What legislative activity can we expect in 2020 in the area of housing finance reform? With the Senate kicking off the New Year with an impeachment trial, it is highly unlikely Congress will make much headway on housing reform in the foreseeable future. The trial started this week and is expected to last at least two weeks and maybe longer. Once it ends—most people anticipate an acquittal due to the GOP Senate majority, it will take some time for members to recover from the bruising partisan fight and turn their sights to more normal business. In the midst of the turmoil, the country will turn its attention to the Democratic primary kicking off in Iowa on February 3. The heated primaries further cloud prospects of passage of anything besides must-pass legislation. Once Democrats and Republicans reach their nominating conventions in July, the prospect of any substantial bipartisan work being accomplished is close to zero. In sum, the congressional outlook is bleak.

In the meantime, we can expect the Trump administration to continue to lay the groundwork for the GSEs to exit government conservatorship and for Congress, particularly congressional Democrats, to counter with zealous oversight of the GSEs. We saw a glimpse of this activity at the end of 2019 when Mark Calabria, Director of the Federal Housing Finance Agency, announced the agency’s decision to reissue the proposed capital rule to establish a better framework for the GSEs to exit conservatorship. While there was much speculation that this would be the route Calabria would take, so far he has not. The proposed rule could be reissued as early as the first quarter of 2020.

As for congressional oversight, the Democrats on the Senate Banking Committee sent a letter to Treasury Secretary Steven Mnuchin and Director Calabria requesting details, including timing, on the process of ending the GSE conservatorships. The Democratic Senators wrote that they intend to provide proper oversight of the nation’s housing finance system, and underscored the need to know additional details about the administration’s plan. The House Financial Services Committee, chaired by Democrat Maxine Waters, is also expected to stay fully engaged on the issue.

More recently, Director Calabria publicly discussed the possibility of the GSEs operating under a consent decree once they exit government conservatorship, as a way to help ensure a smooth transition while the GSEs continue to build capital. It is not a typical start to a new year in Washington, and with that in mind, we will closely monitor Director Calabria and Secretary Mnuchin’s activities as they guide housing finance reform through the administration.