Consumers Will Get the Shaft and Wall Street Will Gorge on Profits if Trump Goes Ahead and Privatizes Fannie Mae and Freddie Mac Government Lending
September 8, 2019
By Jake Johnson
Sen. Elizabeth Warren warned Friday that the Trump administration's new plan to privatize the two government-controlled entities that back half of the nation's mortgages would make it even more difficult for working class families to purchase a home.
"In the middle of a housing affordability crisis, when the gap between the black and white homeownership rates is as big as it was when housing discrimination was legal, the Trump administration wants to make it harder for creditworthy working families—especially families of color—to buy a home and build wealth," Warren, a 2020 Democratic presidential candidate, said in a statement. "That's shameful."
The Trump administration's sprawling housing proposal, unveiled Thursday by former Goldman Sachs banker and current Treasury Secretary Steven Mnuchin, would privatize mortgage finance giants Fannie Mae and Freddie Mac. The two companies were taken over by the government after they nearly collapsed during the financial crisis of 2008.
As the Washington Post reported Thursday, "housing experts have warned that allowing [Fannie and Freddie] too much freedom again could lead to higher mortgage costs for consumers while enriching Wall Street investors."
Sen. Sherrod Brown (D-Ohio) echoed that warning on Twitter, saying the Trump administration's plan "will make mortgages more expensive and harder to get."
"I'm urging the president: Make it easier for working people to buy or rent their homes, not harder," said Brown.
The Federal Housing Finance Agency (FHFA), headed by Vice President Mike Pence's former chief economist Mark Calabria, has the authority to return Fannie and Freddie to private hands without congressional approval.
Kristen Clarke, president and executive director of the Lawyers' Committee for Civil Rights Under Law, said in a statement Friday that the move would be "yet another instance of the Trump administration rolling back the role of the federal government in housing."
"These two [government-sponsored enterprises] guarantee approximately one-half of all mortgages in the United States," said Clarke. "The privatization of Fannie and Freddie has the potential to increase mortgage rates and reduce credit available to low- and moderate-income borrowers, and thus widen the racial homeownership gap."
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