Treasury Secretary Testifies Before Senate Banking Committee

Filed in Capitol Hill, Housing Finance by on May 19, 2017 0 Comments

domeTreasury Secretary Steven Mnuchin testified on May 18 before the Senate Banking Committee and discussed a broad range of topics of interest to the home building community. Here are key issues from the two-hour Q&A session:

  • Tax reform. The secretary said that the Trump administration would not consider a national sales tax.  Responding to questions on the cost of the administration’s plan, he stated that dynamic scoring would help reduce but not eliminate the cost and that the administration would provide details on how it plans to cover the costs.
  • Financial regulation. Secretary Mnuchin promised that Treasury’s report to the president would be released soon. He provided no details on the report’s contents, but did say it would contain recommendations on removing regulatory burdens on community banks.
  • Economic growth. The secretary believes a goal of 3% GDP growth or higher is achievable if significant changes are made to taxes and regulation.
  • Housing finance reform. Mnuchin emphasized the importance of Congress enacting housing finance system reform legislation. He said this is a priority for the administration, but a push will not occur until tax reform and financial system deregulation are addressed.

The secretary further stated the administration is dedicated to preserving the 30-year fixed-rate mortgage, but noted that no decision has been made on whether there should be a federal backstop for a reformed system.

However, if such a backstop is supported, Mnuchin said it would have to be fully paid for and fully protect taxpayers.

He also said that Treasury has told Federal Housing Finance Agency (FHFA) Director Mel Watt that it expects to continue receiving dividends from Fannie Mae and Freddie Mac as provided in existing agreements.  This appeared to be an effort to throw cold water on recent speculation about FHFA suspending Fannie/Freddie dividend payments and allowing the enterprises to build capital buffers.

Read Mnuchin’s prepared statement to the Senate panel.

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