GOP Lawmaker Calls on Obama to Chart Course for Fannie, Freddie

Press Release

Rep. Scott Garrett (R-N.J.) said the president has a "great opportunity" during Tuesday's State of the Union address to lay out the future of housing giants Fannie Mae and Freddie Mac -- but he is not holding his breath.

In an interview with The Hill, the chairman of the House Financial Services subcomittee that oversees the government-sponsored enterprises (GSEs) also said he would be interested in succeeding Rep. Spencer Bachus as head of the full committee. The Alabama Republican will not seek a waiver to remain as top Republican on the panel after he hits a term limit at the end of 2012.

With the president set to discuss the economy in a high profile address before Congress, Garrett maintained it would be a perfect time to lay out the roadplan for remaking the housing market, where struggles have dogged the recovery.

"Tomorrow would be a great opportunity for him to say housing is important, GSE reform is something that we're committed to," he said.

But when asked if he actually expects the president to lay out a specific plan for reforming the housing market, Garrett offered a blunt response: "No."

"Always hope for the best, expect the worst," he said. "The worst would be that he doesn't talk about this at all."

The White House has indicated that it agrees that the current state of Fannie and Freddie is untenable. The two entities guarantee the vast majority of the nation's mortgages, but have stayed afloat for the last several years solely due to billions of dollars in support from the government, which placed them under conservatorship in 2008.

In February, the Obama administration unveiled a long-awaited white paper on housing reform, which laid out three options for remaking the housing market. All of them call for the winding down of the GSEs, but also for the government to play some reduced role in supporting the housing market, especially for lower income borrowers.

Now, Republicans want the president to actually pick a plan and begin working with Congress to make it a reality.

"The worst [outcome] would be that he doesn't talk about it all...that the Senate leadership says, 'Well, there's no direction from the White House so we're not going to take it up,'" said Garrett.

When Republicans took over the House, cutting off the taxpayer-funded lifeline to the GSEs was thought to be a top priority. However, so far that effort has proven to be slow going. Over a dozen bills, both broad and targeted, have been offered in the House that would tackle the outsized role of Fannie and Freddie in the mortgage market. But those measures do not appear likely to become law anytime soon, as the partisan nature of the debate has slowed their progress.

Even with the lack of progress, Garrett said GSE reform remains a high priority for Republican lawmakers. At last week's GOP retreat, he said Rep. Jeb Hensarling (R-Texas) received "strong applause" when he told members Fannie and Freddie still must be wound down. Hensarling is the sponsor of a broad bill that would erase Fannie and Freddie over just a few years.

In addition to housing reform, Garrett is also eyeing the chairman's seat currently occupied by Bachus.

During a Tuesday evening meeting of his subcommittee chairs, Bachus told lawmakers he would not be seeking a waiver to continue serving as the top Republican on the committee beyond the six years typically allowed. Under term limits, Bachus's tenure at the top of the panel wraps up at the end of the year.

"He just kind of threw it out there," said Garrett, who added he was interested in succeeding him.

"It certainly would be a fascinating job," he said. At the same time, he downplayed any political maneuverings with a year left in Bachus's stint as chairman.

"We still have 12 months," he said. "I'm not jockeying."

A number of Republicans are thought to be in the running to take over the committee. Hensarling is the vice chair of the committee, and also holds a leadership position as head of the House Republican Conference. Rep. Ed Royce (R-Calif.) publicly challenged Bachus for the chairman's gavel when the GOP took over the House in 2010. And any number of subcommittee chairmen, such as Reps. Shelley Moore Capito (R-W.V.), Randy Neugebauer (R-Texas), and Garrett are also thought to be potential candidates.

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