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|Trump Chooses Pence Aide Calabria to Lead FHFA|
(From CQ News)
President Donald Trump tapped conservative economist Mark Calabria to lead the Federal Housing Finance Agency, the government agency that oversees mortgage giants Fannie Mae and Freddie Mac.
Calabria, who is Vice President Mike Pence’s top economic aide, would replace FHFA chief and former Rep. Melvin Watt, D-N.C., whom President Barack Obama appointed in 2013 to a term that expires in January.
Calabria has been a critic of the housing finance system, which is based primarily on Fannie and Freddie’s securitization of residential mortgages. In 2016, he described securitization as “a false god that failed us” and whose “virtues have been exaggerated . . . while its costs have been hidden or ignored.” He wrote that the system has not delivered gains in homeownership and that the homeownership rate was lower than it had been before “the era of securitization,” which he said begin in the early 1980s.
Calabria has advocated a return to an “originate-and-hold” model for mortgage finance, in which most mortgages are held as whole loans on the balance sheets of banks. He has called for converting Fannie and Freddie from government-sponsored enterprises to bank holding companies that hold a national bank charter.
“Not only could the GSEs continue to pool and securitize mortgages as
BHCs, but they could also originate, collect deposits, and engage in otherbank activities,” he wrote. Calabria has argued that increasing the housingsupply, rather than government subsidies and securitization, is the most
effective way to boost home affordability. FHFA has served as Fannie and
Freddie’s conservator since 2008, when the government bailed out the
Before becoming Pence’s chief economist, Calabria was the director of financial regulation studies at the libertarian Cato Institute. He has been a
Republican staff member for the Senate Banking Committee and deputy assistant secretary for regulatory affairs at the Department of Housing andUrban Development during the George W. Bush administration.
House Financial Services Chairman Jeb Hensarling, a longtime critic of
Fannie and Freddie who has named them as a chief cause of the
subprimemortgage meltdown that led to the financial crisis, applauded
“He knows what it takes to re-energize our housing industry and to
promote responsible growth,” said Hensarling, R-Texas, who is retiring atthe end of this Congress. He said the future of housing finance policy willbe permanently shaped by the next FHFA director.
John Berlau, a senior fellow at the Competitive Enterprise Institute, a
Washington-based policy group, said, “Calabria has long been a
perceptive critic of the GSEs, pointing out how they have caused market
distortions that harmed the housing market and the economy as a
Robert D. Broeksmit, the president and CEO of the Mortgage Bankers
Association, an industry group, said Calabria has a deep background in
housing finance issues
“We look forward to working with him on a wide variety of housing finance issues, not the least of which is resolving the now-decade long
conservatorship of Fannie Mae and Freddie Mac in a way that best servesborrowers, protects taxpayers and ensures equal access to stable and
liquid secondary mortgage markets for a wide variety of single- and multifamily lenders, regardless of size or business model,” he said.
With the Republicans keeping control of the Senate, Calabria is expected
to win confirmation as FHFA chief.
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