On the Hill Episode 6: Mark Calabria, Director of the Federal Housing Finance Agency

In this episode of On the Hill, Tim Rood, SitusAMC Head of Industry Relations, speaks with Mark Calabria, Director of the Federal Housing Finance Agency (FHFA).

Prior to joining FHFA in 2019, Calabria was Chief Economist for Vice President Mike Pence, spent eight years as Director of Financial Regulation Studies at the Cato Institute, and served as a senior aide on the Senate Committee on Banking, Housing, and Urban Affairs. Calabria drafted significant portions of the Housing and Economic Recovery Act of 2008 (HERA), which created a new regulatory framework for the government-sponsored enterprises, Fannie Mae and Freddie Mac, and the Federal Home Loan Banks. 

Calabria discusses how coming of age in the aftermath of the savings and loan crisis and spending seven years on the Senate Banking Committee shaped his approach to regulating Fannie and Freddie. “My philosophy as a regulator is to hope for the best but plan for the worst,” he said. “What’s the worst 5 percent scenario? Even if only 5 percent likely to happen, there’s too much at stake to cut corners. It’s the decisions of these companies that landed them in the conservatorship. How do you get them to take ownership of their own decisions? How do you create a culture in these companies where they stand up and say we’re not going to enable bad behavior?”

The GSEs charters “are rather clear -- their existence is to be counter-cyclical,” Calabria said. “They are supposed to be there for the mortgage market when others cannot be. Fannie and Freddie today are not ready for a downturn.

How can we build a strong foundation for these companies so they can be there for the market when it turns down next, which will inevitably happen?"