THE HILL: Republicans want comprehensive housing plan along with new FHFA chief
By Vicki Needham and Peter Schroeder - 05/05/13 01:32 PM ET
President Obama’s nominee to take over the regulator overseeing Fannie Mae and Freddie Mac has led to Republican calls for a White House path forward on housing reform.
On Wednesday, Obama tapped Rep. Mel Watt (D-N.C.) to lead the Federal Housing Finance Agency (FHFA), which is charged with overseeing the mortgage giants that are still stuck on a government lifeline.
But while members of both parties are huddling and discussing comprehensive legislation to overhaul the housing market, the nomination is opening fresh calls for the White House to step forward.
Republicans argue that if the president wants to pick a new head to oversee the biggest presence in the housing market, it is up to him to present a comprehensive plan.
“Obviously if you’re going to replace an interim person with somebody permanently, it is incumbent upon the administration to lay out how they plan to transition away from Fannie and Freddie ,” Sen. Bob Corker (R-Tenn.), who is working on a housing reform bill, told The Hill.
Sen. Mike Crapo (R-Idaho), the ranking member of the Senate Banking Committee, which will vet Watt’s nomination, agrees.
In a statement, he said the Obama administration "must provide a long-term plan on how to end the conservatorships and responsibly transition to a more stable housing finance system."
"As the nominee, Congressman Mel Watt has the task of demonstrating that he possesses the necessary political independence, expertise and commitment to structural change required to achieve the necessary reforms at this critical juncture,” Crapo added.
Liberals hailed the Watt nomination, as they had long been frustrated by the stewardship of the FHFA’s acting director, Edward DeMarco , who has resisted efforts to allow Fannie and Freddie to participate in programs aimed at helping struggling homeowners.
The nomination of the high-ranking member of the House Financial Services Committee opens up a fresh front on one of the longest-running debates on Capitol Hill — what is to be done with the housing market.
Ever since the subprime mortgage collapse, both parties agree the current arrangement — government domination of the housing market — is unsustainable but, so far, no comprehensive plan has emerged.
Now those calling for action are hoping the Watt nomination could jar things loose.
Bill Killmer, chief lobbyist at the Mortgage Bankers Association (MBA), said that while the politics continue to be difficult, he hopes the Watt nomination is a "pivot point to get all appropriate policymakers engaged."
Killmer said the FHFA director can only do so much and it is up to Congress to pass legislation to make the comprehensive changes needed to ultimately reduce the role of the mortgage giants .
"There's an opportunity to do a bill on a bipartisan basis so maybe this will jar Congress to action," he said.
DeMarco has said that an overhaul could take upward of five years while lawmakers have pressed for a faster outcome, less than two years.
But Killmer said the complicated process of transitioning Fannie and Freddie will take a "number of years."
"You have to make sure you get it right," he said.
Despite a lack of action, he thinks the right components are out there to craft legislation and it is just a matter of "doing the heavy lifting to get this done."
DeMarco has urged lawmakers to produce a measure that would lay the groundwork for an overhaul of the housing finance market.
"We need Congress and the administration to agree on a legislative path for the role of government in the mortgage market going forward," he told the House Financial Services Committee in March.
DeMarco said he is preparing the agency for a reduced role in housing finance but needs Congress to determine the destination at the end of the path.
"Even if it's not the whole picture, we need parameters on how to gradually shrink Fannie and Freddie," he said.
The White House released a white paper at the beginning of 2011 on housing reform, where it agreed that Fannie and Freddie must be wound down at some point. However, the administration declined to endorse a particular path forward, and instead laid out three options for Congress to consider.
Senate Banking Committee Chairman Tim Johnson (D-S.D.) said recently he is still working across the aisle to "find a bipartisan path forward and sensible long-term reforms."
Fannie and Freddie were taken under government control during the financial crisis nearly five years ago and have soaked up $188 billion in taxpayer funds to keep them afloat.
But they have recently begun turning a robust profit that is being handed over to the Treasury.
Fannie borrowed $116 billion and has paid back $35.6 billion while Freddie has paid back $23.8 billion of their share.
DeMarco has said that he doesn't anticipate the government's complete exit from the mortgage-finance picture, but the ratio must be changed.
Fannie and Freddie together own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans. Those loans are worth more than $5 trillion. Along with other federal agencies, they back roughly 90 percent of new mortgages .
