Editor: David Reiss
Brooklyn Law School

March 18, 2013

Reiss on Future of the FHFA

By David Reiss

Law360 wrote a story (here, behind a paywall) on the Obama Administration’s plans for the Federal Housing Finance Agency.  It reads in part

Although the Obama administration has dealt aggressively with congressional Republicans in some areas, it’s unlikely to make a recess appointment before the U.S. Supreme Court rules on the NLRB case, or chooses not to take it.

“The notion of a recess appointment is even harder to fathom,” said Brooklyn Law School professor David Reiss.

Still, despite those challenges, there are whispers that DeMarco could be replaced within the next few weeks. The names of some potential replacements, including Rep. Mel Watt, D-N.C., have been publicly floated.

A second part of DeMarco’s job is to help figure out just what to do with Fannie and Freddie, and how to bring more private money into the mortgage market.

Currently, Fannie and Freddie own or guarantee around 75 percent of all residential mortgages. Combined with the mortgages owned by the FHFA and the U.S. Department of Veterans Affairs, more than 90 percent of mortgages have some sort of federal backing.

DeMarco in October laid out a five-year plan for winding down Fannie and Freddie, including a common securitization platform for the two companies.

The Obama administration may well be on board with those plans and DeMarco provides convenient cover, Reiss said.

“It’s hard to imagine that Ed DeMarco is taking big positions like that without the administration’s at least tacit approval,” he said.

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