Government

In late January, Judge Magaret Sweeney denied the government's attempt to stay court proceedings in the case, ruling that Fairholme could continue to pursue its lawsuit against the government, which was originally filed in 2013. The suit claims that the sweeping of Fannie Mae and Freddie Mac profits into Treasury, a practice authorized by Congress in August 2012, equates to taking private property for public use without "just compensation," which is forbidden by the Fifth Amendment of the U.S. Constitution.

The senator’s proposed budget amendment will make the CFPB subject to congressional appropriations process because currently the CFPB operates under the Fed, not Congress. The amendment stressed for more congressional oversight given the CFPB receives roughly $600 million of the Fed’s annual operating expenses.

The White House joined Warren in its criticism, saying that putting the bureau under the appropriation of Congress would limit the agency. The administration also criticized the Republicans budget proposal's "creative-accounting savings" that shift funding for the agency to appropriations.

Rep. John K. Delaney (Maryland), Rep. John Carney (Delaware), and Rep. Congressman Jim Himes (Connecticut) said the bill would wind down Fannie Mae and Freddie Mac and allows the GSEs to be sold and recapitalized. The congressmen said protecting the 30-year fixed rate mortgage is key because it ensures “home affordability for the middle class and shields American taxpayers from future bailouts by reforming the housing finance system.”

According to the letter, the senators feel the CSP should have an “open architecture” that gives access to private industry and does not limit the CSP to been an appendage to GSEs. Opening the CSP will “enhance the ability for small and mid-sized lenders to access the secondary mortgage market and facilitate greater competition in this market going forward,” the letter said.

Despite removing the “patient” policy, the Federal Open Market Committee remained steady on the belief that interest rates will not increase by their April meeting. Fed Chair Janet Yellen emphasized in a press conference following the meeting, the removal of the pledge doesn’t mean Fed rates will increase by June.

Led by Senators Mike Crapo (R-Idaho) and Mark Warner (D-Virginia), a group of colleagues from the Senate Banking Committee introduced the bill, S. 752, today, in an effort to push Congress to get serious about exploring reform options for Fannie Mae and Freddie Mac, according to a press release.

The 2014 Conservatorship Scorecard expressed the expectation that the Enterprises would work to increase access to mortgage credit for creditworthy borrowers. Fannie Mae and Freddie Mac have since released programs that allow buyers to obtain a mortgage with a 3 percent down payment. In addition to providing better access to borrowers, the report stated improvements in the Enterprises’ risks. The improvements include stronger underwriting standards and stricter purchasing guidelines. For example, 97 percent loan-to-value (LTV) ratio loans must be fixed-rate and cannot have an adjustable rate. This provides a responsible approach to improving access to credit while also furthering safe and sound lending practices.

n January, the house passed the bill by a vote of 271 to 154, with 29 Democrats voting in favor of it. However, Senate Democrats led by Senator Elizabeth Warren (D-MA) vowed to fight the bill and it failed to pass. Democrats, including Warren, have said they worry that bills that claim to be aimed at relieving regulatory burdens for small banks are being used to roll back Dodd-Frank for the benefit of the largest financial institutions.

Hiring of the current CAE, John Forlines, was flawed for multiple reasons. One, he had not been identified for the CAE role in the senior management’s Succession Plan. The Succession Plan found that there was no internal candidate who was “ready now” for the CAE position and that a permanent successor would require an “external” candidate. Fannie Mae decided to compile a list of internal candidate six months after the Succession Plan was released.