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By Vicki Needham and Peter Schroeder - 05/05/13 01:32 PM ET
President Obama’s nominee to take over the regulator overseeing Fannie Mae and Freddie Mac has led to Republican calls for a White House path forward on housing reform.
On Wednesday, Obama tapped Rep. Mel Watt (D-N.C.) to lead the Federal Housing Finance Agency (FHFA), which is charged with overseeing the mortgage giants that are still stuck on a government lifeline.
But while members of both parties are huddling and discussing comprehensive legislation to overhaul the housing market, the nomination is opening fresh calls for the White House to step forward.
Republicans argue that if the president wants to pick a new head to oversee the biggest presence in the housing market, it is up to him to present a comprehensive plan.
“Obviously if you’re going to replace an interim person with somebody permanently, it is incumbent upon the administration to lay out how they plan to transition away from Fannie and Freddie ,” Sen. Bob Corker (R-Tenn.), who is working on a housing reform bill, told The Hill.
Sen. Mike Crapo (R-Idaho), the ranking member of the Senate Banking Committee, which will vet Watt’s nomination, agrees.
In a statement, he said the Obama administration "must provide a long-term plan on how to end the conservatorships and responsibly transition to a more stable housing finance system."
"As the nominee, Congressman Mel Watt has the task of demonstrating that he possesses the necessary political independence, expertise and commitment to structural change required to achieve the necessary reforms at this critical juncture,” Crapo added.
Liberals hailed the Watt nomination, as they had long been frustrated by the stewardship of the FHFA’s acting director, Edward DeMarco , who has resisted efforts to allow Fannie and Freddie to participate in programs aimed at helping struggling homeowners.
The nomination of the high-ranking member of the House Financial Services Committee opens up a fresh front on one of the longest-running debates on Capitol Hill — what is to be done with the housing market.
Ever since the subprime mortgage collapse, both parties agree the current arrangement — government domination of the housing market — is unsustainable but, so far, no comprehensive plan has emerged.
Now those calling for action are hoping the Watt nomination could jar things loose.
Bill Killmer, chief lobbyist at the Mortgage Bankers Association (MBA), said that while the politics continue to be difficult, he hopes the Watt nomination is a "pivot point to get all appropriate policymakers engaged."
Killmer said the FHFA director can only do so much and it is up to Congress to pass legislation to make the comprehensive changes needed to ultimately reduce the role of the mortgage giants .
"There's an opportunity to do a bill on a bipartisan basis so maybe this will jar Congress to action," he said.
DeMarco has said that an overhaul could take upward of five years while lawmakers have pressed for a faster outcome, less than two years.
But Killmer said the complicated process of transitioning Fannie and Freddie will take a "number of years."
"You have to make sure you get it right," he said.
Despite a lack of action, he thinks the right components are out there to craft legislation and it is just a matter of "doing the heavy lifting to get this done."
DeMarco has urged lawmakers to produce a measure that would lay the groundwork for an overhaul of the housing finance market.
"We need Congress and the administration to agree on a legislative path for the role of government in the mortgage market going forward," he told the House Financial Services Committee in March.
DeMarco said he is preparing the agency for a reduced role in housing finance but needs Congress to determine the destination at the end of the path.
"Even if it's not the whole picture, we need parameters on how to gradually shrink Fannie and Freddie," he said.
The White House released a white paper at the beginning of 2011 on housing reform, where it agreed that Fannie and Freddie must be wound down at some point. However, the administration declined to endorse a particular path forward, and instead laid out three options for Congress to consider.
Senate Banking Committee Chairman Tim Johnson (D-S.D.) said recently he is still working across the aisle to "find a bipartisan path forward and sensible long-term reforms."
Fannie and Freddie were taken under government control during the financial crisis nearly five years ago and have soaked up $188 billion in taxpayer funds to keep them afloat.
But they have recently begun turning a robust profit that is being handed over to the Treasury.
Fannie borrowed $116 billion and has paid back $35.6 billion while Freddie has paid back $23.8 billion of their share.
DeMarco has said that he doesn't anticipate the government's complete exit from the mortgage-finance picture, but the ratio must be changed.
Fannie and Freddie together own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans. Those loans are worth more than $5 trillion. Along with other federal agencies, they back roughly 90 percent of new mortgages .
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