FHFA will ‘re-examine’ the role of federal home loan banks: Thompson
WASHINGTON – The director of the Federal Housing Finance Agency said the agency will “re-examine” the structure and role of federal home loan banks in the US housing market, a possible first step in the long-expected reform.
Testifying during a House Financial Services Committee monitoring hearing, FHFA Director Sandra L. Thompson told lawmakers in her opening remarks that the agency would soon begin a formal review of the federal home loan bank system. Government-sponsored enterprises created in the 1930s have been scrutinized as The main business in the housing market has declined Between historical levels of liquidity in the banking system.
Federal Housing Finance Agency director Sandra Thompson told lawmakers on Wednesday that the agency would conduct a comprehensive review of the role and organization of the federal home loan bank system.
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“As we approach the 100th anniversary of home loan banks,” Thompson said, “now is a good time to re-examine their approach to ensure they continue to meet the needs of today and tomorrow.” “We plan to engage a variety of stakeholders in the coming months as we complete this review and, of course, welcome input from members of Congress.”
In his written testimony, Thompson said the FHFA will conduct a “90-year lookback, as well as a “forward-looking analysis” of the home loan bank system. She also said the agency would hold “public hearing sessions across the country” and “examine everything from the banks’ membership base, operational efficiency and effectiveness, to more fundamental questions about the mission, purpose and organization.”
Thompson was given a warm welcome from Democrats on the House Financial Services Committee in her first appearance since her role was confirmed by the Senate earlier this year. California committee chair Maxine Waters said Biden’s appointment “takes significant steps to propel the FHFA on a new path” by ending policies initiated under the Trump administration that “for families to buy their homes or Refinancing became more expensive.”
Thompson’s Trump-era predecessor, former FHFA director Mark Calabria, was a semi-frequent touchstone of Wednesday’s hearing. Republicans expressed support for the policies introduced by Calabria, before it was Biden ousted by administrationWhile Democrats blasted his term, arguing that his policies made it harder for some Americans to achieve homeownership.
Ranking member Patrick McHenry, a North Carolina Republican, criticized Thompson. Undo Calabria’s changes for the capital requirement framework of the FHFA, which had introduced Bank-like capital requirements For government-sponsored enterprises Fannie Mae and Freddie Mac.
“Instead of working to maintain sustainability, the FHFA has undermined our housing finance system by undermining taxpayer protections and pushing new risky schemes,” McHenry said. “For example, the agency scrapped a capital and liquidity rule designed to ensure that the GSE can weather an economic slowdown. We are concerned about that.”
McHenry’s remarks echo concerns he raised earlier in July with fellow Republican Rep. French Hill of Arkansas in a letter co-signed. Both lawmakers urged Thompson to ensure that the FHFA’s government-sponsored enterprise No expansion in new areas of finance,
Thompson, formerly a regulator of Federal Deposit Insurance Corp., said changes to capital requirements by the FHFA under his leadership would “protect taxpayers while still requiring enterprises to hold substantial amounts of capital.”
“The FHFA will continue to promote sustainable and equitable access to credit in a responsible manner that does not compromise security and soundness,” Thompson said in his written testimony.
Many Republicans asked about the FHFA’s progress toward freeing Fannie and Freddie from stereotypes. At one point, Thompson said that while the FHFA’s combined capital target between Fannie and Freddie’s was about $300 billion under the current framework, other factors would also take into account whether and when the GSE would be issued under private control.
Asked by Missouri Representative Blaine Luetkamayer whether meeting the $300 billion threshold would be enough to exempt the GSE from protection, Thompson said that “other factors need to be taken into account,” including policy issues involving institutions. Includes an examination of the risks. Significant Risk to Fannie and Freddie Stock.
Thompson also suggested during Wednesday’s hearing that the FHFA would welcome the expansion of its authority for GSEs to directly supervise third-party service providers. Asked by Illinois Democratic Representative Bill Foster whether that authority would support the agency’s mission, Thompson said the FHFA had been asking for such powers “for many years”, noting that federal bank regulators already had Only the third party had significant authority. the provider.
“In fact, when I went from the FDIC to the FHFA, I was very surprised that we didn’t have that authority,” Thompson said. “The services we provide to our regulated entities are really important; they can affect the safety and soundness of our regulated entities.”
