Holding the FHFA Accountable
Washington,
April 12, 2018 -
The Oversight and Investigations Subcommittee met today to hear from the Inspector General for the Federal Housing Finance Agency (FHFA) about the Agency’s performance as both the regulator of the housing government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, as well as the manager of their day-to-day business activities through the ongoing conservatorships of Fannie Mae and Freddie Mac.
“Unfortunately, acting as both the regulator and conservator of Fannie and Freddie creates an obvious conflict,” said Congresswoman Ann Wagner (R-MO). “FHFA should be shrinking, not expanding its powers, to return to the proper scope of its Congressional mandate. Today’s hearing highlighted the need for Congress to build consensus on a more balanced approach to homeownership that relies less on taxpayer subsidies and more on private capital and free market incentives. Since 2008, U.S. taxpayers have invested nearly $193.5 billion into Fannie and Freddie alone, leaving serious concerns about their future.”
Key Takeaways
- The conduct of the FHFA is a repeat of what we have seen with former Director-Corday and the CFPB: vast unaccountable power leads to poor results.
- With $5.3 trillion in GSE liabilities, Congress should protect taxpayers from future bailouts.
- The solution to the problems identified by the IG is structural. The FHFA’s discretion under The Housing and Economic Recovery Act of 2008 (HERA) should be reformed and additional statutory oversight should be implemented.
- Congress should allow for a more balanced approach to homeownership that relies less upon taxpayer subsidies and more on private capital and free market incentives.
Topline Quotes from Witnesses
“Currently, FHFA serves in a unique role: it is both conservator of and regulator for the Enterprises and regulator for the FHLBanks. Its duties as conservator of the Enterprises, which together own or guarantee more than $5 trillion in mortgages, are fundamentally different from its responsibilities as their supervisor. FHFA’s stakeholders, including the Congress, American taxpayers, and others, expect FHFA, as conservator, to ensure that both Enterprises are effectively governed and employ sound risk management practices; they also expect FHFA, as regulator, to exercise vigilant supervision of its regulated entities to ensure that they operate in a safe and sound manner.” – The Honorable Laura Wertheimer, Inspector General, Federal Housing Finance Agency
