We continue to gauge the potential for Congress to act on the administration’s housing finance plan and/or pass their own before adjourning for the year. When Congress returned from August recess, members faced an ambitious agenda, including wrapping up the fiscal year 2020 appropriation bills. On September 19, the House of Representatives passed a continuing resolution (CR) that would fund the government through November 21. The Senate passed the CR on September 26, and President Trump signed it into law the next day. While this bought Congress some time to act on non-budgetary items, the remaining limited number of legislative days and the policy differences between the Senate and the House made it highly unlikely at the time that legislation would move in this session of Congress.
Speaker Pelosi’s announcement last week that the House will proceed with a formal impeachment inquiry into President Trump’s involvement with Ukraine and potential interference in the 2020 election is likely the last nail in the GSE (government-sponsored entity) coffin for the remainder of this year. Six different House committees have been selected to participate in the inquiry, including the House Financial Services Committee, chaired by Maxine Waters, who has voiced support for impeaching President Trump since the beginning of his presidency. She has yet to publicly announce a Committee hearing on housing reform, and Congress has adjourned for the next two weeks. So the earliest Committee activity would be the end of October or early November. However, the impeachment inquiry will consume a good amount of the Committee’s attention for the foreseeable future, and it will take an already highly partisan House atmosphere to almost unprecedented levels. This would appear to doom GSE reform prospects for 2019. The Speaker has indicated she hopes to conclude impeachment proceedings by year-end. Depending on the outcome, this could open the door for congressional consideration of some policy initiatives, including GSE reform, early next year.
In the meantime, the administration is moving ahead with its housing finance reform plan. On September 30, 2019, the administration announced that the U.S. Treasury Department and the Federal Housing Finance Agency reached an agreement to modify the Preferred Stock Purchase Agreements allowing Fannie Mae and Freddie Mac to retain $25 billion and $20 billion in capital reserves, respectively. The administration’s reform plan includes other options that will increase the GSEs’ capital reserves, so we can expect additional activity on what is an important step for the GSEs to exit conservatorship.
As we wait for Congress to return to Washington later in October, we will be closely monitoring developments that signal any change in the prospects for reforming the housing finance system this year. We will also track and report on additional administrative changes that do not require congressional action.
