Skip to main content

FHFA’s Watt: Congress Needs to Move on GSE Reform

Phil Hall
May 11, 2017
A coalition of more than 20 financial and real estate trade organizations called on the U.S. Senate to confirm Kathy Kraninger as the next Director of the Consumer Financial Protection Bureau (CFPB)

The director of the Federal Housing Finance Agency (FHFA) urged Congress needs to take responsibility for housing finance reform and offer a strategy to end federal conservatorship of the government-sponsored enterprises (GSEs).
 
In an appearance this morning before the U.S. Senate Committee on Banking, Housing and Urban Affairs, FHFA Director Mel Watt noted that while his regulatory can take credit for “many reforms” to the business models and operations of Fannie Mae and Freddie Mac, their conservatorship is not sustainable. Going forward, Watt stated that Congress must take the next step in determining the GSEs’ future.
 
“So, I want to reaffirm my strong belief that it is the role of Congress, not FHFA, to make these tough decisions that chart the path out of conservatorship and to the future housing finance system,” he said, adding that Congress needed to ask difficult questions on the future structure of the GSEs and to determine the depth and scope of their role in federal housing policy.
 
Watt also warned of the possibility that the GSEs could slip back into financial tumult. “Like any business, the Enterprises need some kind of buffer to shield against short-term operating losses,” he continued. “In fact, it is especially irresponsible for the Enterprises not to have such a limited buffer because a loss in any quarter would result in an additional draw of taxpayer support and reduce the fixed dollar commitment the Treasury Department has made to support the Enterprises. We reasonably foresee that this could erode investor confidence. This could stifle liquidity in the mortgage-backed securities market and could increase the cost of mortgage credit for borrowers.”

 
Published
May 11, 2017
'A Long Road To Normal'

Nominated again to lead The Fed, Powell tells Senate committee to expect three rate hikes, but 'if we have to raise interest rates more over time, we will.'

Regulation and Compliance
Jan 11, 2022
CFPB: Complaint Response Worsens At Big 3 Credit Bureaus

Report claims Equifax, Experian, and TransUnion routinely failed to fully respond to consumers with errors.

Regulation and Compliance
Jan 10, 2022
The Fed Names Chairs, Deputy Chairs For 12 Reserve Banks

In recent years, the Federal Reserve System has worked to increase the overall diversity of the Reserve Bank and branch boards of directors and continues to build on those efforts.

Regulation and Compliance
Jan 06, 2022
The Fed: Rate Hike Likely Coming in June

Federal Open Market Committee's December minutes reveal discussion of first hike in federal funds rate in 2Q of 2022, as well as of ending asset purchases by March.

Regulation and Compliance
Jan 05, 2022
AARMR No Protection For Savanah Scares

Conference provides opportunity for regulators to interact, discuss common topics

Regulation and Compliance
Jan 04, 2022
McCargo Sworn In As Ginnie Mae President

Former HUD official becomes the first female to lead the Government National Mortgage Association.

Regulation and Compliance
Jan 04, 2022