Joseph A. Smith Jr. pledged to offer ‘leadership and not just management’ if he is confirmed as the new director of the Federal Housing Finance Agency (FHFA).Â
In testimony delivered before the U.S. Senate Committee on Banking, Housing and Urban Affairs, Smith did not offer any specific ideas on how to end the conservatorship status of Fannie Mae and Freddie Mac. However, he noted that the continuation of the current setup could not be maintained for the foreseeable future.
‘We are facing a significant challenge in the housing finance markets today. Fannie Mae and Freddie Mac are under conservatorship and have received $151 billion from the Treasury Department in order to maintain their support of the housing market, which is critical at this time,’ Smith said in testimony before the committee. ‘But conservatorship cannot be a long-term solution. Congress and the administration have important decisions to make regarding the future structure of the housing finance system. If confirmed, I look forward to working with you and having FHFA become an active participant in that process.’
Smith, who is currently the North Carolina Commissioner of Banks, also asserted that he would use the FHFA position for implementing proactive policy decisions.
‘I understand that, if confirmed, you expect leadership and not just management,’ he told the Senate committee. ‘The activities of Fannie Mae and Freddie Mac are national in scope but local in impact, directly affecting communities across the country. Leadership in this context means determining how to address critical local needs in conjunction with the agency's duties of conservatorship.’
Smith also promised to provide vigorous attention to the Federal Home Loan Banks, with a particular focus on their importance to community-level lending institutions.
‘The Federal Home Loan Banks are a crucial and needed source of funding and support to community banking – which, in turn, plays a vital role in addressing the credit needs of consumers, small businesses and communities around the country,’ he said. ‘As FHFA has effectively reported, the Federal Home Loan Banks have their own challenges and are now subject to enhanced supervision. Community banks are dear to my heart, and you may be assured that the Federal Home Loan Banks will receive my full attention, with an eye to strengthening them and the banks they serve.’
SOURCE: U.S. Senate Committee on Banking, Housing and Urban Affairs