In what may well be the last hearing Sen. Johnson (D-SD) chairs, FHFA Director Watt today defended his agency against surprisingly strong attack from his side of the aisle. Although Republicans chided him for not doing more to end the conservatorship, the sharpest attacks came from Democrats. Sens. Warren (D-MA) and Warner (D-VA) on Tuesday pushed Mr. Watt to do considerably more to liquidate the GSEs, share risk, and contribute to affordable housing. Today, they were sometimes withering in demanding answers on these issues, leading Mr. Watt to agree at least to opine on contributions to the affordable-housing trust fund by year-end. He also promised an answer to guarantee fees (see FSM Report GSE130) and eligibility standards for mortgage insurance companies during the first quarter. As we anticipated, Sen. Shelby was conspicuously absent from this session, thus giving no clue on the path he will follow on housing-finance reform next year. Despite partisan disagreements over affordable housing, today’s session showed surprising agreement on the need for a new, non-GSE model.
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