordable housing was also a prominent policy in his 2015 Chicago mayoral campaign.

Asymmetric Affordability

As with many economic issues, there are social inequities within the affordable housing dilemma. A 2018 Urban Institute report showed the millennial homeownership rate approximately 8 points lower than that of Gen Xers and Baby Boomers at the same age. Many millennials are waiting to buy a home due to rising home prices, stagnating wages, and high levels of household debt. [The financial meltdown of 2007-08 contributed to this situation, resulting in many foreclosures and more restrictive borrowing standards. –JTM] 

Low-income families are especially affected by the affordable-housing crisis. A national survey conducted by the Low Income Housing Coalition (LIHC) found that a worker earning the state minimum wage could afford a market-rate one-bedroom apartment in only 22 of the country’s 3,000 counties. There is a growing crisis stemming from lack of affordable housing options to low-income earners. Per a March 2018 LIHC Report, the US has a deficit of 7.2 million affordable rental homes to extremely low-income renters.

Looking Ahead

Homeownership has long been a core element of the American Dream, but it’s becoming increasingly unattainable. The problem is especially bad for minorities, low-income families, and younger Americans and is likely to get play not only in HSFC, but on the 2020 campaign trail.

Despite the efforts of champions in the House, such as Rep. Maxine Waters, it has been very difficult to pass any legislation addressing affordable housing. With Rep. Waters at the helm of HFSC, we will definitely see more discussion in this area. Even if the Republican Senate deters real progress, proposals originated in the 116th will serve as an important legislative precedent for 2020 and beyond.

CONGRESS IN TRANSITION | Financial Services Committee

The following email from Dana Chasin is posted here by permission. He called it "Update 315 — Rough Waters Ahead for Banks?"

The subject is the takeover of the  House Financial Services Committee by Rep. Maxine Waters (CA). The contrast between her and retiring Rep. Jeb Hensarling (R-TX) is one of the greatest in policy and style in the 116th Congress.

Clear Waters

Rep. Waters’ bedrock issues have long been housing, consumer protection, and big bank regulation. In the 115th Congress, Waters focused on protecting the Community Reinvestment Act, designed to prevent discriminatory credit practices, and guarantee fair housing protections.

Bills introduced by Waters during the Congress now ending (capping a six-year tenure as Ranking Member of HFSC) indicate her priorities:

• Public Housing Tenant Protection and Reinvestment Act of 2017 — H.R. 3160: The bill reforms the public housing demolition and disposition rules to require one-for-one replacement and tenant protections, and provides public housing agencies with additional resources and flexibility to preserve public housing.
• Comprehensive Consumer Credit Reporting Reform Act of 2017 — H.R. 3755: The bill enhances requirements on consumer reporting agencies, like Equifax, TransUnion, and Experian, to better ensure that the information on credit reports is accurate and complete.
• Megabank Accountability and Consequences Act — H.R.3937: The bill would give authority to federal banking regulators to break up banks that mistreat their customers.
• Consumers First Act —H.R.6972: The bill would reverse the harmful changes to the Consumer Financial Protection Bureau imposed by the Trump Administration and restore the agency’s supervisory and enforcement powers.
• Restoring Fair Housing Protections Eliminated by HUD Act of 2018 — H.R.6220: The bill would restore several fair housing protections that HUD Sec. Ben Carson eliminated.

Crossing the Party Bar

During her tenure as Ranking Member on the Committee, Rep. Waters supported bipartisan legislation, notably the third iteration of the JOBS and Investor Confidence Act. The bill includes provisions aimed at “decreasing the regulatory burden” for some financial institutions, as well as others that aim to increase protections for consumers.

In a similar vein, she partnered with Sen. Sherrod Brown on S. 1491, the Community Lender Regulatory Relief and Consumer Protection Act of 2015. The bill would give banks and credit unions with under $10 billion in assets relief from the Consumer Financial Protection Bureau’s (CFPB) “Qualified Mortgage” rule.

Appealing to Waters’ passion for housing reform, the measure would make permanent expired provisions that protect tenants from eviction when their landlord or property owner has entered foreclosure. When it comes to her bedrock issues, Waters may be more willing to compromise to ensure she reaches her legislative goals.

She has also reached across the aisle to work with Republicans to reauthorize the Export-Import Bank, and used her political savvy to get Republicans on board with a reauthorization of the National Flood Insurance Program. While she will look to make some strides in these areas as Financial Services Chair, she has expressed firm and progressive stances regarding systemic risk and oversight.

Mitigating Systemic Risk

Importantly, Rep. Waters at the helm of the HFSC means two things for systemic risk:

• the “tide” of deregulation of the financial sector is “at an end”
• regulators and agencies should be prepared to will have their feet held to the fire more often

Heading into the next Congress, a key item on Waters’ agenda will be monitoring systemic and other risks in big banks. The financial industry has enjoyed several months of continuous deregulatory activity under an HFSC headed by Rep. Hensarling and a Republican-controlled Congress. Under her leadership, the Committee will be limited in its ability to stall measures at the federal regulator level, but it will be able to increase oversight and change rhetoric to keep a check on agency overreach.

In the words of Waters, “as we saw in the last crisis, it is the average hard-working Americans that will suffer the consequences if Washington deregulates Wall Street megabanks again.”

Oversight

A robust oversight agenda will accompany the legislative priorities of the Committee under Waters. This agenda will likely focus on four distinct areas: firms, rulemaking, agencies, and the presidency.

On the firms, Waters has expressed indignation about the slap-on-the-wrist treatment of Wells Fargo in light of the improper and unfair foreclosures on its customers. Many were erroneously denied loan modifications to lower their mortgage payments.

A Democrat-controlled House cannot do much in the way of affirmative rulemaking, but it will no longer have to play defense against further attempts at deregulation. Much of Waters’ oversight in this area will be over agencies, ensuring that the Trump appointee-controlled CFPB, FSOC, and OFR are operating according to their original statutory purposes and with the resources they need. This will likely take the form of hearings, subpoenas, and investigations.

Waters has been steadfast in her position that investigation into the president’s alleged illegal financial dealings is on her agenda, but it’s not her top priority. In a Bloomberg interview earlier this month, Rep. Waters was clear that she would use her authority to get more information, using subpoenas if necessary, but was far more eager to discuss Wells Fargo and the CFPB.

Summing Up: An Able Veteran

Waters is a skilled and seasoned legislator. Her turn with the gavel at HFSC is very welcome news and signals the end of the tide of deregulation. It also signals an end to a period of free-reign for regulators (or should we say deregulators) dogmatically pursuing an agenda that puts Wall Street megabanks ahead of ordinary Americans. Her agenda will be limited by the Republican-controlled Senate, but it will set the tone and pave the way for future legislation that will curb the rollbacks of Dodd-Frank that have occurred in recent years.