(Bloomberg) -- The Senate Banking Committee's top Democrat is warning the Trump administration that carrying out its plan for ending U.S. control of Fannie Mae and Freddie Mac could destabilize the economy if it fails to protect the housing market.
Senator Sherrod Brown of Ohio in a Thursday statement pointed to multiple hearings the committee has held this year, during which both Democrats and housing experts cautioned that freeing the mortgage giants from government conservatorship without major reform would be risky.
“Failing to listen to these important voices does a disservice to communities and puts our housing market and taxpayers at risk,” Brown said in the statement. An ideal housing reform plan would have mortgage guarantors like Fannie structured like public utilities, and expands investment in affordable housing, he said at a June hearing.
Brown's warning comes even before the public release of the Trump administration's Fannie and Freddie plan. The Treasury Department has sent its report, which President Donald Trump ordered the agency to write in March, to top officials at the White House, according to people familiar with the matter.
The plan, which is awaiting sign-off, will address ways to rebuild capital at Fannie and Freddie, as well as plotting their path out of conservatorship, one of the people said.
Fannie and Freddie have surged since Wednesday news articles that the Treasury report had been submitted to the White House and other agencies, with Wall Street taking it as a sign that the administration is making progress on pursuing an overhaul of the companies. Fannie rose 9.6% to $2.68 as of 12:35 pm in New York trading Thursday, while Freddie gained 7.8% to $2.57.
Taken over by the government in the midst of the financial crisis, what to do with Fannie and Freddie is the biggest piece of unfinished business from that era. Since their takeover, three presidential administrations and numerous congressional working groups have repeatedly failed to agree on a revamp of the companies that would end government control.
To contact the reporter on this story: Austin Weinstein in Washington at aweinstein18@bloomberg.net
To contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Gregory Mott
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