On The Money: Biden to fire FHFA director after Supreme Court removes restriction | Yellen pleads with Congress to raise debt ceiling

On The Money: Biden to fire FHFA director after Supreme Court removes restriction | Yellen pleads with Congress to raise debt ceiling
© Greg Nash

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THE BIG DEAL—Biden to fire FHFA director after Supreme Court removes restriction: President BidenJoe BidenFive takeaways from the Ohio special primaries FDA aims to give full approval to Pfizer vaccine by Labor Day: report Overnight Defense: Police officer killed in violence outside Pentagon | Biden officials back repeal of Iraq War authorization | NSC pushed to oversee 'Havana Syndrome' response MORE ousted Federal Housing Finance Agency (FHFA) Director Mark Calabria after the Supreme Court struck down a protection against his dismissal Wednesday, a White House official told The Hill.

“FHFA has an important mission of oversight of Fannie Mae and Freddie Mac as well as the Federal Home Loan Bank System. It is critical that the agency implement the Administration’s housing policies,” the official said in an email to The Hill. “As a result, in light of the Supreme Court’s decision today, the President is moving forward today to replace the current Director with an appointee who reflects the Administration’s values.”

What happened: 

  • The court held Wednesday that the structure of the FHFA, the conservator and overseer of Fannie Mae and Freddie Mac, was unconstitutional because it prevents the director from being fired by the president for reasons other than neglect or misconduct. 
  • The court ruled that the FHFA director can be fired at will by the president, opening the window to dismiss Calabria. Read more on the decision here.

Calabria bids farewell: Calabria, a Republican, had served as FHFA director since April 2019. He was appointed to the position by former President TrumpDonald TrumpFive takeaways from the Ohio special primaries Missouri Rep. Billy Long enters Senate GOP primary Trump-backed Mike Carey wins GOP primary in Ohio special election MORE after serving as the chief economist to former Vice President Mike PenceMichael (Mike) Richard PenceOfficers' powerful Capitol riot testimony underscores Pelosi's partisan blunder RealClearPolitics reporter says Freedom Caucus shows how much GOP changed under Trump Want to improve vaccine rates? Ask for this endorsement MORE

In a Wednesday statement that he respects the Supreme Court's decision and Biden's authority to fire him.

“It has been the honor of a lifetime to serve as Director of the Federal Housing Finance Agency alongside world-class staff. During my tenure, FHFA has fulfilled its mission as the economy fluctuated from record-low unemployment and a strong housing market, to a pandemic-triggered recession that spared house prices but contracted supply,” Calabria said.

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What comes next: White House press secretary Jen PsakiJen PsakiBiden rebukes GOP governors for barring mask mandates Florida becomes epicenter of COVID-19 surge The Hill's 12:30 Report - Presented by AT&T - Simone wins bronze with altered beam routine MORE declined to say during a White House briefing Wednesday whom Biden would nominate to replace Calabria and when he would announce a pick. But Biden's eventual nominee will likely face a cold reception among Senate Republicans, who were fond of Calabria and his approach to the housing finance system.

"Based on Director Calabria’s record of success, I believe the president is making a tremendous mistake by removing him," said Sen. Pat ToomeyPatrick (Pat) Joseph ToomeyBlack women look to build upon gains in coming elections Watch live: GOP senators present new infrastructure proposal Sasse rebuked by Nebraska Republican Party over impeachment vote MORE (Pa.), the top Republican on the Senate Banking Committee.

“That mistake would be compounded if President Biden were to nominate a new director who does not share Director Calabria’s commitment to fixing the flaws in the structure of the housing finance system, ending the conservatorships, and protecting taxpayers against future bailouts."

LEADING THE DAY

Yellen pleads with Congress to raise debt ceiling, avoid 'unthinkable' default: Treasury Secretary Janet YellenJanet Louise YellenYellen tries to tamp down Democrats fury over evictions ban On The Money: Biden, Pelosi struggle with end of eviction ban | Trump attorney says he will fight release of tax returns Yellen to brief House Democrats on Tuesday on rental aid MORE implored lawmakers Wednesday to suspend the legal limit on how much debt the U.S. can owe before it kicks back in on Aug. 1, warning that failure to do so “would have absolutely catastrophic economic consequences.”

  • In testimony before a Senate subcommittee, Yellen urged Congress to make sure the U.S. does not default on its debt by raising and suspending the so-called debt ceiling.
  •  A two-year deal to suspend the debt limit expires after July 31, at which point the Treasury Department would have to take “extraordinary measures” to prevent the U.S. from defaulting.

“I believe it would precipitate a financial crisis, it would threaten the jobs and savings of Americans, and at a time when we're still recovering from the COVID pandemic,” Yellen said of a default on the U.S. debt. “I would plead with Congress simply to protect the full faith and credit of the United States by acting to raise or suspend the debt limit as soon as possible.”

I have more here.

House Democrats propose increasing IRS budget for fiscal 2022: House Appropriations Committee Democrats on Wednesday released a draft government funding bill for fiscal 2022 that would increase the IRS's budget.

The financial services and general government appropriations bill would provide the IRS with about $13.2 billion in base funding for the agency, plus an additional $417 million focused on reducing the "tax gap" between the amount of taxes paid and the amount owed. 

The total funding for the IRS in the bill is $1.7 billion higher than the enacted level for this year. 

The Hill’s Naomi Jagoda breaks it down here.

Read more: House Democrats unveil spending bill to boost staff pay, maintain lawmaker pay freeze

ON TAP TOMORROW:

  • The House Oversight Committee holds a hearing on the need for paid family leave at 10 a.m.
  • The Senate Banking Committee holds a hearing on bipartisan bills to increase access to housing at 10 a.m.

GOOD TO KNOW

ODDS AND ENDS

  • Southwest Airlines CEO Gary Kelly will step down from his position next year, the company announced on Wednesday.
  • Cruise ships are preparing to set sail once again after more than a year in port due to coronavirus restrictions.