According to the latest from the Scotsman Guide, despite the Trump administration’s claimed intentions to issue public shares of the government-sponsored enterprises (GSEs) Freddie Mac and Fannie Mae, Senate Democrats’ demands for transparency have not been taken seriously by administration officials thus far.
Sen. Elizabeth Warren, D-Mass., ranking member of the Senate Committee on Banking, Housing, and Urban Affairs, “needs to get her facts straight,” according to a letter dated Oct. 7 that was posted on his personal X account on Wednesday. The letter was written in response to a letter she and colleagues sent to members of the Federal Housing Finance Oversight Board, which Pulte chairs, on June 16.
The FHFA director, the secretaries of the U.S. Department of the Treasury and the Department of Housing and Urban Development, as well as the chair of the Securities and Exchange Commission, make up the advisory council that Warren’s letter refers to.
The board was created by the Housing and Economic Recovery Act of 2008, which was passed in reaction to the 2008 financial crisis. Among its responsibilities are advising the FHFA director and submitting an annual report to Congress on the performance and operations of companies that are subject to FHFA regulation, such as Fannie and Freddie.
“The public would benefit from your agencies proactively releasing information about the June 17th meeting, including a pre-meeting agenda and meeting minutes that include attendees,” Warren and Democratic senators Chuck Schumer, Andy Kim, Ron Wyden, Raphael Warnock, and Mazie Hirono wrote in a letter dated June 16 ahead of the board’s scheduled June 17 meeting.
Doing so, they claim, “would demonstrate your commitment to promoting Board transparency and accountability, especially given that the Board has not met since 2017.” They requested such materials be provided no later than June 20.
“The Board has indeed held regular meetings on a quarterly basis” since the 2017 timeframe Warren and her colleagues cited, according to Pulte’s Oct. 7 answer, which was sent to Warren directly and was dated almost four months after her original June 16 request for information. Additionally, the Act exempts the Board from publishing information about its meetings, according to Pulte.
None of the other specifics listed in the June 16 letter from Senate Democrats are addressed in the FHFA director’s response. Fannie Mae and Freddie Mac responded that the responses to seven questions about a possible initial public offering (IPO) will “help Congress better understand your agencies’ approach toward reprivatization of the Enterprises.” Below are the questions, which have been condensed for clarity:
- What proposals, advice or other information, if any, have your agencies discussed regarding the status or reprivatization of the Enterprises?
- What proposals, advice or other information, if any, have your agencies discussed with the White House regarding the status or reprivatization of the Enterprises?
- What analyses, if any, have your agencies conducted to assess the potential effects of removing the Enterprises’ explicit federal guarantees on: mortgage rates, multifamily housing production, housing costs, investor confidence and market liquidity?
- What analyses, if any, have your agencies conducted to assess the potential effects of reprivatizing or altering the status of the Enterprises on the Federal Housing Administration or Ginnie Mae?
- What analyses, if any, have your agencies conducted regarding the sale of Treasury’s senior preferred stocks, or otherwise making changes to the Treasury’s Senior Preferred Stock Purchase Agreements, including how proceeds may be used?
- How do your agencies plan to ensure that mortgage and multifamily lending costs do not rise if the Enterprises are reprivatized or released from conservatorship?
- How will the Administration guarantee compliance with consumer protections, civil rights and other relevant laws, including preserving the Affordable Housing Goals and Duty to Serve requirements, if the Enterprises are released from conservatorship?
What This Means for the U.S.
Major U.S. banks like JPMorgan Chase, Goldman Sachs, and Bank of America have vying for a position in bringing the huge mortgage investors public ever before President Donald Trump first hinted at an IPO for Fannie and Freddie.
However, it’s still uncertain if the FHFA would continue to have conservatorship over Fannie and Freddie. “I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as President,” Trump wrote in a May social media post that initially alluded to his consideration of an IPO for Fannie and Freddie.
Pulte stated that going public while maintaining federal control over the enterprises is still an option in a late July interview with Scotsman Guide, but he would not elaborate on the inner workings of the discussions.
The Community Home Lenders of America, an advocacy group that primarily represents small and midsize mortgage lenders, wrote a letter in early September that was co-signed by a group of 46 independent mortgage banks. The letter advised against any further GSE charters for large Wall Street institutions and opposed any merger of Fannie and Freddie that would be prompted by an initial public offering (IPO).
In closing his Oct. 7 response to Warren, Pulte said his agency “welcomes all dialogue” on the issue of Fannie and Freddie conservatorship, “including perspectives from Members of Congress and other important stakeholders on how to achieve the shared goal of a safer and more affordable housing ecosystem that protects U.S. taxpayers.”
Pulte advised Warren or her employees to ask for any queries they may have by getting in touch with the organization.
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The post FHFA, Senate Democrats Clash Over Fannie and Freddie Transparency first appeared on The MortgagePoint.
