Washington Update - 07/27/2005 (Plain Text Version)

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Senate Panel to Consider GSE Bill

Senate Banking Committee Chairman Richard Shelby (R-AL) confirmed last week that his committee would mark up government-sponsored enterprise (GSE) legislation on July 28. NAHB sent a letter to the entire Banking Committee stating that the bill scheduled for markup (S. 190) “represents a missed opportunity to craft a meaningful regulatory framework that strengthens and safeguards the financial health of the GSEs while preserving their vital housing mission.” NAHB urged the Senators to oppose S. 190 because it fails to adeuqately address the nation’s housing concerns.

Specifically, S. 190 would severely curtail the investment portfolios of Fannie Mae and Freddie Mac; does not include an affordable housing set-aside for the two housing finance entities; and would give the new regulator unlimited power to increase GSE minimum capital requirements and broad program approval authority that could inhibit the development of new products. Because S. 190 sets stringent limits on the types of securities that the GSEs may hold for investment and contains no affordable housing fund, it is expected that the Senate panel will approve tomorrow’s mark up of the legislation along a strict party line vote.

On the House side, Financial Services Committee Chairman Mike Oxley (R-OH) sent a letter to Majority Leader Tom Delay (R-TX) last week requesting that H.R. 1461 be sent to the House floor for a vote. The bill has been put on hold due to concerns from the Republican Study Committee (RSC) regarding the affordable housing fund and its potential abuse by Fannie Mae and Freddie Mac as a political slush fund. To address the RSC’s concerns, Chairman Oxley outlined in his letter several proposed changes to the bill’s affordable housing requirements. Further complicating matters was a jurisdictional claim last week by the House Judiciary Committee over some parts of the bill, which could require that the Judiciary Committee consider H.R. 1461 before it can advance to the House floor. It appears unlikely that the bill will be considered by the full House before the August recess. For more information, contact Greg Brown or Scott Meyer at 800-368-5242, x8470.

Greenspan Remarks Provide Boost to Terrorism Insurance Supporters

Efforts to pass legislation extending the Terrorism Risk Insurance Act (TRIA) past its current expiration of Dec. 31, 2005 received an unexpected boost last week from Federal Reserve Chairman Alan Greenspan during his testimony before the House Financial Services Committee on the state of the nation’s economy. When asked about TRIA, he said: "The type of terrorism that is arising in the context of increasing technologies which were not available before has created the possibilities of huge losses. And there is no way for a private system to handle that." He later added, "I don't see how we can avoid the issue of a significant segment of government-backed reinsurance in this particular area." To date, two hearings have been held where the Administration has testified about its analysis of the need for an extension of TRIA. In that analysis, the Administration stated that TRIA has actually stood in the way of the private market developing terrorism insurance products. The House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises will address the topic in a hearing on July 27. For more information, contact Greg Brown at x8470. [return to top]

House Action Delayed on ESA Reform Plan

Negotiations over an Endangered Species Act (ESA) reform bill have faltered between House Resources Committee Chairman Richard Pombo (R-CA) and Ranking Member Nick Rahall (D-WV). As a result, any committee or floor action on such a measure will be delayed until after the August congressional recess. Chairman Pombo had been seeking to broker a deal in time to bring a bill before his committee before the August break. However, such a deal proved elusive, and negotiations will continue through the summer. NAHB will be continuing to meet with committee staff to push our priorities for ESA reform. For more information, contact Jason Lynn at x8470. [return to top]

Canadian Softwood Lumber Talks End with No Deal

Negotiations that began last week between the U.S. and Canada to end the current softwood lumber dispute ended with no deal in sight. NAHB met with the United States Trade Representative's (USTR) lead negotiator to express our concern that the proposed terms of the deal would negatively affect the housing industry, and that the government was not adequately representing lumber consumers in these negotiations. NAHB has shared our concerns with members of Congress and asked that they contact Ambassador Rob Portman at USTR to inform him of their frustration as well. Negotiations may begin anew in late August. For more information, contact Jason Lynn at x8470. [return to top]

Senate Panel Approves HUD Spending Bill

The Senate Appropriations Committee last week unanimously approved a fiscal 2006 Transportation-Treasury-Judiciary-HUD spending bill. NAHB worked closely with appropriators to highlight key priorities and programs of interest to our members. Highlights are listed below, along with the corresponding amounts provided in the House-passed version of its fiscal 2006 HUD spending bill.

