[CORRECTION: An earlier version of this article misidentified Senator Tim Johnson, D-S.D., as one of the 26 Senators that voted against Julián Castro's nomination. Senator Johson voted in favor of Castro's nomination. Senator Ron Johnson, R-Wisc., voted against the nomination.]
The Senate voted Wednesday and confirmed the nomination of San Antonio Mayor Julián Castro to lead the Department of Housing and Urban Development. Castro was confirmed by a 71-26 vote. Castro’s nomination only needed a simple majority vote to pass.
Castro is now set to take over HUD as current HUD Secretary Shaun Donovan has been nominated to the post of Director of Office of Management and Budget.
When he announced Castro’s nomination, President Barack Obama called Castro an “all-star,” who has “become a leader in housing and economic development.”
After Castro was confirmed by the Senate, President Obama released a statement applauding the Senate's actions. "I applaud the bipartisan majority of Senators who today confirmed Julián Castro as our next Secretary of Housing and Urban Development," President Obama said. "Julián is a proven leader, a champion for safe, affordable housing and strong, sustainable neighborhoods."
"I know that together with the dedicated professionals at HUD, Julián will help build on the progress we’ve made battling back from the Great Recession -- rebuilding our housing market, reducing homelessness among veterans, and connecting neighborhoods with good schools and good jobs that help our citizens succeed," Obama continued. "Julián has lived the American Dream in his own life, and I’m confident he will help Americans across our country seize their own piece of that dream for themselves and their children."
Of note in the “no” votes was Senator Mike Crapo, R-Idaho, who co-authored the Johnson-Crapo housing finance reform legislation with Senator Tim Johnson, D-S.D., that is currently under consideration on the Senate floor. The Johnson-Crapo bill would wind down Fannie Mae and Freddie Mac within five years and had received support from the Obama administration.
While Castro will now be in place to execute whatever plan the White House has to wind down Fannie Mae and Freddie Mac, it is unlikely he will do so – GSE reform appears to be dead until after the mid-term elections and likely dead until after the 2016 presidential election.
Analysts from around the industry believe that the debate over housing finance reform may stretch out as far as 2017.
Castro’s nomination raised concerns in the initial confirmation hearing, when senators raised questions about the HUD inspector general report that found Castro, as mayor of San Antonio, mismanaged or lost millions in taxpayer funds supposedly dedicated to affordable housing programs.
Prior to Castro's official nomination, analysts from Compass Point said that they did not anticipate a strategic shift when Castro takes over at HUD. "Our conversations lead us to believe that Castro is unlikely to deviate materially from the existing FHA single-family strategy,” said Compass Point analyst Isaac Boltansky.
“The potential impact of the leadership change at HUD is admittedly an unknown at this junction but there is little reason – either political or fundamental – to expect a MIP reduction prior to 2015.”