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WASHINGTON — Policymakers will have to make difficult decisions in the coming years on the future of housing finance, yet Congress hasn’t even finalized the appointment of a new agency head who appears to have ample support.
Michael Bright’s nomination to become president of Ginnie Mae has been pending since May and the agency that provides funding for government-insured mortgages has been without a permanent chief for almost two years.
But even though Ginnie Mae has increasingly been at the forefront of policy deliberations over reforming the government-sponsored enterprises, observers say Bright’s nomination is being held up with other appointments as Congress prioritizes other issues and the focus shifts to the midterm elections.
“The bottom line is simply that the Senate’s failure to confirm Michael Bright as president is not indicative of anything other than prioritization in the Senate,” said Thomas Wade, the director of financial services policy at the American Action Forum.
Bright, now the acting head of Ginnie Mae, appeared to face reluctance from Democrats at his nomination hearing in July over a paper he had co-written at the Milken Institute envisioning an expanded role for Ginnie Mae in a GSE reform plan. But he is seen as a middle-of-road choice in a highly partisan Congress. When the Senate Banking Committee advanced his nomination in August, two Democrats, Mark Warner of Virginia and Jon Tester of Montana, both praised him.
“The administration is lucky to have him,” said Warner at the committee markup.
But it is unclear when the full Senate will vote on his confirmation. He has joined other pending nominees waiting for Senate action, including Kathy Kraninger to run the Consumer Financial Protection Bureau and Nellie Liang to fill a seat on the Federal Reserve Board. Another Fed board nominee, Michelle Bowman, is scheduled for a Senate floor vote for after the midterm elections.
The full Senate’s attention has been focused elsewhere, relegating the confirmation of Bright and others to the back-burner.
“Majority Leader Mitch McConnell has made it very clear in the last month or two that judicial nominations are very much the priority of the Republicans particularly in the Senate,” said Wade.
Bright worked for Sen. Bob Corker, R-Tenn. He helped draft 2013 legislation introduced by Corker and Warner to replace Fannie Mae and Freddie Mac with a new government backstop agency. And his Milken paper drafted along with former acting Federal Housing Finance Agency Director DeMarco, which proposed establishing Ginnie Mae as a standalone reinsurer of private-market mortgage guarantors, has appeared to be the basis for multiple legislative housing finance proposals.
“With regard to Michael Bright, he is extremely capable and I believe he will get confirmed when Congress returns for the lame-duck session,” said Anne Canfield, the executive director of the Consumer Mortgage Coalition.
Under Bright, Ginnie Mae probed and ultimately rebuked lenders accused of unnecessarily refinancing veterans’ homes to boost revenue. That will only bolster his case for confirmation, said Isaac Boltansky, director of policy research at Compass Point.
“The timing is admittedly uncertain, but I think his confirmation is uncontroversial and should be part of a broader package at the end of the year,” Boltansky said.
Still, at his nomination hearing, senators appeared concerned that Bright would use his position as president of Ginnie Mae to implement the plan outlined in his paper, but Bright told the committee that he does not intend to advance those proposals, and no longer believes some of the ideas put forward in the paper, such as separating Ginnie from the Department of Housing and Urban Development.
Bright has also been mentioned as a possible choice to run another agency, the Federal Housing Finance Agency, Fannie and Freddie’s regulator, which will have a key role implementing housing finance reforms.
However, there is only a small chance that Bright’s involvement in the paper would be an obstacle for his confirmation, said Wade, and he is perhaps one of the least controversial in a long line of regulatory nominees awaiting confirmation.
After the mid-term elections in November, it’s likely that the Senate will turn its attention to some of the more contentious candidates in an effort to push them through before the end of the year, said Wade.
If the nominees aren’t confirmed before 2019, President Trump will either have to renominate his candidates in the new Congress or select different people.
“Given the rather short lame-duck session and the politics of the nomination process, the Senate will need to prioritize nominees to move across the floor,” said Wade.
Some observers said Republicans may focus on moving Kraninger’s CFPB nomination more quickly since the consumer bureau is a higher-profile agency. However, the choice of Kraninger has also triggered sharp Democratic opposition, which could slow her confirmation down relative to other appointees.
“CFPB is a bigger deal than I think Ginnie Mae, so that would take precedent,” said Brian Gardner, the managing director of Washington research at Keefe Bruyette & Woods.
Nominations will be “front and center” on the Senate’s agenda when Congress returns in mid-November, said Canfield.
“The slow pace of getting nominations approved has not been a reflection on the quality and capability of most of these nominees,” she said. “The reality is that the Senate process for getting nominees approved has been inordinately slow.”
However, McConnell has already made judicial nominees a priority, and might continue to do so after the midterm elections. On top of that, the Senate has pending resolutions and a budget to consider.
“I think in the grand scheme of things, the head of Ginnie Mae is probably a second or third-tier item,” said Gardner.
Ultimately, it all comes down to how hard Democrats are willing to fight the Trump administration’s nominees, Gardner and Wade said.
“If Democrats want to pursue a scorched-earth tactic and try and block as much as they can, then it’s possible that a group of nominees that are lower on the prioritization list could fall by the wayside,” Gardner said.
The lack of a permanent president at Ginnie Mae also has likely not affected its operation, minimizing the urgency for Bright’s immediate confirmation, said Wade.
“I think the business of the agency is very much just rumbling on as ever,” he said.