In our view, the stunning primary defeat of Eric Cantor has made it still more clear that housing-finance reform legislation will not advance this year, dashing hopes we know some – including the Administration – harbored that the House and Senate could turn to this after the mid-term election. The initial legislative plan by the Obama Administration this year was for the Senate to pass something like Johnson-Crapo and, with this on the table, for Cantor to force Hensarling to compromise.  With Cantor gone and the House sure to go still more passionate about free-market initiatives, that plan – a long, long shot since the mark-up – is in our view now a no-go. The question now is will this lead the Administration and Mel Watt to move more quickly to reconstitute the conservatorships within the construct of current law?

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