WASHINGTON—The Trump administration’s nominee to oversee the Federal Housing Finance Authority said he is committed to preserving the 30-year mortgage–a product he has criticized in the past–during a Senate confirmation hearing at which he faced tough questions and scrutiny primarily from Democratic members of the committee.
Dr. Mark Anthony Calabria, who appeared at the same confirmation hearing as NCUA board nominees Rodney Hood and Todd Harper, was also asked for his views on too-big-to-fail banks, the future of Fannie Mae and Freddie Mac (which the FHFA oversees), and other housing issues, with several Democratic senators saying Calabria’s testimony contradicted statements he had made in the past.
Calabria previously served as a senior aide on the Senate Banking Committee and was among those who helped draft the legislation, the Housing and Economic Recovery Act of 2008, that created the FHFA.
The credit union trade associations have issued statements in support of Calabria’s nomination to head the FHFA.
Questions for Nominee
Nearly every question asked by senators during the Q&A with the federal nominees was directed at Calabria, with only a few questions for Hood and Harper.
In response to a question regarding his support for the 30-year mortgage, Calabria, who currently serves as chief economist for Vice President Mike Pence and who has held other positions in government and with trade associations for home builders and Realtors, told the committee it is his position it is “indeed possible for us to have a well-capitalized, strong system that preserves the 30-year mortgage.”
Calabria, who has been a critic of big banks and in particular of what occurred in the financial crisis in which he said there was private profits but public risk, said he would bring scrutiny to the major banks as part of his role as a member of the Financial Stability Oversight Council. Calabria said he did not support the 2008 federal bailout plan known as TARP.
A number of senators referenced prior writings by Calabria, including while working at the libertarian think tank the Cato Institute from 2009 to 2017, during which he called for dialing back federal government support for the 30-year, fixed-rate mortgage. Calabria’s position, said Sen. Sherrod Brown (D-OH), runs counter to what “housing stakeholders” have told the committee in the past.
Position on Conservatorship
Calabria was also questioned over an earlier report that he supports a plan by the Trump Administration to end the decade-long conservatorship of Freddie Mac and Fannie Mae, and said he has not been involved in any related discussions.
If confirmed by the Senate, Calabria said he would “carry out the clear intent of Congress, not to impose my own vision,” and that would include not impeding purchases of 30-year loans by the two secondary mortgage giants.
Sen. Elizabeth Warren (D-MA) raised questions over Calabria’s commitment to discrimination in housing.
“For decades, America subsidized buying housing for white families…But discriminated against black families,” Warren said, adding that even with laws in place to stifle such discrimination it continues to occur. She pressed Calabria for what he would do to stop discrimination, but time constraints left little opportunity for a response.
Affordable Housing Support
Warren also challenged Calabria over prior statements that he would like to eliminate federal requirements for affordable housing.
When asked if he still believes the affordable housing goals contributed to the housing crisis of a decade ago, Calabria said they played only a “marginal role."
Trade Group Response
Following the hearing, NAFCU CEO Dan Berger issued a statement saying, “Mark Calabria possesses a unique combination of policy, regulatory and housing expertise, and his nomination to lead the FHFA is well deserved. If confirmed by the Senate, NAFCU looks forward to working closely with Dr. Calabria to ensure a healthy, sustainable and viable secondary mortgage market. In our numerous meetings with Dr. Calabria, it is clear he has a firm understanding of credit union issues and of the important role the GSEs play in their mission.”
NASCUS also issued a statement saying it “agrees with Dr. Calabria that we are in a ‘critical juncture’ in housing finance policy. For this reason, if Dr. Calabria is confirmed, we would urge him to consult with the state credit union system and work with Congress to pass legislation that would mandate small lender access to the secondary market. Without such mandate, small lenders such as many credit unions will effectively be shut out of the secondary market, undermining their ability to provide loans and services in already underserved areas.”