Many Democrats in Congress are frustrated by the months-long, bi-partisan infrastructure negotiations that seem to have made little progress. With control of the presidency and both chambers of Congress, the party has a growing sense of urgency to move President Biden’s agenda forward before the mid-term elections. Just as pressure to abandon the negotiations increased, the Senate appears to have reached a deal on a package that includes $550 billion in new infrastructure spending. A 67-32 procedural vote in the Senate allowed the bill to move forward but final passage is far from assured. Democrats are continuing to work on a separate bill that they plan to pass through the budget reconciliation process to avoid the need for any Republican support. The bill is expected to contain priorities from Biden’s comprehensive infrastructure proposal such as housing and national paid family leave. However, Democrats are finding internal consensus just as frustrating as there isn’t agreement over the amount of spending or how to pay for it.
Looming deadlines threaten to further complicate negotiations. Suspension of the debt ceiling ends on July 31 and U.S. Treasury utilization of extraordinary measures will likely only add a few months to that deadline before default. Additionally, Congress will need to pass a government funding bill before Oct. 1. Delayed action by Congress on both issues could impact continued economic recovery.
President Biden isn’t relying solely on Congress to advance his agenda. He continues to utilize executive orders and regulations where possible. Biden recently signed an executive order aimed at big companies intended to increase competition. This most recent order joins others on climate-related financial risks and advancing racial equity – both are top priorities for Biden.
President Biden Signs Executive Order on Competition
President Biden signed an Executive Order called “Promoting Competition in the American Economy.” The order, among other things, encourages the Department of Justice, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) to update guidelines calling for a greater level of scrutiny on bank mergers.
It also encourages the Consumer Financial Protection Bureau to issue rules allowing customers to download their banking data and take it with them to in an effort to make it easier and less costly to switch financial institutions.
Fannie and Freddie Adverse Market Refinance Fee Eliminated
The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac will eliminate the Adverse Market Refinance Fee for loan deliveries. This becomes effective on August 1, 2021.
By way of background, in August 2020, Fannie Mae and Freddie Mac planned to begin collecting the fee on mortgage refinance loans sold to them. This was met with strong opposition from lenders, housing organizations and members of Congress from both parties. The FHFA ultimately delayed implementation to Dec. 1, 2020 and added exemptions on loans being refinanced with balances below $125,000.
Waters Releases Comprehensive Housing Package
Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services released a comprehensive housing package and stated, “the reconciliation bill provides us with a once-in-a-generation opportunity to provide the housing resources that our country so desperately needs.“
The package includes three separate bills:
1. “Housing is Infrastructure Act of 2021” includes $600 billion in funding including:
- $75 billion for Public Housing
- $45 billion for the national Housing Trust Fund
- $35 billion for the HOME Investment Partnerships Program
- $12.5 billion to the Capital Magnet Fund
- $75 billion for Multifamily Housing Greening and Preservation
- $5 billion for Preservation Grants for Properties Receiving Section 8 Project-Based Rental Assistance
- $150 billion for new incremental Housing Choice Vouchers
- $15 billion for the Community Development Block Grant program
- $15 billion for grants for zoning and land use improvements
- $10 billion for the Community Revitalization Fund
- Creates an infrastructure bank called the National Investment Authority
2. “Ending Homelessness Act of 2021:”
- Expands Housing Choice Voucher program into a federal entitlement
- Prohibits landlords from discriminating against renters based on source of income and veteran status
- $10 billion in funding over 5 years for the Housing Trust Fund and McKinney Vento grants to fund the creation of permanent affordable housing for people experiencing homelessness
3. “Downpayment Toward Equity Act of 2021:”
- Establishes grants for down payment and closing costs of up to $20,000 for first-generation homebuyers and up to $25,000 for socially and economically disadvantaged homebuyers
House Passed FY22 THUD Bill
The House approved the fiscal year 2022 Transportation, and Housing and Urban Development (HUD), and Related Agencies funding bill. The bill provides a total of $56.5 billion for HUD – an increase of $6.8 billion above fiscal year 2021 and $314 million below the President’s 2022 budget request.
- $29.2 billion for Tenant-based Rental Assistance
- $8.64 billion for Public Housing
- $400 million which doubles the Choice Neighborhoods Initiative
- $200 million for Self-Sufficiency Programs
- $10.6 billion for Community Planning and Development
- $3.4 billion for Homeless Assistance Grants
- $14 billion for Project-based Rental.
- $100 million for Housing Counseling
- $185 million for Policy Development and Research, including $20 million to continue legal aid assistance for eviction prevention
- $85 million for Fair Housing and Equal Opportunity
- Community projects identified by more than 250 Members of Congress from both parties.
OCC to Rescind Its 2020 CRA Rule
The OCC announced it will propose rescinding the Community Reinvestment Act (CRA) rule issued in May 2020. OCC joined the Federal Reserve Board and the FDIC in a joint statement that the agencies are committed to working together to strengthen and modernize regulations implementing CRA.