Although HFSC Chairwoman Waters (D-CA) described the Administration housing-finance reform plan (see Client Report GSE143) as “disastrous,” Members on both sides of the aisle at today’s hearing were open to changes beyond the affordable-housing ones that normally divide Democrats from Republicans.  FHFA Director Mark Calabria warned that Fannie Mae and Freddie Mac are so ill-capitalized that they would fail under stress comparable to the 2008 crisis, stress he argued is building up based on the detailed comparison of GSE exposures in 2004 versus 2019.  Both he and Treasury Secretary Mnuchin made it clear that, if the GSEs experience stress of this magnitude, receivership might be required, with Mr. Mnuchin making it clear also that the long-term future of Fannie and Freddie is not necessarily re-privatization.  As always, he is strongly opposed to recap and release, with Rep. Bill Foster (D-IL) emphasizing the need to act on legislation pending before HFSC to make near-term release impossible under law.

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