The U.S. Senate on Thursday confirmed Mark Calabria to head the Federal Housing Finance Agency (FHFA), the agency tasked with overseeing the government-sponsored entities Fannie Mae and Freddie Mac.
Calabria, currently serving as Vice President Mike Pence’s chief economist, was appointed to a five-year term by a 52 to 44 vote.
“I congratulate Mark Calabria on his confirmation by the U.S. Senate to serve as director of the Federal Housing Finance Agency,” Joseph Otting, the acting director of FHFA said in a statement. “I am confident that [Calabria] will do a great job leading the FHFA, as he recognizes the need to work toward a housing finance system that protects taxpayers and meets our nation’s housing needs.”
Calabria, a one-time economist for the National Association of Realtors (NAR), has long been an advocate for reforming the two government-sponsored entities that he will now oversee in his role as FHFA director.
“The National Association of Realtors applauds the U.S. Senate for confirming Dr. Mark Calabria as the next director of the Federal Housing Finance Agency,” a spokesperson for the association said in a statement. “Dr. Calabria has decades of experience in the housing industry, including time spent as an economist at NAR, and he understands the critical importance of the FHFA’s prudent management of America’s housing finance system.”
Calabria’s appointment comes at a time when the White House has publicly floated the idea of privatizing both Fannie and Freddie, which were put under government conservatorship in 2008 — at the same time FHFA was created — as a result of the 2008 financial crisis. They were bailed out by taxpayers to the tune of $187.5 billion, but have since paid that back and become profitable once again.
Calabria, formerly the director of financial regulation studies at the Cato Institute, a libertarian-leaning think tank, has in the past argued in favor of breaking up Fannie Mae and Freddie Mac into smaller entities and that the entities should require more mortgage insurance.
He has also argued, like the White House’s proposal, that the charters under which Freddie Mae and Fannie Mac operate should be open to private companies. The two companies currently purchase mortgages directly from lenders, repackage them into mortgage-backed securities, and re-sell them into investors, adding a guarantee that they will pay the investor even if the homeowner defaults.
NAR itself has outlined its vision for Fannie and Freddie and released a report calling for broader reform to the mortgage industry. In that report, the association calls for replacing Fannie and Freddie with a new, private entity that’s regulated like a utility.
“As he begins his tenure, we urge Director Calabria to work closely with Congress in the effort to responsibly reform the [government-sponsored entities], particularly in search of policies that protect the 30-year fixed rate mortgage, secure a government guarantee and emphasize taxpayer and consumer protection,” the NAR spokesperson added.
While Calabria was at the Cato Institute, he argued in favor of making it more difficult for low-income Americans to get a mortgage through the entities by increasing underwriting standards, requiring a minimum down payment of 5 percent and a minimum credit scores of 700.
His appointment was rebuked by Democratic Senators, including Sherrod Brown of Ohio and Charles “Chuck” Schumer of New York, the minority leader.
“He makes it more difficult to develop affordable housing, cuts off access for housing especially for people of color,” Brown said on the Senate floor, prior to the vote. “That’s what he advocated his entire career. We should reject Dr. Calabria’s nomination.”
President @realDonaldTrump wants Mark Calabria to lead the agency responsible for overseeing our housing finance system.
Calabria is a man who has said that “extensive regulation” led to the financial crisis and “bankers shouldn’t be blamed”!
— Chuck Schumer (@SenSchumer) April 4, 2019