Washington D.C. — The American Economic Liberties Project released the following statement from Director of Policy and Advocacy Morgan Harper on the House’s passage of its version of the 21st Century ROAD to Housing Act:

“This bill is a good step to fix the housing supply problem created by policies that financialized the U.S. housing market. In particular, we are encouraged to see both chambers of Congress begin to address the role Wall Street plays in driving up housing costs for Americans. By voting to restrict large institutional investors, and creating pathways to unlock the nation’s housing supply, Congress is starting to put power back in the hands of American homeowners and renters who have suffered from Wall Street greed since the Great Recession caused mass evictions. Before passage, however, more work should be done to bring the final bill even closer to the Senate version and eliminate all deregulatory provisions.”

The House injected community bank deregulation provisions that would undo measures enacted after the savings & loan crisis to promote bank stability. Specifically, the House bill includes the following new sections to deregulate community banks:

• Section 901: exempts community banks from capital requirements and interest limits for a certain percentage of “custodial” deposits. This jeopardizes their stability by allowing them to hold more deposits that are rate-sensitive and likely to flee quickly if the bank gets into trouble, potentially accelerating failure and increasing FDIC resolution costs. Private-equity owned firms have been lobbying for years for various steps towards privatizing FDIC deposit insurance, and the deregulatory provisions would constitute another step in that process.
• Section 902: raises the percentage threshold of reciprocal deposits that may be held by any bank, without being considered brokered deposits. This means banks can load up more of their balance sheet with rate-sensitive deposits before restrictions kick in.

The House bill also eliminated the seven-year sale requirement for build-to-rent acquisitions, which the Senate negotiated with the White House. This requirement should be restored before a final bill is passed.

Build-to-rent is the next frontier of the same problem. Entire single-family neighborhoods are being built not for families, but for institutional portfolios, off-limits to homebuyers before the foundation is even poured. In Atlanta, build-to-rent inventory has grown more than 1,300% since 2019. In January, Invitation Homes acquired ResiBuilt and locked in options on roughly 1,500 lots. The Senate’s sell-off rule would have forced those exact homes back onto the market for Atlanta families within a decade. Without it, they never have to sell.

“If Congress is going to take on institutional investors and access to housing, it should be comprehensive and forward thinking. We are still paying the price of the 2008-2009 foreclosure crisis, when investors with cheap capital and Wall Street backing moved in and bought up thousands of properties, and left families on the street. Overnight, the foundation of the American Dream became, for millions of households, an asset in an investor’s portfolio,” Harper continued. 

Read AELP’s paper on institutional investors in Atlanta— “The New Rent Seekers” —  here. 

Read AELP’s paper on financing for homebuilders– “Capital Crunch”— which extensively details how deregulation led to the failure of many local savings and loan institutions and harmed local homebuilding– here.

Learn more about Economic Liberties here.