Treasury Secretary Mnuchin to address Senate Banking Committee on GSE reform
Mnuchin preparing to suspend GSE dividend payments?
Treasury Secretary Steven Mnuchin will serve as a witness before the Senate Committee on Banking, Housing and Urban Affairs.
The hearing, entitled Domestic International Policy Update, will take place Thursday at 9 a.m. EST and will cover questions related to GSE reform.
Last week, Melvin Watt, Federal Housing Finance Agency director, stood before the same committee and testified that now is the time for GSE reform, insisting that tax payers would soon carry the burden of conservatorship.
During Watt’s testimony, he mentioned wanting to suspend Fannie Mae and Freddie Mac dividend policy by mutual agreement with the Treasury.
Now, the market awaits the secretary’s response.
“Even if Secretary Mnuchin doesn’t appear warm to the idea but does have a statement ready, then it could indicate Treasury is open to considering new directions to jump start GSE reform,” stated Jim Vogel, Interest Rate Strategies Group executive president and manager.
“It seems too early to dismiss Watt’s idea this spring, so a firm ‘no’ presents a different story,” Vogel continued. “Our conclusion would be GSE reform ideas take a back seat to garnering the political support necessary to pursue meaningful tax reform.”
Mnuchin is on the record several times for saying GSE reform will come during the Trump administration.
And plans for GSE reform clearly have the support of the housing industry. Recently, the Mortgage Bankers Association wrote a 60-page white paper on how to tackle the transition process. Other industry leaders soon gave their support to the MBA’s plan, saying it’s a good start.