FHFA Head Mel Watt Testifies Before The Senate On Fannie Mae Reform

Federal Housing Finance Agency (FHFA) chief Mel Watt testified in front of the Senate Banking Committee yesterday, and some Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) investors have seized on a statement from current committee chair Tim Johnson that Watt could end the conservatorship for hope of a change in direction. But Watt, consistent with previous statements, shows no inclination to take such bold action without Congressional direction.

Watt defers to Congressional authority on future of Fannie Mae and Freddie Mac

“There is only so much that can be accomplished while the enterprises are in limbo. Everyone agrees that the conservatorship cannot continue forever. So I hope my colleagues will keep working toward a more certain future for the market. However, if Congress cannot agree on a smooth or certain path forward, I urge you Mr. Watt to engage the Treasury Department in talks to end the conservatorship,” said Johnson.

Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) bull Dick Bove points out that Johnson is expected to retire soon, and regardless won’t be the committee chairman next year, so Democrats will have even less ability to set the agenda than they have in the last few years. Senator Richard Shelby, who’s expected to chair the banking committee next year, is thought to be hostile to the GSEs, and Bove would like to see the Democrats take action now.