(Bloomberg) -- Democratic lawmakers Maxine Waters and Sherrod Brown have a message for Treasury Secretary Steven Mnuchin: Stand down on making big changes to Fannie Mae and Freddie Mac before the Trump administration ends.
House Financial Services Committee Chair Waters and Brown, the top Democrat on the Senate Banking Committee, said it would be a mistake to pursue policies that could disrupt the U.S.'s $11 trillion residential mortgage market, particularly when it's one of the few bright spots for an economy that's been ravaged by Covid-19. In a letter dated Wednesday, they urged Mnuchin to inform them immediately of any actions the Treasury Department might take in the next month.
“Any significant changes to our multitrillion dollar housing system, which affects every person in this country, could further damage the economy,” California's Waters and Ohio's Brown, wrote in the letter. “Treasury should listen to the concerns raised from all corners and immediately halt any plans for significant changes.”
Mnuchin, speaking to reporters earlier this month, said he would likely favor changing a key agreement that outlines his agency's support of Fannie and Freddie, though he didn't offer specifics. He told the Wall Street Journal last week that he had all but ruled out letting the mortgage giants leave government control before he steps down.
Fannie and Freddie are essential to the housing market because they backstop about $5 trillion of loans. The companies buy mortgages from lenders, wrap them into securities and guarantee repayment of interest to investors. They got in trouble during the 2008 housing slump, prompting the government to take them over and eventually inject them with $187.5 billion in taxpayer funds.
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