By Benjamin Goad - 04/18/13 06:45 PM EDT
Democrats, including Sen. Jon TesterJon TesterGOP plan: Link Dems to an email scandal Court ruling could be game changer for Dems in Nevada Election-year politics: Senate Dems shun GOP vulnerables MORE (D-Mont.), also had kind words for DeMarco.
Sen. Elizabeth WarrenElizabeth WarrenThe Hill's 12:30 Report How to hold execs accountable when big banks rob customers Sanders warns Clinton: Don't rush to compromise with GOP MORE (D-Mass.), who has been a harsh critic of financial regulators during her brief time on the panel, was not at the hearing. Warren was en route to Boston with President Obama to attend a memorial service for the victims of the Boston Marathon bombing.
In 2008, the FHFA took control of Fannie Mae and Freddie Mac in an effort to stabilize the plummeting market. DeMarco was named acting director the following year and has led efforts to stem the tide of foreclosures, in part through a set of loan modification programs.
Under pressure to end the government’s control of Fannie and Freddie, DeMarco and his team have developed a plan to wind down the conservatorship. But he said Congress must take the lead by passing legislation that could provide the framework for rules that would offer a picture of what the post-conservatorship world would look like and attract the necessary private investment capital.
“We view the way out of conservatorship is for the Congress of the United States and administration to get together on legislation that determines what the future looks like,” he testified. “Without a set of rules, people seem unwilling to dip their toe in the water."
The only significant criticism came from Sen. Jack ReedJack ReedArmani, Batali among guests at White House state dinner Overnight Finance: Jobless claims near record low | Cops bust IRS phone scam in India | Republican demands Iran sanctions docs Senate Dems demand answers from Wells Fargo over treatment of military MORE (D-R.I), who chided DeMarco for blocking the companies, which back roughly half of the nation's home loans, from lowering the principals of loans of underwater borrowers.
"This was a fundamental rejection of what we all thought was going to be one of the most significant improvements, not only in the housing market, but in the overall economy," Reed said.
DeMarco countered that, because Fannie and Freddie are supported by taxpayer dollars, such a move would be different than a scenario in which a private lender decided to forgive a portion of the loan.
"I concluded ... pursuing that program is inconsistent with our mandate as conservator," he said.
Meanwhile, the Obama administration is reportedly considering well-known economist Mark Zandi to replace DeMarco as the FHFA's permanent director, which would require Senate confirmation.
The matter did not come up during Thursday's hearing.
This story was updated at 1:56 p.m.