Following our analysis of Treasury and HUD housing finance reform plans (see Client Report GSE143), we follow up now with an assessment of Congressional reaction. As our earlier report makes clear, consequential GSE reform via administrative action is in the works. However, the Administration also lays out numerous legislative changes for still more sweeping change. Judging by Democratic response, little if any of this will advance. As expected, both HFSC Chairwoman Waters (D-CA) and Senate Banking Ranking Member Brown (D-OH) rejected the plan as a whole, arguing that it would increase housing costs and decrease availability. Senate Banking Chairman Crapo (R-ID) and HFSC Ranking Member McHenry (R-NC) welcomed the plan in general terms, with Sen. Crapo importantly making it clear that the Administration should proceed on changes that do not require Congressional action. However, they also refrained from outright endorsement of the plan even though the broad strokes of the GSE changes track those in an earlier outline from Sen. Crapo (see GSE Activity Report GSE-020119. We will analyze next week’s Senate Banking hearing on this plan to determine likely next steps in the Senate, but we expect the chances of comprehensive reform in the Senate remain low and those for anything like the Administration’s recommendations remain nil in the House.
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