Department of Housing and Urban Development funding:
• HUD overall: Senate: $38.9 billion; House: $37.5 billion.
• Section 8: Senate: $15.6 billion; House: $15.6 billion.
• Section 8 Project-Based Rental Assistance: Senate: $5.1 billion; House: $5 billion.
• HOPE VI: Senate: $150 million; House: $60 million. NAHB had urged appropriators to maintain this program. The Administration sought to eliminate HOPE VI in fiscal 2006.
• CDBG: Senate: $4.3 billion (formula grants, $3.8 billion); House: $4.2 billion (formula grants $3.86 billion). Both the House and Senate rejected the Administration's proposal to transfer the Community Development Block Grant program to a new consolidated block grant program at the Commerce Department. NAHB urged appropriators to maintain the program at HUD.
• HOME: Senate: $1.9 billion ($1.7 billion, formula grants); House: $1.9 billion ($1.76 billion, formula grants).
• American Dream Downpayment: Senate $50 million; House: $50 million.
• FHA Multifamily Mortgage Insurance programs: In both the House and Senate, loan commitment authority is given at $35 billion, which should be adequate to avoid a shutdown.
• FHA Single Family Mortgage Insurance Premiums: The House and Senate each set the program authority at $185 billion in fiscal 2006.
• PATH: Senate: $5 million; House: $5 million. At the request of NAHB, language to allow the NAHB Research Center to move forward with cooperative agreements under the program is included in both versions.
• YouthBuild: Senate: $55 million; House: $50 million.

The full Senate will vote on the HUD appropriations bill following its August recess. While no firm date has been set, committee staff expect that the bill may be brought to the Senate floor during the second or third week of September. For more information, contact Jenna Morgan Hamilton at x8470. [return to top]

Tax Reform Panel Urges Repeal of Alternative Minimum Tax

The President's Advisory Panel on Federal Tax Reform agreed last week that the Alternative Minimum Tax (AMT) is needlessly complex and burdensome and should be repealed. However, the panel did not determine how to recoup the $1.2 trillion in lost revenue that AMT repeal would cost the Treasury over the next decade. The AMT was originally designed to ensure that high-income individuals paid some income tax. However, it has mushroomed from a law targeted to the rich to one that threatens more than 20 million taxpayers in 2006. NAHB has policy calling for the full repeal of the individual and corporate AMT. The panel is expected to issue its final recommendations on tax reform to the Treasury Secretary by Sept. 30, 2005. For more information, contact Jim Tobin at x8470. [return to top]

Senate to Seek Vote on Estate Tax Repeal

The Senate may schedule a cloture vote this week on the full and permanent repeal of the federal estate tax. Although proponents of full and permanent repeal lack the 60 votes needed to defeat a filibuster of the legislation, they hope that by forcing a vote, Democrats and moderate Republicans will reach a compromise on the issue. In response to next week's vote, NAHB sent a letter to the full Senate encouraging a vote on full and permanent repeal. NAHB will continue to work with our business coalition partners to lobby the Senate for full repeal.

As reported last week, an unofficial compromise has been floated by Senators Jon Kyl (R-AZ) and Max Baucus (D-MT) that creates a permanent $8 million exemption from the estate tax ($4 million for single filers). Any estate value above the $8 million exemption would be taxed at the long term capital gains rate, which is currently 15% (though the capital gains rate is scheduled to go back up to 20% in 2009). For more information, contact Jim Tobin at x8470. [return to top]

Conferees Continue to Seek Consensus on Energy Legislation

House and Senate conferees have completed their work on comprehensive energy legislation and the House and Senate should vote upon the final bill later this week. The tax provisions, which include energy efficiency tax credits for new homes, existing homes and multifamily properties, are still being negotiated at this time, but are expected to be included in the final product. NAHB is urging conferees to ensure that these housing tax provisions are included in the final conference report and that they are meaningful credits. The conferees are pushing to approve a bill before they adjourn for the August recess. For more information, contact Allen Segal at x8470. [return to top]