Almost exactly 10 years after he helped pass
the legislation that established the Federal Housing Finance Agency (FHFA),
Mark Anthony Calabria has been nominated by the White House to be its
director. If his nomination is confirmed
by the Senate, Calabria, currently the Chief Economist in the Office of the
Vice President, will succeed Melvin Watt whose five-year term expires in
January.
Calabria has a long history in housing and
housing finance. He was a senior aide to
the Senate Banking Committee in 2008, helping to draft the Housing and Economic
Recovery Act of 2008 (HERA), which created the Federal Housing Finance Agency
and was a Deputy Assistant Secretary at the Department of Housing and Urban
Development during the second Bush administration. He has also held positions
at the Cato Institute, Harvard's Joint Center for Housing Studies, the both National
Associations of Home Builders and Realtors.
If confirmed, Calabria will lead the
agency that serves as both regulator and conservator of the government
sponsored enterprises (GSEs) Fannie Mae and Freddie Mac at a time when
pressures will be mounting to end their 10 years in federal conservatorship. Bloomberg notes that the nominee could be a
controversial pick as he has advocated for policies that would reduce the
government's role in the housing market.
Among his proposals is one that would move
the GSEs into receivership, liquidating its assets and erasing its remaining
stockholders, many of whom have been in the courts for years, fighting the process
by which the government takes nearly all of the corporations' sizable
profits. He has also called for
abolishing the mortgage interest deduction for homeowners and there have been suggestions
among industry insiders that he might lower the conforming loan limits. They were recently raised to $484,350 after
FHFA's annual recalculation.
Both Bloomberg
and IMFNews have sought to allay some
of these fears. Bloomberg notes that
Calabria has held private meetings with bankers and bond investors in recent
months, "presenting a more tempered approach to overhauling Fannie and Freddie." It also quotes Compass Point's Isaac
Boltansky who said that the, at that point potential, nominee is far more pragmatic
than dogmatic. "I don't see him walking in there with an ax. There will surely
be areas of curtailment, but I think it will be measured and strategic."
James Fenkner, who hold stock in both Fannie and Freddie told
IMFnews that Calabria would be "constrained in his mission to
dissolve Fannie and Freddie," adding, "The capital market just doesn't have the
risk appetite or depth for this."
It is unlikely that the Senate will be able to confirm the nominee
before Watts term ends. It is widely
expected that Joseph Otting, Comptroller of the Currency, would be appointed as
an interim head, wearing both hats until Calabria, or some other nominee, can
be sworn in.
While Calabria had long been considered likely to be the
pick, his nomination was only quietly announced Tuesday afternoon on the White
House website. The first to react was Robert
D. Broeksmit, President and CEO of the Mortgage Bankers Association (MBA). He issued a statement congratulating the
nominee on behalf of MBA and adding, "He has a deep background in housing
finance issues and we have enjoyed a good working relationship with him in his
current and past roles.
"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 serves
borrowers, 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."