Early September, the U.S. Treasury Department released the Housing Reform Plan, a 53-page proposal to end the federal conservatorship of government-sponsored enterprises (GSEs). This proposal is in response to President Trump’s presidential memorandum signed in late March to revamp the GSE structure. GSEs came under the purview of the federal administration during The Great Recession and the bailout of Freddie Mac and Fannie Mae in 2008. The Housing Reform plan details its goals of ending the conservatorship of GSEs, facilitate competition in the housing finance market, and establish regulations of the GSEs to ensure financial stability of the United States.
On September 10, the Senate Banking Committee held its Housing Finance Reform: Next Steps hearing. Treasury Secretary Steven Mnuchin, HUD Secretary Ben Carson, and FHFA Director Mark Calabria provided testimony to the committee to discuss an overview of the Housing Reform Plan released earlier this year by the Trump Administration, working with Congress on future legislation required to implement this plan , and addressing concerns over consumers’ access to government-backed 30-yr, fixed-rate mortgages. “The Trump Administration is committed to promoting much needed reforms to the housing finance system that will protect taxpayers and help Americans who want to buy a home,” said Treasury Secretary Mnuchin. “An effective and efficient federal housing finance system will also meaningfully contribute to the continued economic growth under this Administration.”
Senator Mike Crapo, the committee’s chair, gave little confidence the plan would move out of committee. The senators cited concerns that Fannie and Freddie continue to lack capital and could end up costing consumers more in the future. NAFCU President and CEO Dan Berger stated, “First and foremost, a legislative solution is necessary and crucial to ensuring credit unions receive guaranteed access to the secondary mortgage market and fair pricing for their paper, and we appreciate the Senate Banking Committee’s commitment to these key issues. Also, the committee’s focus on allowing Fannie Mae and Freddie Mac to rebuild their private capital reserves is a positive development as private capital can be used to shield American taxpayers from risk, place the GSEs on solid financial footing, and help stabilize them for the long-term.” With a year and half remaining of the President’s first term, FHFA will have to work hard to complete all the tasks outlined in the reform proposal.