President Trump’s nominees to lead the Federal Housing Finance Agency (FHFA) and the Consumer Financial Protection Bureau (CFPB) pledged to bring reform to their respective agencies.
In testimony delivered today before the Senate Banking, Housing and Urban Affairs Committee, the designated FHFA director Bill Pulte noted his connection to the housing market began in his youth when he worked on his family’s homebuilding sites.
“I have seen firsthand the devastating consequences of bad policy on housing and the economy,” said Pulte. “In 2008, the housing crash nearly destroyed our family’s legacy company. In 2020, as a director of Pulte Homes, I witnessed how the Covid-19 pandemic placed our housing finance system under unprecedented strain.”
Pulte, the CEO of the investment firm Pulte Capital Partners, stated his “number one mission will be to strengthen and safeguard the housing finance system.” He also touched upon the hot-button topic of ending the federal conservatorship of the government-sponsored enterprises that has been in place since September 2008.
“Under President Trump’s leadership in his first term, Americans were able to realize the American Dream of homeownership through Fannie Mae and Freddie Mac, and to that end, while their conservatorships should not be indefinite, any exit from conservatorship must be carefully planned to ensure the safety and soundness of the housing market without upward pressures on mortgage rates,” Pulte stated, adding “I will be laser focused on ensuring that Fannie Mae and Freddie Mac operate in a safe and sound manner.”
In his testimony, the designated CFPB director Jonathan McKernan cited his work as a director with the Federal Deposit Insurance Corporation and his “staff roles in the Senate, the Department of the Treasury, the FHFA, and even a short detail to the CFPB, all focused on the mortgage market, one of the key markets supervised by the CFPB.” Also noted his “nine years as a lawyer focused on banking and consumer financial laws” in a legal career that launched at the start of the 2008 financial crisis.
While noting the need for consumer protection, McKernan stressed the CFPB had issues that needed to be addressed.
“All too often, however, the CFPB has gotten in the way of its own mission,” he said. “It has acted in a politicized manner. It has pushed beyond the limits of its statutory authority. It has seized opportunities to expand its jurisdiction and power. It has offended our basic notions of fairness and due process when it has regulated by enforcement. And it has harmed consumers through higher prices and reduced choice when it has failed to strike an appropriate balance between costs and benefits in prescribing new regulations.”
McKernan added, “Even if you don’t agree with that view, it’s clear that the CFPB suffers from a crisis of legitimacy. This must be corrected if the CFPB is to reliably do what it’s supposed to do – look out for the American consumer. To that noble end, the CFPB needs to be made accountable to our elected officials and its past excesses need to come to an end.”
McKernan did not cite the need to shutter the CFPB, but instead promised to have the agency “take all steps necessary to implement and enforce the federal consumer financial laws and perform each of its other statutorily assigned functions. But the CFPB will do this by centering its regulation on real risks to consumers and by focusing its enforcement on bad actors.”
