U.S. Sen. Bob Corker is welcoming President Barack Obama’s announcement that he is backing a bipartisan Senate effort the Tennessee Republican helped craft seeks to strengthen America’s housing finance system and shield taxpayers from bearing the brunt of future economic meltdowns.
It “gives me hope that we actually deal with Fannie and Freddie before the political season begins this January and makes it very difficult for anything to occur,” Corker told Times Free Press editors and reporters Tuesday.
Some five years after the mortgage crisis struck government-sponsored enterprises Fannie Mae and Freddie Mac and required a $200 billion federal bailout, Obama said it’s time to reduce government’s risk in any future crisis.
With the real estate market now coming back and Fannie Mae and Freddie Mac beginning to pay off their loans, Obama agreed officials should start phasing out the two companies.
Corker and Virginia Republican Sen. Mark Warner’s plan, which Corker said has the support of five Republicans and five Democrats on the Democratic-led Senate Banking Committee, would replace Fannie Mae and Freddie Mac with a privately capitalized system.
Corker said his proposal would create a new entity and require the loans it backs to be capitalized up front at 10 percent when the housing mortgages are sold.
Federal guarantees would be explicit, but Corker said he doesn’t see it ever having to happen. Had a 5 percent capitalization requirement been in effect in 2008, Corker said, no 2008 federal bailout would have occurred.
Corker said White House officials called him in advance to let him know the “Corker-Warner bill was sort of the direction they’re going. Now, they’re pushing for some things that are not in the bill … and I’m not particularly supportive of [them]. But I understand how things work and you’ve got to gain widespread support and pass a piece of legislation.”
During his discussion with Times Free Press reporters and editors, Corker sought to downplay Washington gridlock and what some characterize as a “civil war” amongst GOP factions in the House and Senate.
On gridlock, Corker, a former Chattanooga mayor, said local residents here are coming to him during this month’s recess and saying, “Gosh almighty, I’ve never seen so much dysfunction.”
Corker said his view is that “for the first time, I see function. For the first three and a half years I was in the Senate we had this financial meltdown in our country with our financial institutions and because of my background [former state finance commissioner/private developer] I wound up playing sort of an outsize role for a freshman.
“I look at where we are now where things are functioning. There’s a lot of discussion between the two sides of the aisle. ... So I look at where we are, it’s so different to me than I think people back here envision,” Corker added.
While he disagrees with some tea party Republicans’ efforts to reject all spending bills to halt implementation of Obamacare, “everybody on the Republican side has concerns about it. But there are differing strategies as to how to deal with it. It’s sort of a unified opposition, but within that there’s multiple ways of looking at it, some of which I think are totally self-defeating and not a very good course of action, and I’ve stated it as strongly as I could.”
Corker recently denounced the proposal in a letter signed by a dozen Senate Republicans as “silly.” He said the letter was passed around at a luncheon and he believes eight senators have regrets about signing it.
Corker said he continues to hold out some hope of a “grand bargain” dealing with corporate tax overhauls, entitlement reforms, debt and other issues.
But even should that not happen, Corker said at the very least, some sort of legislation should be passed to implement a better thought-out approach to cutting spending other than the “sequester” which imposes across-the-board cuts.
Still, he acknowledged that while senators have been able to strike bipartisan deals on issues like immigration, he recognizes “it’s different for the House. Speaker [John] Boehner, I mean it’s tough. You’ve got a slim [Republican majority] margin … I do think the House has divisions that right now are difficult to overcome.”
As for a comprehensive budget deal, the senator paused, saying, “if I had [another] dollar to bet … I’d put a chip on the table and decide later where I was going to put it. But there’s no question that the fiscal solution has to emanate from the Senate. I don’t think there’s a way that a solution on the fiscal side comes out of the House.”
<em>Contact staff writer Andy Sher at firstname.lastname@example.org or 615-255-0550.</em><em></em>