Calabria Discusses His Approach to Regulating Fannie and Freddie

The Director of Federal Housing Finance Agency (FHFA) Mark Calabria this past week spoke with SitusAMC's Head of Industry Relations, Tim Rood for the Situs podcast "On The Hill," a show on which Rood regularly interviews high-level government officials and department representatives about federal policy, changes, and the effect on the real estate industry.

Prior to joining FHFA in 2019, Calabria was Chief Economist for VPOTUS Mike Pence, spent eight years as Director of Financial Regulation Studies at the Cato Institute, and served as a senior aide on the Senate Committee on Banking, Housing, and Urban Affairs.

Rood explains to his audience that Calabria drafted significant portions of the Housing and Economic Recovery Act of 2008 (HERA), which created a new regulatory framework for the government-sponsored enterprises, Fannie Mae and Freddie Mac, and the Federal Home Loan Banks.

That gives Calabria a wealth of insight when it comes to the more-modern recession.

Calabria tells Rood how "coming of age in the aftermath of the savings and loan crisis" and spending seven years on the Senate Banking Committee shaped his approach to regulating Fannie and Freddie.

“My philosophy as a regulator is to hope for the best but plan for the worst,” he said. “What’s the worst 5 percent scenario? Even if only 5 percent likely to happen, there’s too much at stake to cut corners. It’s the decisions of these companies that landed them in the conservatorship. How do you get them to take ownership of their own decisions? How do you create a culture in these companies where they stand up and say we’re not going to enable bad behavior?”

DS5, a program of The Five Star Institute (parent company to DS News and MReport), also had Calabria on as a guest during the start of the pandemic. That's available here.