There’s a perfect storm going on in Washington D.C right now.
Just as talks over housing finance reform start to move from a laughing matter to a serious topic of discussion, some of the biggest positions of power in and around Capitol Hill just opened up. Or, they’re about to be up for grabs.
The Federal Reserve, the Federal Housing Administration, the Federal Housing Finance Agency, the House Financial Services Committee and, most recently, the Consumer Financial Protection Bureau are all about to have new leaders.
Besides the Department of Housing and Urban Development and the Senate Banking Committee, that is practically all the major parts of the government that have a hand in the future of mortgage finance.
And President Donald Trump will appoint of all these new leaders, excluding the next chairman of the Financial Services Committee.
Despite early talks from the Trump administration about reforming Fannie Mae and Freddie Mac, it’s been hard to get anything accomplished in Washington on housing finance reform with things structured as they have been.
But this is starting to change, and some of the top positions staffed by people appointed by former President Barack Obama are about to open, including CFPB Director Richard Cordray and FHFA Director Mel Watt.
Here are the highlights from the positions that are open or about to open:
- Fed Chair Janet Yellen’s term is set to expire next year. Trump recently tapped Federal Reserve Governor Jerome Powell to be the next Fed chair, and he is in the confirmation process.
- Back in September, Trump selected Brian Montgomery to run the FHA. He is still in the confirmation process.
- House Finance Services Committee Chairman Jeb Hensarling, R-Texas, announced he will not will not run for re-election in 2018.
- FHFA Director Mel Watt was sworn in on Jan. 6, 2014 to a five-year term as director of the agency, meaning his terms ends January 2019.
- Most recently, CFPB Director Richard Cordray announced in an email to the bureau’s staff that he will be stepping down from his position before the end of November.
Plus, in October, the Senate confirmed Randal Quarles as a member of the Board of Governors of the Federal Reserve System, placing Trump’s handpicked choice in the position that many consider to be the most powerful in banking.
The two open positions to keep watch for are the next directors of the FHFA and CFPB.
Interestingly, the second-in-command position at the CFPB has been vacant for nearly two years. In July 2015, Steven Antonakes announced he was stepping down as acting director for the bureau. Meredith Fuchs served as acting deputy director for about 6 months until David Silberman ultimately stepped in to the position as acting director back in January 2016. He’s been in the position ever since.
In a blog post from Ballard Spahr, Alan Kaplinsky posed the question, “Can President Trump appoint an acting director upon Cordray’s departure?”
From the blog:
It appears Congress did not expressly provide in Dodd-Frank for how a vacancy should be filled if the CFPB Director were to resign. Dodd-Frank provides only that the Deputy Director “shall serve as acting Director in the absence or unavailability of the Director.” It does not expressly authorize the Deputy Director to serve as Acting Director when a vacancy in the position of Director is created. As a result, a vacancy can only be filled using one of the Vacancies Act’s three permissible methods.
Since President Trump would have the option of making his own appointment instead of allowing Mr. Silberman to serve as the Acting CFPB Director, it can be assumed he would make his own appointment.
So who will Trump to choose to lead the CFPB?
Kaplinsky tossed out Treasury Secretary Mnuchin’s name as the obvious and logical person to serve as acting director since the Dodd-Frank Act authorized the Treasury secretary “to perform the functions of the Bureau under this subtitle until the Director of the Bureau is confirmed by the Senate.”
However, this recent decision from Hensarling to not run for re-election throws a new possibility into the mix.
It has long been rumored that Cordray would leave the bureau to run for Ohio governor. And, sources told HousingWire Wednesday they speculate Cordray will announce a run for Ohio governor in the next few weeks.
If Trump doesn’t select Mnuchin to lead the CFPB, Hensarling could fill the position. He is one of the biggest opponents to how the bureau is currently being run.
Several names have already been tossed out to replace Watt, with one likely option being the Chief Economist to Vice President Mike Pence, Mark Calabria, who is also a long-time housing reform advocate.
Both Calabria and Hensarling are no strangers to talks of housing reform.
Calabria has spoken about housing finance reform in many forms, including on the pages of HousingWire, in his career. And Hensarling spearheaded the Financial CHOICE Act 2.0, which included drastic overhaul of Dodd-Frank and the CFPB.
This is all speculation though, and we’d be happy to hear your thoughts on who will land these positions.
What is for certain is that 2018 is going to be a major year for housing finance, as the future leaders who could bring change are about to be selected.
And the real kicker? Next year marks the 10-year anniversary of when Fannie Mae and Freddie Mac were placed into conservatorship. That's a nice round number, don't you think?