Senate Banking Committee to take another shot at GSE reform.

Building on last year's efforts, Senate Banking Committee Chairman Richard Shelby (R-Alabama) said he will continue to push for consensus in order to move a strong government-sponsored enterprise (GSE) reform bill through the Senate in 2006.

GSE reform is one of more than a dozen priorities set for the Banking Committee during the second session of the 109th Congress, announced Shelby.

"Over the course of my chairmanship, I have been extremely pleased with the committee's commitment to operating in a bipartisan manner to address many of the key issues in the areas of financial services, housing and transit," Shelby said in a statement. "I look forward to working with ranking member [Paul] Sarbanes [D-Maryland] and the other members of the committee to again press forward with an aggressive agenda."

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The House passed a GSE reform bill, the Federal Housing Finance Reform Act of 2005 (H.R. 1461), in November. However, the Senate's reform bill--the Federal Housing Enterprise Regulatory Reform Act of 2005 (S. 190)--has been bogged down since it moved out of committee along a strict party-line vote over the issue of GSE mortgage portfolios (see Mortgage Banking, September 2005, p. 8; and December 2005, p. 10).

Among other things, H.R. 1461 would give the new regulator the authority to set a clear definition of the secondary mortgage market and of mortgage loan origination, effectively establishing a "bright line" between the primary and secondary mortgage markets, which the Mortgage Bankers Association (MBA) supports.

Despite the committee's fulsome intended agenda, the work accomplished last year by the committee gives GSE reform a "leg up," making the chances of moving a bill good, according to Banking Committee Communications Director Andrew Gray.

"Senator Shelby thinks the environment is right for moving a bill," Gray told Mortgage Banking.

Look for post-Hurricane Katrina redevelopment to be "an issue of primary importance" to the committee, said Gray, with a particular focus on flood insurance, economic stabilization and housing needs. Part of this review will include various proposals to rebuild the Gulf Coast region.

A separate but related committee priority will include reform of the National Flood Insurance Program (NFIP). In light of what Shelby has referred to as the program's "bankruptcy," as well as its continuing obligations, expect the committee to consider legislation to allow NFIP to remain viable, said Shelby.

On the issue of data security, Gray said the committee is in the process of drafting a bill that would establish standards for notifying customers of unauthorized disclosure of their financial information in certain circumstances. The bill would be designed to complement existing data-security protections established in the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act (FCRA).