There won’t be any real movement on GSE reform, but there may be a serious heeling of the Consumer Financial Protection Bureau.
That’s one of the insights about what the coming GOP majority in Congress means for the housing industry, according to Stanley Street, president of Street Resource Group.
“With this next Congress, we’re going to have a lot of talk but not action. And you have to remember it will be just about six months for anything to happen before people start talking about 2016 elections,” Street said in an interview with HousingWire. “As long as GSEs are making money, there will be very little priority for change.”
That's a very different line than the one being published by Secretary of Housing and Urban Development, Julian Castro, who recently said "housing finance reform certainly has been a priority and will continue to be a priority," in this interview.
“There will be a lot of talk of Kumbaya, but a lot of combat,” Street said. “Immigration, taxes will take away from any meaningful talk about housing reform.”
The fact that after the midterm elections Democrats elevated Sen. Elizabeth Warren, one of the architects of the CFPB and once considered for its directorship, to a leadership position could signal that Democrats want to draw a line in the sand on CFPB reform.
However, Street said it may be more likely that Democrats want to moderate the outspoken progressive Warren, who is considered a likely Democrat candidate for president in 2016.
“I think it’s very interesting that she’s been put into Democrat leadership circles and that’s an implicit endorsement, but it could also be that they’re trying to tame her as well,” Street said.
In the big picture, it’s going to be a stalemate, Street said.
“If you look at the 113th Congress, there were 60 bills that got through the Senate; normally 100-200 would go through Congress,” he said. “Obama will be pushing his agenda through executive orders, and Congress will fight him tooth and nail over that and if they do enact legislation or amendments it has to be veto proof – so it’s all a huge stalemate.
“Whether (Federal Housing Finance Agency Director Mel) Watt can push anything through or make any progress remains to be seen,” Street said.
The CFPB is another matter, as Congress will have more say independent of the White House.
“The CFPB will be high on the agenda. No one can debate that CFPB protects consumers' interest, but it’s the execution and lack of oversight that is the problem,” Street said. “The GOP will want to bring the CFPB back into the appropriation process and out of the Fed, and bring the leadership under something like a five-member committee rather than under a single person.”
House Republicans have already passed bills this year to replace the leadership of the CFPB, but they stalled out.
“I don’t think anyone is necessarily against that and it’s an issue both sides can come together on as long as they don’t go against the mandate,” he said. “CFPB needs a structural change but not a mission change.”