Community Bankers Say GSE Reforms Will Squeeze Out Small Banks

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Community banks say the Treasury’s proposed housing market reforms will privatize the secondary mortgage market to the detriment of community banks that use GSE loan products to fund loans to consumers in small towns and rural areas.

"A reliable secondary market is essential so that the nation’s Main Street community banks can continue to offer residential mortgages to their customers," said Jim MacPhee, ICBA chairman and CEO of Kalamazoo County State Bank in Schoolcraft, Mich. "While reform should focus on preventing future crises in the housing market and embracing the common-sense underwriting standards long practiced by community banks, it should not eliminate all government involvement in the secondary market while turning it over to Wall Street."

Full Story >>>> HousingWire [Feb 11, 2011]