President Trump Mulls Nomination Of Fannie Mae, Freddie Mac Critic To Oversee Those Organizations
President Donald Trump is reportedly looking to continue his trend of filling government agency vacancies with nominees critical of those agencies' missions.
Trump is considering nominating Vice President Mike Pence's chief economist, Mark Calabria, as the new head of the Federal Housing Finance Agency, the Wall Street Journal reports. The position will be vacant if no nominee is confirmed when Obama appointee Melvin Watt's term ends in January.
Under Pence, and in previous roles as a pundit on cable news and a member of conservative-leaning think tanks, Calabria has been critical of the government's takeover of Fannie Mae and Freddie Mac, both of which have been run by the FHFA since the mortgage crisis of 2008, the New York Times reports. The federal government still pockets all of the profits from both companies, something which has caused some to openly wonder if government conservatorship should be wound down. Calabria is among those critics, according to the WSJ.
Fannie and Freddie purchase mortgages from private lenders, packaging them and selling them to other private entities as securities. That cycle injects capital into the mortgage market, financing further mortgages from those initial lenders. For years, federal interest rates remained low, but they have been rising again this year. Concurrently, home prices have risen, and the new tax law's reduction of homeownership incentives puts the housing industry in a precarious position, according to the WSJ.
In June, Trump floated the idea of ending government conservatorship of Fannie and Freddie, a move that some in the multifamily industry warned could destabilize the market. In the 10 years since the onset of the Great Recession, lending behavior has not been as aggressive from financiers, but some in commercial real estate worry that loosened regulation could risk a repeat of history.
Calabria would represent a continuation of Trump's tendency to nominate people who would favor the dismantling or hamstringing of the departments they would lead.
For the Environmental Protection Agency, Trump tabbed Scott Pruitt, who had advocated for dismantling the agency. (Pruitt resigned his post this year, dogged by corruption allegations.) To lead the Department of Housing and Urban Development, Trump chose neurosurgeon Ben Carson, who had never held any government office, due to the latter's belief in "tough love" for those in need of housing assistance. Carson's tenure has been similarly checkered by controversy as he has admitted his difficulties in transitioning from medicine to bureaucracy.
No final decision on Calabria has been made, and Trump may yet choose a different candidate, according to the Times.