The Senate confirms that Calabria will lead the overhaul of housing finance

The Senate confirmed Thursday the appointment of Mark Calabria as director of the Federal Agency for Housing Financing, placing the libertarian economist at the center of the Trump Administration's efforts to reform the country's housing finance system .

Calabria, who was the chief economist of Vice President Mike Pence, was confirmed by a vote of 52 votes to 44 for a five-year term with the regulator, who oversees mortgage giants Fannie Mae and Freddie Mac.

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Determining the fate of Fannie Mae and Freddie Mac is the main issue shaking the housing market since the government seized the two companies in 2008 after a massive bailout to prevent their collapse during the mortgage crisis.

Last week, the White House issued a presidential memorandum asking the Treasury to put in place a plan to end government control over Fannie and Freddie, even as Congress redoubled its efforts to reform the mortgage financing system. . Fox Business News reported this week that government officials had contacted Wall Street to consider the possibility of privatizing the mortgage giants through a sale.

Bank Senate President Mike Crapo (R-Idaho), who held two days of hearings last week over his reform cadre of Fannie and Freddie, assured colleagues Thursday the contribution of lawmakers before 39; act.

During its confirmation hearing, Calabria "is committed to working with me, as well as other members of this body, to find a comprehensive solution to put an end permanently to the tutelage of Fannie and Freddie, "said Crapo in the Senate.

"He agrees with me and many others that action on housing finance reform is the prerogative of Congress, and that after more than a decade of conservatism, it has been waiting for a long time, "added Crapo.

In last week's memo, Trump asked Treasury Secretary Steve Mnuchin to "develop a plan for administrative and legislative reforms" with the aim of "ending the Conservative [government-sponsored enterprises] when completing the specified reforms. "

The seven-page memo lists three conditions to end the preservation: Fannie and Freddie should hold more capital; the government should be "indemnified for the explicit and implicit warranties that it has provided to the GSE or any successor entity in the form of a payment in progress"; and GSE portfolios and activities should be reduced.

The administration also called for allowing the Federal Housing Finance Agency to approve new guarantors to strengthen the role of the private sector in the mortgage market.

Mnuchin will have to specify whether each of its proposals is a legislative or administrative reform and provide a timetable for the implementation of the administrative steps. Trump ordered him to submit his plan "as soon as possible".

Calabria has many steps to take to reduce the footprint of Fannie and Freddie in the meantime, for example by lowering the limit on the maximum size of loans that companies can buy. FHFA could also tighten the minimum credit requirements, increase fees charged by Fannie and Freddie, and require companies to limit purchases of certain loans, such as cash refinancing.