GSEs

Two housing-policy experts whose previous recommendations have been closely followed by the Biden administration are defending the Federal Home Loan Banks, raising the stakes in a debate over whether a major overhaul is needed.

The group, led by Senate Banking Chairman Sen. Sherrod Brown, said nonperforming loans sold to single family housing rental businesses or private equity firms results in the displacement of homeowners.

The Federal Housing Finance Agency got an earful from housing experts at a listening session intended to aid a comprehensive review of the financing system.

The former head of the agency said a decision last year to suspend caps on investor loans has further induced demand in an already hot market. Other experts say a supply-demand imbalance is the true driving force.

Federal Housing Finance Agency Director Sandra L. Thompson told lawmakers on Wednesday that the agency would consider “foundational questions about mission, purpose, and organization” of the Home Loan Bank System.

Former Federal Reserve Gov. Daniel Tarullo and two Fed economists argue that the Federal Home Loan banks have expanded into activities that pose risks to financial stability.

Former FHFA director Mark Calabria said the mortgage market was a “ticking time bomb” on track for a 2008-like crisis. Other experts foresee a tamer end to the bull housing market.

Mark Calabria, who oversaw the two government giants under Trump and was fired by the Biden administration, said in a recent interview that the government-sponsored enterprises are once again at risk of insolvency.

In an open letter to Sandra L. Thompson, President Biden’s nominee for director of the Federal Housing Finance Agency, two longtime advocates of the Federal Home Loan banks suggest a new path forward.

Chryssa Halley, who has been with the company since 2006, was named CFO and Jim Holmberg was named controller.