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Secretary Mnuchin: GSE Reform Delayed to 2018
Posted On October 03, 2017
In an interview with Bloomberg last week, Treasury Secretary Steven Mnuchin addressed the reform of government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac. He agreed the issue of reform is of great importance. The GSEs have remained under federal conservatorship since the Financial Crisis nine years ago.
Mortgage industry advocacy groups, like the Mortgage Bankers Association (MBA), have continued to express the need for GSE reform. The MBA released a white paper in April 2017 reviewing various strategies to get Fannie and Freddie out of conservatorship. In his interview, Secretary Mnuchin said, “we need to fix Fannie and Freddie […] this is a 2018 issue, but we’re going to fix it and when we fix it we want to make sure we never put taxpayers at risk.”
Senator Bob Corker, a consistent advocate for housing reform, announced he will not be seeking reelection, giving him 15 more months in office. Due to his propensity for pushing for GSE reform, many political analysts expect him to be especially supportive of change before his retirement. Fannie and Freddie have been profitable since 2012, and bailout terms require all profits are returned to the US Treasury.
The Trump Administration has faced considerable delays with healthcare and tax reform and other issues prioritized over housing reform. The House Financial Services committee and the Federal Housing Finance Agency (FHFA) are planning to discuss housing reform as early as this month. Representative Jeb Hensarling will hear testimony from FHFA Director Mel Watt and work together to enact an amicable solution.