| WASHINGTON, June 17
WASHINGTON, June 17 President Barack Obama's
nominee to lead the Department of Housing and Urban Development,
Julian Castro, urged lawmakers on Tuesday to move forward with
efforts to shutter Fannie Mae and Freddie Mac
, saying the current housing finance system is not
serving Americans well.
Castro told the Senate Banking Committee that if confirmed
he would seek to ensure taxpayers are never again on the hook in
a housing crisis as they were when the government stepped in to
bailout the two mortgage financiers.
"I absolutely believe that there are better alternatives
than what we have in place with this duopoly and with this
conservatorship," Castro said.
Freddie Mac and Fannie Mae were seized by government in 2008
as losses on mortgages they backed threatened their solvency.
The companies, which own or guarantee about 60 percent of all
U.S. mortgages, eventually soaked up $187.5 billion in taxpayer
funds. They are now profitable and have returned more to the
government in dividends than they received in aid.
A Senate committee last month passed a bill to wind down the
two entities, but opposition among Democrats who fear it could
drive up lending costs and give big banks too much control over
mortgages make its enactment unlikely.
Castro, mayor of San Antonio, Texas, was nominated by Obama
last month to replace Shaun Donovan, who was picked to lead the
White House budget office. Castro has been lauded for his
housing and economic development programs in San Antonio, the
nation's seventh-largest city.
If confirmed by the Senate, as widely expected, he would
step into HUD at a time when the U.S. housing market lags the
rest of the economy in recovery and still-tight lending terms
make it hard for many Americans to obtain mortgages.
Castro would inherit the Federal Housing Administration, a
troubled government mortgage insurer under HUD that was forced
to tap $1.7 billion in taxpayer funds last year.
The FHA, which is charged with making homeownership
affordable to low-income buyers, is under scrutiny for
increasing its mortgage insurance fees to shore up its finances,
an action that has locked out thousands of potential buyers.
Castro said it was possible to balance FHA's mission of
helping low-income borrowers with the need to keep it
"My perspective, whether it relates to the requirements for
down payments or other measures, is that we achieve this balance
to stay within the mission of the FHA - the historic mission to
ensure that first-time homebuyers, that folks of modest means
who are creditworthy, that they have the opportunity to reach
the American dream of homeownership," he said.
Castro, a graduate of Stanford University and Harvard Law
School, gained national prominence when he delivered the keynote
address at the 2012 Democratic National Convention.
As HUD secretary, he would be a step closer to national
leadership. Many in the Democratic Party view him as a potential
2016 vice presidential nominee.
(Reporting by Elvina Nawaguna; Editing by Tim Ahmann)