Department of Housing and Urban Development Secretary Shaun Donovan said the Obama administration doesn’t plan to introduce Fannie Mae or Freddie Mac reform “any time soon.”
The comment before a Senate Banking Committee Thursday comes as no surprise. It’s been long believed anything done to replace the mortgage finance giants would have to wait until after the November elections.
The Treasury Department released a white paper more than a year ago, outlining three options to either privatize the firms, install a full government-backed guarantee on the bonds or create some sort hybrid between the two.
But Donovan gave no indication that a direction has been set.
Meanwhile, Fannie and Freddie drew $188.4 billion in bailouts from the Treasury since entering conservatorship in 2008. They combined to pay back $35.3 billion in dividends.
Some lawmakers introduced legislation over the past year, though not one has even been taken up. The House passed more than a dozen “reforms” last year, many deemed duplicative of the conservatorship agreements, according to Federal Housing Finance Agency Acting Director Edward DeMarco.
Reps. John Campbell, R-Calif., and Gary Peters, D-Mich., introduced a bipartisan bill in May 2011, which would create five chartered government-sponsored entities backed by a catastrophic fund to replace the GSEs.
Sen. Bob Corker drafted a bill in November that would unwind Fannie and Freddie and turn the mortgage market over to private funding.
Rep. Jeb Hensarling re-introduced his bill in March 2011 that would end the GSE bailouts as well.
The problem is the elusive housing recovery. The private-label market remains dormant as capital is sparse and new regulations continues under development. Industry trade groups argue the government-backed firms are needed to keep liquidity moving through the market, and that any drastic action could jeopordize what little rebound there has been.
Donovan did say the administration is continuing to work for a bipartisan consensus around the potential options available.