Secretary of the U.S. Department of the Treasury Steve Mnuchin told FOX News Monday that he hopes to have Congressional support on GSE reform within the next three to six months.
“They’ve been in conservatorship for too long,” Mnuchin said in the interview.
He added that now is the right time to “recapitalize on them and make them stronger,” and to also protect taxpayers in the event of another housing downturn.
Mnuchin told FOX that the government is in the process of negotiating with the FHFA on current lines, and hope to reach an agreement that would allow Fannie Mae and Freddie Mac to retain their earnings. He said this would be a step in the right direction in increasing third-party capital.
He added that if the administration does not get Congressional support, it will move forward and make whatever changes it can administratively.
“We will restructure Fannie Mae and Freddie Mac.” Mnuchin said.
He said both Fannie Mae and Freddie Mac currently have about $3 million in capital.
The Trump administration released its plan for housing finance reform last week, more than a decade after the Great Recession sent the GSEs into conservatorship.
According to the department, the Treasury Housing Reform Plan consists of a series of recommended legislative administrative reforms aimed to “protect American taxpayers against future bailouts,” preserve the 30-year-fixed-rate mortgage, and help guide Americans toward the path to homeownership.
“The Trump Administration is committed to promoting much needed reforms to the housing finance system that will protect taxpayers and help Americans who want to buy a home,” said Mnuchin in a release. “An effective and efficient Federal housing finance system will also meaningfully contribute to the continued economic growth under this Administration.”
Fannie Mae and Freddie Mac suffered significant losses due to their structural flaws and lack of sufficient oversight during the financial crisis of 2008. The GSEs received more than $190 billion from the Treasury Department.
Despite the plan, industry insiders questioned whether reform of the GSEs will happen before the end Trump’s term as president, or if he is re-elected.
Watch the interview here.