Five Questions Facing the GSEs’ Common Securitization Platform
By Jacob Passy
December 27, 2016
But market response to the new security and the platform is not the only concern on lenders’ minds when considering the CSP. Who controls the platform is another worry for some smaller lenders.
While the CSP is run by Common Securitization Solutions, a joint venture between Fannie and Freddie, legislation has cropped up in the past that would shift ownership to a fully private entity.
Sen. Richard Shelby, R-Ala., introduced a bill in 2015 that would do that as part of broader changes to financial regulation, but the legislation never went to a full Senate vote. Similar language also made it into the Senate version of a Treasury appropriations bill, but was taken out in the final version.
Now with Republican control of Congress and the White House, such a proposal could become more feasible. Similarly, if the GSEs were to be privatized, it is not clear how control of the platform would be regulated.
“The fact that it was considered in a comprehensive bill that passed the Senate Banking Committee is a source of concern,” said Scott Olson, executive director of the Community Home Lenders Association. “Given that it had moved forward before, it will continue to be a source of concern that it could happen.”
While his trade group supports the broader effort to implement the CSP, it is opposed to the platform moving into private hands for fear that it could make it harder for smaller lenders to compete, Olson said.
“Our opposition to turning the CSP over to a private entity is specifically that it could be controlled by Wall Street banks that are vertically integrated, so they use that then to capture, monopolize or get better pricing in the origination of loans,” Olson said.