Hill Delivers Opening Remarks at Hearing to Conduct Oversight of the Federal Housing Finance Agency
Washington,
May 23, 2023 -
Today, the House Financial Services Committee is holding a hearing to conduct oversight of the Federal Housing Finance Agency (FHFA). Republican lawmakers will examine the Agency’s recent actions that undermine housing affordability and scrutinize policies that fail to protect homeowners and taxpayers.
Watch Vice Chairman French Hill’s (AR-02) opening remarks here.
Read Vice Chairman Hill’s opening remarks as prepared for delivery:
“Today the Committee will hold a hearing called, ‘Federal Housing Finance Agency Oversight: Protecting Homeowners and Taxpayers.’
“This will be the Committee’s second hearing on the government’s role and response to the housing challenges faced by too many Americans in as many weeks.
“We are fortunate to have the FHFA Director, Sandra Thompson, as our witness, for the second time in her two years as the head of the agency.
“Director Thompson has had a long career with over 20 years at the Federal Deposit Insurance Corporation followed by 10 more at FHFA. Thank you for being here.
“Let’s address the elephant in the room. Fannie Mae and Freddie Mac have been under government conservatorship for nearly 15 years.
“To echo former Acting Director Ed DeMarco last week, we are asking a lot of the FHFA Director to act as both regulator and conservator for Fannie and Freddie, and continuing to make what would otherwise be private business decisions while regulating the companies.
“As long as the GSEs are under conservatorship, FHFA’s primary focus should be raising Enterprise capital and maintaining their narrow charter and mission.
“In many respects, housing finance in this country looks dramatically different than it did when FHFA was created in 2008.
“According to BTIG, nonbank companies originate 71% of agency-backed loans and 86% of government-backed loans.
“Banks have all but retreated from the servicing and loan origination business because of bank capital and liquidity rules.
“Meanwhile in 2008, the Fed started buying mortgage-backed securities for the first time as a temporary response to the financial crisis but now owns nearly a quarter of all 1-to-4 residential mortgages in the country. The Fed only just started trimming its $2.7 trillion in MBS holdings.
“Generationally high inflation and out of control government spending have made housing affordability worse, with mortgage rates hitting 20-year highs last fall. And the GSEs have somehow become even bigger.
“We have to realize that these outcomes are the result of actions taken in this very room. And it’s hard for me to see it as a very good outcome.
“Enter the FHFA, which has tremendous influence over our housing market and the American economy. Director Thompson has been active on a host of initiatives to revamp and expand the roles that Fannie Mae and Freddie Mac play.
“These include the questionable—like politically-driven Equitable Housing Finance Plan lending mandates—to the technical, like improving the process for new product approval and continuing to build Enterprise capital.
“Members can decide for themselves if these changes are good or bad, but it’s clear that if you favor a more limited government role in housing markets as I do, then you are probably out of luck. And we’ve been trending in the wrong direction for a while.
“All of that brings us to this hearing and the critical need for Congress to do its job and provide oversight and accountability to the work FHFA is doing.
“In too many instances, it appears that FHFA has allowed safety and soundness to take a back seat to advancing a housing agenda through the GSEs.
“We saw earlier this month when FHFA rescinded its unworkable DTI-based fee and issued a request for input on the opaque process it used to set GSE pricing adjustments.
“The agency’s focus has to be on the safety and soundness of Fannie, Freddie, and the 11 Federal Home Loan Banks.
“Given the tremendous and expanding footprint of the GSEs, homeowners and taxpayers are in need of greater protections from housing instability. With that, I yield back.”
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