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Financial service trade groups last week called on Congress to curb the "mission creep" of government sponsored entities to make sure they don't enter into, and potentially dominate, America's primary housing market.
Christopher Sumner, president of the Mortgage Bankers Association, said consumers would be worse off if the GSEs enter into the primary market because it would reduce the "vigorous" competition that's already present.
Mr. Sumner made his comments before the House Subcommittee on Capital Markets, Securities and Government Sponsored Enterprises. The subcommittee was seeking public comment on H.R. 3703, sponsored by Rep. Richard Baker, R-LA.
The Baker bill establishes a single, independent oversight board whose principal duties would be to make sure the GSEs operate in a financially safe and sound manner, carry out their mission and remain adequately capitalized.
The bill also calls for increased regulation of the GSEs and an end to their lines of credit with the U.S. Treasury Department.
"As their share of secondary-market activity increases to the point of domination, they might naturally...