Mark Calabria Supported Stringent Financial Regulation of Fannie and Freddie Before He Opposed It

Federal Housing Finance Agency chief Mark Calabria announced on Tuesday that he opposed designating Fannie Mae and Freddie Mac as “systemically important financial institutions,” or SIFIs, a regulatory label that brings an institution under stringent financial regulation.

That was a reversal of his earlier support for the designation.

In an op-ed for The Hill in 2015, Calabria and Alex Pollock, now a distinguished senior fellow at the R Street Institute, set out seven reforms they said were necessary before Fannie and Freddie could be released from conservatorship.

The final reform:

Designate them as the Systemically Important Financial Institutions (SIFIs) they indubitably are.  Fannie and Freddie are as big as JPMorgan, Citigroup, and Bank of America and have conclusively demonstrated their ability to generate huge systemic risk. If they are not SIFIs, then no one is; if anybody is a SIFI, then they are.  This is simply recognition that all large financials should be treated similarly under the law.

This is a very different stance than Calabria took this week in testimony before the Senate Banking Committee. There he argued that while the Financial Stability Oversight Council should review the companies under its process for determining whether SIFI designation is appropriate, he said he agreed with Treasury Secretary Steven Mnuchin that if well-capitalized, they would not need to be designated. He also said he did not think it appropriate in advance of the process to say they should be considered SIFIs.

Secretary Mnuchin and Calabria sit on the council that would make that determination. Mnuchin, a chair of the council, effectively wields a veto power over SIFI designations.

The FHFA did not respond to a request for comment about this change in his position.