Republicans Divided on Best Approach for GSE Reform

According to a recent article in American Banker, announced plans for GSE reform by Steven Mnuchin may indicate a difference of opinions with some Republicans on Capitol Hill.  During a recent Fox Business News interview, Mnuchin explained that once confirmed as Treasury Secretary, he plans on taking steps to recapitalize Fannie Mae and Freddie Mac and return them to the private market. He indicated that this will be a high priority for him, saying “it’s right up there in the top 10 list of things that we’re going to get done. And we’ll get it done reasonably fast.”

This approach would differ considerably from positions held in the past by a number of congressional Republicans. Among these members is House Financial Services Committee Chairman Jeb Hensarling. During an earlier attempt at reforming the GSEs, Hensarling supported efforts for a resolution which would have wound down and eliminated Fannie and Freddie completely.

This divergence in opinions is not lost on Mnuchin however. During his recent Fox interview, he noted that “efforts to reform (Fannie and Freddie) have been unsuccessful, in part because of ideological differences on the role government should play in housing finance."

Although it remains to be seen how these differences might be resolved, early efforts at Dodd-Frank and tax reform might give some indication of how well Mnuchin can work with Republicans in Congress.

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