By Benjamin Goad - 04/18/13 06:45 PM EDT
Democrats, including Sen. Jon TesterJon TesterSenators weigh in on FCC's business internet reform plans Senate Dems push Obama for more Iran transparency Bayh jumps into Indiana Senate race MORE (D-Mont.), also had kind words for DeMarco.
Sen. Elizabeth WarrenElizabeth WarrenJill Stein helps Trump as Ralph Nader helped Bush Scott Brown calls ex-Fox host harassment charge ‘totally false’ The disclosure wars 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 ReedDems to GOP: Admit Trump is 'unfit' to be president Armed Services leaders encouraged after first conference meeting US urges China to be calm in wake of South China Sea ruling 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.