Housing finance reform

There is bipartisan agreement in the Senate that Fannie Mae and Freddie Mac are "too big to fail" but some lawmakers are skeptical that a SIFI designation is appropriate.

The Federal Housing Finance Agency has appeared willing to take its own steps to reform Fannie Mae and Freddie Mac, but legislation would be necessary to create an explicit guarantee of the mortgage system.

Treasury Secretary Steven Mnuchin was adamant that the Trump administration won’t just let Fannie and Freddie build up their capital buffers and then release the companies. He also said he backed an explicit government guarantee, something only Congress can do.

The head of Fannie Mae and Freddie Mac’s regulator blamed “burdensome” local regulations for a lack of housing supply, and also provided an update on the administration’s plan for GSE reform.

The FHFA director’s recent comments about whether the government-sponsored enterprises should be designated as SIFIs tees up a potentially significant element of the mortgage finance debate.