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.
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 CorkerBob CorkerGOP lawmaker: Time to work with Dems on healthcare GOP senator: I'm ready to work with Trump, Dems on healthcare Senators introduce new Iran sanctions 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 WarnerSunday shows preview: Aftermath of failed healthcare bill Devin Nunes has jeopardized the oversight role of Congress Senators push Trump on defense deals with India 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 CrapoMike CrapoSenators war over Wall Street during hearing for Trump's SEC pick Overnight Finance: Biz groups endorse Trump's Labor pick | New CBO score coming before health bill vote | Lawmakers push back on public broadcasting cuts Senate Banking panel seeks proposals for economic growth 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 TesterJon TesterUnder pressure, Dems hold back Gorsuch support The Hill’s Whip List: Where Dems stand on Trump’s Supreme Court nominee Overnight Defense: Pentagon chief urges Congress to approve budget boost | Senate fight over NATO addition 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 SchumerSpeculation grows over Trump FCC pick A Justice Gorsuch will defend religious Americans from persecution Dem to Trump: 'You truly are an evil man' MORE (D-N.Y.), Sherrod BrownSherrod BrownDems question potential Kushner real estate deal with Chinese firm The Hill’s Whip List: Where Dems stand on Trump’s Supreme Court nominee Senators war over Wall Street during hearing for Trump's SEC pick MORE (D-Ohio), Jeff MerkleyJeff MerkleyThe Hill’s Whip List: Where Dems stand on Trump’s Supreme Court nominee Dem senator accuses Trump of 'dangerous tilt towards authoritarianism' Overnight Regulation: Dems punch back in fight over CEO pay rule MORE (D-Ore.) and Elizabeth WarrenElizabeth WarrenDems question potential Kushner real estate deal with Chinese firm Inspector general reviewing HHS decision to halt ObamaCare ads Warren: 'Today is a great day... but I'm not doing a touchdown dance' 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 CornynGOP senators pitch alternatives after House pulls ObamaCare repeal bill Rand Paul takes victory lap on GOP health bill Senators push Trump on defense deals with India 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.