Magazine article American Banker

Mnuchin Wants GSE Reform in 2019. There's a Problem with That

Magazine article American Banker

Mnuchin Wants GSE Reform in 2019. There's a Problem with That

Article excerpt

Byline: Victoria Finkle

Treasury Secretary Steven Mnuchin confirmed Monday what we already knew: Reform of the government-sponsored enterprises isn't happening this year.

Still, Mnuchin remained bullish about prospects for picking up the debate in 2019.

"We'll come back to this next year and this will be a big focus of mine post the elections," he told Fox Business in an interview. "I'm determined that we have a fix to the GSEs and don't leave them in conservatorship for the rest of time."

This may prove to be wishful thinking.

It's true that the Trump administration has the opportunity to nominate a new director to the Federal Housing Finance Agency to replace Mel Watt, whose term expires in January. And a new FHFA chief could impose a number of changes on Fannie Mae and Freddie Mac -- not the least of which might involve cutting off affordable housing contributions or even more structural changes to the entities.

But doing so will still take time, not to mention the ability to confirm a nominee. Under the Housing and Economic Recovery Act, Watt can remain in his position until a successor is appointed. Given the slow pace in assembling a financial regulatory team up to this point -- with vacancies still pending at the Federal Reserve, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corp. -- there's no indication that this will be an immediate priority for the White House or Congress.

More crucially, the Trump administration appears, at least for now, to be pushing for a legislative overhaul of the GSEs. …

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