Treasury Secretary Steven Mnuchin on Monday reiterated his goal of tackling housing finance reform within the next year, an aggressive plan for resolving a matter that has long flummoxed Congress.
“Whether it’s at the end of this year or the beginning of next year, that’s the time frame we’re looking at,” Mnuchin said in remarks at the Milken Institute Global Conference.
Fannie Mae and Freddie Mac have been in government conservatorship since 2008, and congressional efforts to reform the two mortgage giants never got off the ground during the Obama administration.
Senate Banking Committee Chairman Mike Crapo, R-Idaho, said in February that while he hoped housing finance reform could be passed within the next 12 months, it might take longer.
“The climate right now in the Senate is as toxic as I have ever seen,” Crapo said at the time.
But speaking last week, Crapo said he was more optimistic about finding common ground with Democrats on the issue.
Mnuchin, whose long career in finance has included stints at Goldman Sachs and as chairman of OneWest Bank, has taken a strong interest in reforming Fannie and Freddie.
“There are things that I came into this job that I knew absolutely nothing about,” he said Monday. “For better or for worse, the housing market is something I know a lot about. I’ve been around for 30 years and have followed the history of Fannie Mae and Freddie Mac very closely.”
Still, it is not clear what a Trump administration reform plan might look like. Congressional Republicans have long been split over the role of the federal government in any revamped system.
Mnuchin said Monday that it is important to eliminate the risk that U.S. taxpayers will be left holding the bag again, as they were in 2008, but did not provide additional details.
“What I’ve said is we can’t leave Fannie and Freddie as is for the next four years,” he said. “We need to make sure that on the one hand we have liquidity in the housing markets — a very, very important part of the economy. On the other hand, we can’t have taxpayers at risk. And right now, taxpayers are at risk through the Treasury’s support.”
Mnuchin was also asked about the mortgage interest deduction, which has long been a sacred cow in Washington, and would be preserved under the tax reform outline that the Trump administration unveiled last week.
“That’s kind of like apple pie,” Mnuchin responded. “Again, owning a home is something that’s been part of the American dream, and we want to keep it that way.”
Still, the Trump plan has stirred unease in the housing sector, since it would double the standard deduction, eliminating the advantage that the mortgage interest deduction currently provides to many middle-class homeowners.