Page Mortgage Bankers Association of America, letter dated April 23, 1982, from 412 Mortgage Insurance Companies of America, letter dated April 21, 1982, from 416 National Association of Home Builders, letters from Fred Napolitano, president: Dated May 10, 1982.. 417 Dated June 11, 1982. 418 National Association of Mutual Savings Banks, statement dated April 28, 1982. 420 National Savings & Loan League, letter dated April 20, 1982, from Jim 424 425 "Readjustable Mortgages in an Inflationary Economy-A Study of the Israeli Experience," from Journal of International Law and Economics, January 1981 426 Summary of remarks at 1980 World Congress of the Internatonal Federation of Housing and Planning....... Elliott, Raymond H., president, Federal Home Loan Bank of Boston.. Kearns, Thomas J., vice president, Merrill Lynch White Weld Capital Mar- Kudlow, Lawrence A., Associate Director for Economics and Planning, Office of Management and Budget. McConnell, John J., professor of finance, University of Minnesota Mark, Morris, vice president, Goldman, Sachs & Co.... Maxwell, David O., chairman of the board, Federal National Mortgage Association... Phillips, Craig, investment banker, Lehman Brothers Kuhn, Loeb, Inc.. Tuccillo, John A., senior research associate, The Urban Institute 668 744 705 581, 658 494 696 588 535 611 638 718 755 Williamson, John C., executive vice president, Mortgage Insurance Companies of America.. ADDITIONAL MATERIAL SUBMITTED FOR INCLUSION IN THE RECORD Elliott, Raymond H.: Prepared statement 674 Response to additional written questions from Chairman Gonzalez...... Gourley, Willard, prepared statement on behalf of the Mortgage Bankers Association of America 773 747 Green, Roy G., prepared statement on behalf of the U.S. League of Savings Response to additional written questions from Chairman Gonzalez........... 533 530 Chairman Gonzalez.... Congressman Stanton McConnell, John J.: Prepared statement Page 698 Response to additional written questions from Chairman Gonzalez........ 777, 778 Mark, Morris: Prepared statement Response to additional written questions from: Maxwell, David O.: 591 775, 776 779, 780, 781 Prepared statement on behalf of the Federal National Mortgage Association..... 544 Response to additional written questions of: Chairman Gonzalez 771 Congressman Stanton 781 Response to the request for additional information from Congressman Section-by-section analysis of H.R. 6442, referred to in oral presentation.... Response to additional written questions from: Chairman Gonzalez... Congressman Stanton. Statement submitted of Roger C. Altman, managing director, Lehman 571 555 787 775, 776 780, 781 616 Statement submitted of H. James Toffey, managing director, First Boston 623 Tuccillo, John A.: Prepared statement 725 Response to additional written questions from Chairman Gonzalez.... 776, 777, 778 Williamson, John C., statement submitted of Leon T. Kendall, president, 757 TO EXPAND AND REORGANIZE THE FEDERAL HOME LOAN MORTGAGE CORPORATION WEDNESDAY, APRIL 21, 1982 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING, FI- Washington, D.C. The subcommittee met, pursuant to call, at 10:10 a.m., in room 2128, Rayburn House Office Building, Hon. Henry B. Gonzalez (chairman of the subcommittee) presiding. Present: Representatives Gonzalez, LaFalce, Lundine, Vento, Schumer, William J. Coyne, Wylie, McKinney, Evans of Delaware, James K. Coyne, Wortley, and Lowery. Chairman GONZALEZ. The subcommittee will please come to order. Our purpose this morning is to begin hearings on H.R. 4787, a bill to restructure the charter of the Federal Home Loan Mortgage Corporation, known more popularly as Freddie Mac, and known by the more sober-minded people as simply the Mortgage Corporation. FHLMC is an agency assigned to provide a secondary market for conventional loans, that is, loans that are not guaranteed under the VA or insured under the FHA programs. Its operations are similar to those of its corporate cousin, FNMA, or the Federal National Mortgage Association. This bill would change FHLMC into quasi-private corporation, one that would be recapitalized with private funds. Once the restructuring would take effect we would then have two former Government corporations acting as private makers for market instruments. Needless to say, the entire financial structure of the housing industry is undergoing radical change. The primary source of mortgage funds, the thrift institutions, are in desperate condition. It does not appear likely that this will change, that the thrifts would be able to resume a high level of mortgage lending even if interest rates were to drop very soon. In short, the greatest dilemma of the housing industry is where tomorrow's source of mortgage money will come from. If there is trouble in the primary lending business, there is also trouble in the secondary marketplace. The question we confront is how to regain health in both the primary and secondary mortgage markets, because that is a key to large-scale housing production. No one needs to be reminded of the level of demand for housing expected to be coming in the next 10 to (1) 20 years. No one needs to be reminded that both the primary and secondary mortgage market are absolutely essential to make that housing production possible. That brings us to this bill. We have to consider carefully the questions brought to us by the Corporation. First, is a restructuring necessary? Second, if it is necessary, what would be the best form for it to take? Third, what powers should be granted to a restructured FHLMC? Fourth, would the restructuring have the benefits claimed? Fifth, what should be the relationship between the existing FNMA and FHLMC assuming that the latter is restructured? All of these and many more questions will have to receive our most careful consideration. This is not a bill that can be rushed. It is not a matter that can be settled without thorough and thoughtful consideration. Still, the need for expeditious action is upon us. It is a question that must be addressed and we are beginning, certainly today, which is as soon as it was feasible. [Chairman Gonzalez' opening statement and the text of his bill, H.R. 4787, follow:] |