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 CorkerSenate chaplain offers prayer 'as children are being separated from their parents' Senate passes 6B defense bill This week: House GOP caught in immigration limbo 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 WarnerWray defends FBI after 'sobering' watchdog report Top Dems: IG report shows Comey's actions helped Trump win election Dem senator: Trump at G-7 made me ‘embarrassed for our country’ MORE (D-Va.) put forward a housing finance proposal that became the foundation for a bipartisan bill from Banking Committee Chairman Tim JohnsonTimothy (Tim) Peter JohnsonSenate GOP rejects Trump’s call to go big on gun legislation Court ruling could be game changer for Dems in Nevada Bank lobbyists counting down to Shelby’s exit MORE (D-S.D.) and Sen. Mike CrapoMichael (Mike) Dean CrapoSenate Dems want watchdog to probe if SEC official tried to pressure bank on gun policies Community development impact remains clear with NMTC post-tax reform Overnight Finance: Trump signs Dodd-Frank rollback | Snubs key Dems at ceremony | Senate confirms banking regulator | Lawmakers lash out on Trump auto tariffs 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) TesterManchin becomes final Democrat to back bill preventing separation of immigrant families Trump signs VA reform bill without Democratic co-author The Hill's Morning Report — Sponsored by PhRMA — Primary results give both parties hopes for November 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 SchumerDems must stop picking foxes to guard the financial hen house Schumer warns 'House moderates' against immigration compromise bill Trump knocks Schumer, touts North Korea summit in early morning tweet MORE (D-N.Y.), Sherrod BrownSherrod Campbell BrownTrump surprises with consumer agency pick On The Money — Sponsored by Prudential — Trump nominates budget official Kraninger for consumer chief | Senate votes to block Trump ZTE deal | Stocks fall on trade tensions | House panel moves to markup budget Dems must stop picking foxes to guard the financial hen house MORE (D-Ohio), Jeff MerkleyJeffrey (Jeff) Alan MerkleySenate passes 6B defense bill Amnesty International rips family separation policy: 'This is nothing short of torture' Merkley leads Dem lawmakers to border amid migrant policy outcry MORE (D-Ore.) and Elizabeth WarrenElizabeth Ann WarrenTrump surprises with consumer agency pick Senate passes 6B defense bill Dems must stop picking foxes to guard the financial hen house 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 CornynTrump plan to claw back billion in spending in peril Trump digs in amid uproar on zero tolerance policy Amendments fuel resentments within Senate GOP 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 L. S. 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.