TMPG Consultative Summary Note ‘Theoretical Implications for Agency MBS Market Liquidity and Functioning of any Potential GSE Ownership Structure Changes’
Summary
SIFMA 1 and SIFMA AMG 2 provided comments to the Federal Reserve Bank of New York on the TMPG’s Summary Note.
Excerpt
Since Fannie Mae and Freddie Mac (the “GSEs”) entered conservatorship in 2008, SIFMA members have been keenly focused on how proposed changes to the U.S. housing finance system could impact markets for mortgage-backed securities, and consequently, the provision of liquidity and capital throughout the entire housing finance system from end investors to the ultimate benefi ciaries, American consumers. SIFMA is encouraged that discussions of how to resolve the long-running conservatorships of the housing GSEs have, to some extent, resumed.
In this letter, we discuss SIFMA’s conceptual framework regarding the important role the GSEs and the To-Be-Announced (“TBA”) mortgage-backed securities (“MBS”) market play in the U.S. mortgage finance system and then turn to a review of the TMPG’s Summary Note.
Our key points include:
- MBS issued by the GSEs attract trillions of dollars of capital from across the globe to the US housing fi nance system through the TBA market, which ensures access to thirty-year, fixed-rate mortgages nationwide and throughout economic cycles, at lower rates than would otherwise be available.
- Without the TBA market, mortgages would be more expensive, and their availability would become fractured regionally.
- Any legislation or government action should articulate a clearly defi ned government role in the mortgage market that supports the “rates market” characteristic of the TBA market, and significant amounts of private capital should stand in front of the taxpayer.
- SIFMA is generally supportive of the comments and conclusions set forth in the TMPG’s Summary Note.
- SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fi xed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and eCicient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA).
- SIFMA AMG brings the asset management community together to provide views on U.S. and global policy and to create industry best practices. SIFMA AMG’s members represent U.S. and global asset management fi rms whose combined assets under management exceed $45 trillion. The clients of SIFMA AMG member fi rms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds such as hedge funds and private equity funds.