It wasn’t quite an affirmation of mom, baseball and apple pie, but it was close.
As President Donald Trump signed a memo on initiating reform of the housing finance system Wednesday, the White House said the aim was to “preserve the 30-year fixed-rate mortgage” and enable “Americans to access federal housing programs that help finance the purchase of their first home.”
That’s not exactly going out on a limb, though the nominee to lead the Federal Housing Finance Agency, Mark Calabria, once wrote the “housing market will be fine without 30-year fixed loans.” (He walked that libertarian outburst back at his confirmation hearing.)
What was newsworthy was that the White House was willing to go it alone on taking Fannie Mae FNMA, +8.18% and Freddie Mac FMCC, +7.48% out of government conservatorship.
“The president is directing the Secretary of the Treasury and the Secretary of Housing and Urban Development to craft administrative and legislative options for housing finance reform,” the White House said. “Critically, the administration wants to work with Congress to achieve comprehensive reform that improves our housing finance system.”
The phrasing is significant. The White House wants to work with Congress. The White House didn’t say it needed to work with Congress.
The actual memo Trump signed, even called for Treasury to identify which proposed reforms can be done without Congress and include a timeline for implementation.
Up on Capitol Hill, the distinction wasn’t lost.
“Yesterday I spent a lot of time emphasizing we’re not doing this in a vacuum. The new FHFA director has enormous, broad powers,” said Sen. Mark Warner, a Virginia Democrat. “The notion that this may be taken away from Congress is, I think, a concern.”
Warner was speaking at the second day of a two-day hearing on housing finance reform, working around an outline put forward by Sen. Mike Crapo, the chairman of the Senate Banking Committee and Idaho Republican.
Warner said he had heard agreement from the 12 witnesses over two days around a government guarantee and additional support for low- and moderate-income home buyers as concern remained over access for smaller and rural lenders.
There are huge issues that neither Congress nor the White House has tackled, such as how to capitalize Fannie and Freddie in a way that could remove them from government support. The memo merely states the obvious, that the giants will be subject to “increased capital requirements.”
The next step will be for the Senate to confirm Calabria, which is expected to happen next month, putting the new FHFA director in a position to lead the way on Fannie and Freddie reform — with or without Congress’s help.