WASHINGTON (Reuters) - The administration of U.S. President Donald Trump intends to include Congress in any effort to pull back on its control over mortgage finance firms Fannie Mae and Freddie Mac, a White House official said on Tuesday.
Details are still being hammered out, but the White House said it plans to announce soon a framework for a housing finance overhaul that “fully addresses the risks to taxpayers presented by the current housing finance system and that improves the ability of creditworthy Americans to buy a home.”
That plan will include input from Congress, it said.
“Housing finance reform is a priority for the Administration,” White House spokeswoman Lindsay Walters said in a statement.
Since the 2007-2009 global financial crises, Congress and government officials have sought ways to move on from the federal takeover of Fannie and Freddie, calling the current conservatorship - in which the two enterprises pass profits to the Treasury Department in exchange for an explicit government backstop - unsustainable.
Tuesday’s announcement by the administration that it would work with Congress comes after reported comments from Joseph Otting, the acting head of the Federal Housing Finance Agency, who told staff at a private meeting the administration was preparing plans to remove government control of the entities. The FHFA oversees Fannie and Freddie.
Reports of Otting’s comments sent the value of shares in both entities surging, but they were down more than 10 percent on Tuesday following the White House announcement.
In a separate statement on Tuesday, Senate Banking Committee Chairman Mike Crapo said housing finance reform would be a top priority for his panel, calling it the “last piece of unaddressed business from the financial crisis.”
Under the terms of the current arrangement, Fannie and Freddie are required to hand over all quarterly profits to the Treasury Department. The enterprises have paid the Treasury $292 billion in dividends since the takeover, after receiving $191 billion in government support, according to research from Keefe, Bruyette & Woods.
In December 2018, Trump named Otting, who currently serves as the Comptroller of the Currency, as FHFA director.
Otting, who replaced Democrat Mel Watt after he left the agency in January of last year, will remain at the helm until the U.S. Senate confirms Mark Calabria, who is Trump’s nominee to fill the role full-time. Calabria is currently chief economist for Vice President Mike Pence.
Reporting by Katanga Johnson, Jeff Mason and Pete Schroeder; Editing by Dan Grebler