Obama’s housing nominee open to ending Fannie and Freddie

President Obama’s nominee for Housing secretary on Tuesday told the Senate Banking Committee he is open to shuttering the mortgage giants Fannie Mae and Freddie Mac.

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Senators expressed little opposition to San Antonio Mayor Julián Castro’s nomination for secretary for Housing and Urban Development (HUD), a job that would give him a major role in the push for reforms to the housing system.

Though he declined to endorse any specific legislative proposals, Castro said he supports ending the federal backstop that Fannie and Freddie now enjoy.

"I absolutely believe that there are better alternatives than what we have in place with this duopoly and with the conservatorship," Castro said.

That was enough for Sen. Bob CorkerRobert (Bob) Phillips CorkerDeficit hawks voice worry over direction of tax plan The Hill Interview: Budget Chair Black sticks around for now Overnight Finance: White House requests B for disaster relief | Ex-Equifax chief grilled over stock sales | House panel approves B for border wall | Tax plan puts swing-state Republicans in tough spot MORE (Tenn.), who said he will support Castro’s nomination.

"You will be involved in what happens with Freddie and Fannie," Corker told Castro at the hearing. "You were a little vague on your support of the bill, and you should be at this point, but relative to [Fannie and Freddie status quo] you agree with that 100 percent."

Corker and Sen. Mark WarnerMark Robert WarnerTrump: Why isn't Senate looking into 'Fake News Networks'? 5 takeaways from Senate Russian meddling presser Trump: 'America is truly a nation in mourning' MORE (D-Va.) put forward a housing finance proposal that became the foundation for a bipartisan bill from Banking Committee Chairman Tim JohnsonTim JohnsonCourt ruling could be game changer for Dems in Nevada Bank lobbyists counting down to Shelby’s exit Former GOP senator endorses Clinton after Orlando shooting MORE (D-S.D.) and Sen. Mike CrapoMichael (Mike) Dean CrapoLawmakers look to bypass Trump on North Korea sanctions Overnight Finance: What to watch for in GOP tax plan rollout | IRS sharing info with special counsel probe | SEC doesn't know full extent of hack | New sanctions target North Korean banks US Chamber opposes Trump's Export-Import Bank nominee MORE (Idaho), the committee’s ranking Republican.

"I believe that reform would be preferable to what we have in place now," Castro said in response to a question from Sen. Jon TesterJonathan (Jon) TesterOvernight Cybersecurity: Equifax security employee left after breach | Lawmakers float bill to reform warrantless surveillance | Intel leaders keeping collusion probe open Overnight Finance: White House requests B for disaster relief | Ex-Equifax chief grilled over stock sales | House panel approves B for border wall | Tax plan puts swing-state Republicans in tough spot Senators grill ex-Equifax CEO over stock sales MORE (D-Mont.). "If the nation were to experience another downturn and another housing crisis as we just experienced, for that reason I commend the committee for working toward a housing finance model that takes the taxpayers out of their position of first loss and puts the private sector in that position."

The committee approved the Johnson-Crapo bill last month on a 13-9 vote, with liberal Sens. Charles SchumerCharles (Chuck) Ellis SchumerOvernight Health Care: Schumer calls for tying ObamaCare fix to children's health insurance | Puerto Rico's water woes worsen | Dems plead for nursing home residents' right to sue Crying on TV doesn't qualify Kimmel to set nation's gun agenda Trump knocks ‘fake’ news coverage of his trip to Puerto Rico MORE (D-N.Y.), Sherrod BrownSherrod Campbell BrownDems plan to make gun control an issue in Nevada Mandel leads GOP primary for Ohio Senate seat: internal poll Red-state Dems need more from Trump before tax embrace MORE (D-Ohio), Jeff MerkleyJeffrey (Jeff) Alan MerkleyOvernight Energy: Dems take on Trump's chemical safety pick Dem senator slams Trump for dedicating golf trophy to hurricane victims Dem senator compares Trump to Marie Antoinette MORE (D-Ore.) and Elizabeth WarrenElizabeth Ann WarrenOvernight Finance: Lawmakers grill Equifax chief over hack | Wells Fargo CEO defends bank's progress | Trump jokes Puerto Rico threw budget 'out of whack' | Mortgage tax fight tests industry clout Michelle Obama is exactly who the Democrats need to win big in 2020 Wells Fargo chief defends bank's progress in tense Senate hearing MORE (D-Mass.) opposing it because of concerns the legislation did not do enough to address affordable housing. The lack of liberal support likely killed the bill’s chances of receiving a floor vote this year.

"I fully understand though, as well, the concerns of folks with regards to the other part of the balance, which is access to credit," Castro continued in his response to Tester. "We have had a housing finance system in place that seeks to ensure opportunity for Americans with modest means who are credit borrowers."

Housing finance reform has been one of the largest financial regulatory issues left unresolved from the 2008 economic crisis. The government took control of Fannie and Freddie in September 2008 and gave them a $187.4 billion taxpayer bailout.

Now, eight years after the crisis, the government is still conservator. Further complicating the issue is that Fannie and Freddie have become profitable again and have paid back the bailout money.

Johnson asked Castro about a 2012 HUD inspector general report that found San Antonio had mishandled $8.6 million in HUD allocations to the city. Castro said the city returned $125,000 of that money, and that he had personnel removed who were involved with the decision.

Castro, a rising Democratic star who is often named as a potential vice presidential 2016 contender, had a packed crowd of about 50 people inside the Dirksen Senate Building, which is unusual for a Banking Committee confirmation hearing.

He was introduced by Sen. John CornynJohn CornynGun proposal picks up GOP support House bill set to reignite debate on warrantless surveillance Republicans jockey for position on immigration MORE (R-Texas).

Castro was joined by his family, including his twin brother, Rep. Joaquín Castro (R-Texas), who arrived late the hearing.

"You'll have to forgive him. He's the second-born twin and sometimes he's late," the mayor quipped of his brother's tardiness.

President Obama nominated Castro for HUD secretary because the current chief, Shaun DonovanShaun DonovanHouse Dems call on OMB to analyze Senate budget plan Overnight Finance: Dems turn up heat on Wells Fargo | New rules for prepaid cards | Justices dig into insider trading law GOP reps warn Obama against quickly finalizing tax rules MORE, has been nominated to lead the Office of Management and Budget.