Treasury Secretary Steven Mnuchin said Monday that he plans for action on the bailed-out government-sponsored enterprises Fannie Mae and Freddie Mac after the midterm elections in November, acknowledging that it’s not realistic to expect legislation to revamp them this year.
Mnuchin, speaking in an interview on Fox Business, also said he would pursue bipartisan legislation to take the two mortgage giants out of the government’s custody, where they have lingered since 2008.
“What gets done here will need to be on a bipartisan basis,” Mnuchin told host Maria Bartiromo. “We have had conversations with both Democrats and Republicans, and unfortunately I just don’t think this is going to be a focus in this Congress. But we will come back to this next year, and this will be a big focus of mine post-the elections.”
Mnuchin also said President Trump would look to replace the government regulator who oversees Fannie and Freddie. That position, the director of the Federal Housing Finance Agency, is held by Mel Watt, an Obama appointee.
Watt’s term ends in early 2019. That will be an opportunity to “make sure we have someone in that job that supports the agenda,” Mnuchin said.
Mnuchin’s acknowledgment that there won’t be legislation this year on Fannie or Freddie is a sign that the two businesses will make it to the 10-year mark in government conservatorship.
In that time, Fannie and Freddie have continued to buy home loans from banks and other lenders and package them into securities to sell to investors with a guarantee to make them whole if the loans go bad. Those guarantees are backed by the federal government.
Mnuchin repeated Monday that he wants to take the two enterprises out of the government’s hands, a goal that is supported by many lenders who would like to see Fannie and Freddie facilitate more lending.
Key members of Congress would also like to see Fannie and Freddie taken out of conservatorship, but also reformed or shuttered, so that they cannot return to their past practices of pursuing profits for their shareholders while passing risks on to taxpayers in the form of potential bailouts.
Mnuchin also reiterated that he supports maintaining a government backstop for mortgage-backed securities, an arrangement that many conservatives in Congress oppose.
