Five Questions with U.S. Rep. Ed Royce
Congressman Ed Royce (R-CA) serves California’s 39th Congressional District, which encompasses parts of Orange, Los Angeles and San Bernardino Counties. A member of the U.S. House of Representatives since 1993, he lists hispriorities in Congress as: “addressing our national debt, protecting our homeland, eliminating pork-barrel spending, fighting crime and supporting victims of crime, strengthening education for all students,spurring job creation and strengthening Social Security and Medicare.”
Since 2013, he has chaired the House Foreign Affairs Committee. He is also a senior member of the House Financial Services Committee, and sits on two of its subcommittees: Capital Markets and Government Sponsored Enterprises and Housing and Insurance. A proponent of comprehensive housing finance reform, he co-sponsored the Credit Scoring Competition Act of 2015 (H.R. 4211) with Rep. Terri Sewell (D-AL). Rep. Royce found time amid his many duties to discuss the Act with The Score.
Last December, you introduced the Credit Scoring Competition Act of 2015 (H.R. 4211), which is currently pending before the House Financial Services Committee on which you serve. Why?
Fannie Mae and Freddie Mac currently evaluate their ability to purchase a mortgage based exclusively on one credit scoring model, which has created a monopoly in the credit scoring field. My legislation opens the door for the GSEs to use alternative credit scoring models, which creates competition in credit scoring while decreasing the potential for systemic risk in the housing market. It’s a win-win.
H.R. 4211 is a bipartisan bill with Rep. Terri Sewell (D-AL) as the lead Democratic cosponsor; why do you think credit scoring competition attracts bipartisan support?
Fannie and Freddie’s 90% share of the secondary mortgage market and reliance on one credit scoring model has created a near monopoly in this field. Opening the GSEs up to other credit scoring models will foster competition and innovation in the credit scoring industry, all of which ultimately benefits consumers. That’s something both Democrats and Republicans can get behind.
There have been many calls for GSE reform since FHFA placed Fannie Mae and Freddie Mac into conservatorship, but not a lot of action. Why is that, and when do you think Congress will deal with the tough issues related to GSEs?
A nationalized mortgage market is an unsustainable status quo; GSE reform remains the great undone work of the financial crisis. While there is widespread, bipartisan consensus amongst policymakers that Fannie and Freddie must go, there are disagreements on the role of government in the market moving forward. In the interim, members of Congress have introduced “building block” reforms such as opening up the GSEs’ Common Securitization Platform to private capital and encouraging more risk-sharing by Fannie and Freddie that will ease the path for future comprehensive housing finance reform.
As Chairman of the House Foreign Affairs Committee, what do you see as the top foreign challenge facing this country in 2016?
For seven years now, the administration has focused more on befriending our enemies than helping our allies. This failed approach has empowered Russia, and allowed for ISIS and Iran’s rise – all of which will continue to be significant challenges in 2016.
With the Presidential primaries in full swing the nation is focused on this year’s presidential run. What advice would you give the next president to help improve relations between the White House and Congress and is there any one candidate you think might be best able to build a bridge between the Administration and Congress?
Keep the lines of communication open. Our system of government is designed to be collaborative, and a go-it-alone approach ultimately produces poor results and circumvents the will of the American people. I think there are multiple Republican candidates well-positioned to improve relations with Congress, and I’m following the race closely.