WASHINGTON — A top Obama administration official reiterated a pledge Wednesday to unveil a plan next year to revamp the housing finance system, but was hammered by Republicans who said it should already have one on the table.
In testimony before a House subcommittee, Michael Barr, the Treasury Department's assistant secretary for financial institutions, said the administration is "hard at work on reform" and pledged that its plan "will call for fundamental change."
Although Barr said the administration's plan would be out in January, he provided no new details about a possible future for Fannie Mae and Freddie Mac. The lack of a concrete plan continued to nettle Republicans.
"In all respect, y'all have really done nothing but plan to do things," said Rep. Spencer Bachus, the lead Republican on the House Financial Services Committee. "There [are] no proposals on the table. You've done nothing. You seem to be content, the administration, with doing nothing except for having progress hearings."
"It's time that we quit the slow walking and we started doing things. This should be a legislative hearing, not another planning session," he said.
Fannie and Freddie were put into conservatorship two years ago when the Federal Housing Finance Agency seized both companies on the brink of failure. Barr insisted a plan was on its way, and said the status quo would have to be overturned. "It is not tenable to leave in place the system that we have today," Barr said.
Roughly 95% of the mortgages originated in the U.S. are currently financed by the two GSEs, along with the Federal Housing Administration, Ginnie Mae and others.
As it crafts its plan, Barr said the administration has to be careful not to disrupt a jittery housing market.
"This situation is neither sustainable nor desirable, but if the GSEs were to suddenly exit the market, the stability of the housing market would be undermined," Barr said. "The transition to a new system must occur in an orderly fashion that is minimally disruptive to the market."
The administration has taken some steps toward GSE reform, including releasing a series of questions for comment in April and hosting a conference with the Department of Housing and Urban Development on the future of the housing finance system.
But that did not satisfy GOP members of the House subcommittee on oversight of the GSEs.
"Unfortunately I believe the focus is happening much later than it really should be," said Rep. Scott Garrett, R-N.J.
"It really should have been happening … about two years ago, since Fannie and Freddie were put into conservatorship. Finally, now we're getting to formally and seriously look at the way to reshape that market."
"Put simply, where's the plan? When will this administration or Congress wind down and put an end to these, what we could call Frankenstein-like mortgage giants, Fannie and Freddie?" said Rep. Judy Biggert, R-Ill.
But the hearing also spotlighted some other issues.
The Federal Housing Finance Agency's acting director, Edward DeMarco, criticized some of the largest financial institutions for not repurchasing bad mortgages that were sold to Fannie and Freddie.
As of the second quarter of 2010, both enterprises combined had $11 billion in outstanding repurchase requests, some of which has been met by some resistance.
"The delays by lenders in repurchasing these loans are a significant concern to FHFA," DeMarco said in prepared testimony. "There are ongoing discussions between the enterprises and lenders to reach a workable solution."
He warned, however, that the FHFA may take action soon if the discussions are not fruitful.
"If these discussions do not yield reasonable outcomes soon, FHFA may look to its supervisory and conservatorship authorities provided under the statute to resolve the situation," DeMarco said.