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This next story poses some fundamental questions. It's a story of an effort to reshape the housing finance industry. The measure addresses the industry that it was at the heart of the financial crisis. It's also an industry at the heart of the American Dream and the bill before Congress may affect who can afford to buy a house. The Obama administration supports this bipartisan bill. Civil rights groups and housing advocates do not, because it would weaken rules pushing banks to lend to low-income homebuyers.
NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: Since the housing crash, there's been a lot of talk about doing a really historic overhaul of the U.S. mortgage market. And this bipartisan bill could be the last best shot at doing that during the Obama presidency.
HUD Secretary Shaun Donovan is trying to help push it forward.
SHAUN DONOVAN: This is the most important piece of repairing the damage from our financial crisis that remains.
ARNOLD: The bill aims to protect taxpayers from having to bail out financial firms in another housing crash and Secretary Donovan says it would do a lot to promote affordable housing.
DONOVAN: We would be able, under the current bill, to dedicate $5 billion a year to affordable housing. That's the largest new investment in affordable housing we've had in more than a generation.
ARNOLD: But housing advocates and civil rights groups say that they're actually worried about this bill. That's in part because of a section in it entitled the repeal of mandatory housing goals. Mike Calhoun is the president of the Center For Responsible Lending.
MIKE CALHOUN: The bill explicitly abolishes affording housing goals.
ARNOLD: Calhoun says these goal had required that a certain percentage of loans be made to low and moderate income people, but the bill gets rid of these mandatory goals, making them voluntary with a set of financial incentives. That's because many conservatives blame the mandatory lending rules for causing the financial crisis and the bill needed support from Republicans.
CALHOUN: Those who argue that the crisis was caused by over government regulation, encouraging banks to offer loans to low or moderate income families.
ARNOLD: So the new bill softens those regulations.
WADE HENDERSON: Many of us are skeptical.
ARNOLD: Wade Henderson heads up the Leadership Conference on Civil and Human Rights, which includes groups ranging from the NAACP to the AARP. He worries about losing those mandatory goals.
HENDERSON: The new proposed system, that bill promised to deliver more in the way of actual dollars for affordable housing, has loopholes and it's not clear that that will be the case.
ARNOLD: HUD Secretary Donovan, though, says that just look at the foreclosure crisis and that shows you that the current system is broken and it needs to be fixed.
DONOVAN: African Americans lost half their wealth between 2005 and 2009 so anybody who tells you that the current system is serving those families well is missing the point. We need reform here to serve the very families that those groups advocate on behalf of.
ARNOLD: But Henderson and Calhoun say one of the big reasons all those people got hurt so badly is that folks on Wall Street were making a lot of money packaging up risky home loans that people couldn't afford. The Justice Department is now winning billion-dollar settlements over that. And Calhoun says despite that, this bill gives Wall Street firms a freer hand to do what they want.
CALHOUN: It turns over the home mortgage system to Wall Street and the bigger banks.
ARNOLD: So we asked HUD Secretary Shaun Donovan about that. I've heard the criticism that the reform in this bill takes power from government and shifts it to Wall Street. Why is that a good idea?
DONOVAN: Well, Chris, let me ask you a question on that. If that were true, why is Wall Street fighting so hard for the status quo? We see ads every day that are complete misinformation about this bill trying to undermine it because Wall Street is supporting the status quo.
ARNOLD: Actually, Mike Calhoun says, most of that resistance is coming from just a tiny slice of Wall Street, a few hedge funds that made big stock bets on something. He says many more big banks and financial firms support the bill. In any case, HUD Secretary Shaun Donovan says he believes that this would be a good thing for the country and he's hopeful that these concerns could be addressed so that it can gain more support.
The bill could be voted on in a Senate committee later this week. Chris Arnold, NPR News.
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