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FHFA’S Watt: Congress Needs To Move On GSE Reform

Mel Watt, Director of the Federal Housing Finance Agency (FHFA), defended his agency's nearly 10 year conservatorship of Fannie Mae and Freddie Mac, and specified that the agency has implemented numerous measures to strengthen the secondary mortgage market. Testifying before the Senate Banking Committee, Watt also urged Congress to move forward with secondary mortgage market reforms to end federal conservatorship of the government-sponsored enterprises (GSEs).

Watt also warned of the possibility that without action, Fannie Mae and Freddie Mac could require additional draws. The additional draws of taxpayer support would reduce the amount of taxpayer backing available to the enterprises and the foreseeable risk that the uncertainty associated with such draws or from the reduction in committed taxpayer backing could adversely impact the housing finance market.

Watt outlined several issues Congress should address on GSE reform, including how much backing, if any, should the federal government provide and in what form, what process should be followed to transition to the new housing finance system and avoid disruption to the housing finance market. He further insisted Fannie Mae and Freddie Mac need some kind of buffer to shield against short-term operating losses.

News Characteristics

Date : May 12, 2017
Region : North America
Industry : Mortgage Companies
Function : Regulation and Compliance
Sub-Function : Regulatory changes