May 10, 2019

Calabria Expects GSEs to be released from conservatorship, NAFCU engaged

Federal Housing Finance Agency (FHFA) Director Dr. Mark Calabria stated this week thathome Fannie Mae and Freddie Mac (GSEs) are expected to be released from government conservatorship. Dr. Calabria noted his desire for Congress to lead the effort by passing housing finance reform first, also saying that the FHFA will wait "at least an entire Congress" before the agency acts to release the GSEs from government control. 

Dr. Calabria also indicated that the GSEs must adequately rebuild their capital levels before being released. 

"Even if it was the largest IPO in history, it's not clear that that could do that in one fell sweep," Calabria said. Capital ratios at the GSEs would need to "look like any other large financial institution" before being released, he added.

In March, the Trump administration released an outline for housing-finance reform that instructed the Departments of Treasury and Housing and Urban Development to develop reform plans. Both agencies are expected to complete their reports in the coming months.

NAFCU is leading efforts to ensure credit unions' unfettered access to the secondary mortgage market in any housing finance reform and has urged the Trump administration and Congress to work together on a comprehensive solution. Dr. Calabria supports NAFCU's position on allowing the GSEs to rebuild capital.

NAFCU staff has met with Dr. Calabria several times to share the association's housing finance reform priorities. The association also met on these issues with Comptroller of the Currency Joseph Otting when he served as FHFA acting director. 

NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt recently testified before the Senate Banking Committee on credit unions' priorities for housing finance reform, many of which align with Dr. Calabria's and the Trump administration's positions on the issue.