Mark Calabria, former director of the Federal Housing Finance Agency (FHFA), on Friday suggested that the government could pilfer Fannie Mae and Freddie Mac if they don’t move completely into the private sector.
His comments came after President Biden decided to remove Calabria from his position following a Wednesday U.S. Supreme Court decision that found the structure of the FHFA, which was created in 2008 and oversees Fannie Mae and Freddie Mac, violates the Constitution’s separation of powers principles, which divides the government into three separate branches.
“We need to get these companies acting like normal companies again,” Calabria said Friday on Fox Business’ “Kudlow” of Fannie and Freddie, noting that then-Senators Barack Obama and Joe Biden voted to make FHFA an independent agency see it taken “out of politics.”
“There’s a smart way to expand homeownership. That’s growing incomes. That’s growing jobs,” he continued. “And there’s a crazy way. That’s getting rid of lending standards, getting rid of down payments, and to me, that’ll be destructive to the very families who will get those mortgages. It’ll be destructive to those communities.”
During 2019 and 2020, under Calabria’s leadership, the FHFA recorded the largest increase in annualized homeownership among Black Americans, he said.
Supreme Court justices sent the case involving the agency overseeing the mortgage giants back to a lower court for additional proceedings.
Shareholders of the two companies had argued that the FHFA’s structure was unconstitutional and that the justices should set aside a 2012 agreement under which the companies have paid the government billions. That money is compensation for the taxpayer bailout that Fannie Mae and Freddie Mac received following the 2008 financial crisis.
The justices didn’t go that far in their decision.
The “FHFA’s structure violates the separation of powers, and we remand for further proceedings to determine what remedy, if any, the shareholders are entitled to receive on their constitutional claim,” Justice Samuel Alito wrote for a majority of the court.
Calabria’s firing will halt his “recap and release” plan that includes ending efforts to take the mortgage outfits out of government control, or conservatorship, and scrap a massive public offering that would allow the so-called government-sponsored enterprises or GSEs to operate as private companies.
Fox News’ Jonathan Garber, Charles Gasparino and Lydia Moynihan contributed to this report.