President Biden plans to fire Federal Housing Finance Agency (FHFA) Director Mark Calabria after the Supreme Court struck down a protection against his dismissal Wednesday, a White House official told The Hill.
“FHFA has an important mission of oversight of Fannie Mae and Freddie Mac as well as the Federal Home Loan Bank System. It is critical that the agency implement the Administration’s housing policies,” the official said in an email to The Hill.
“As a result, in light of the Supreme Court’s decision today, the President is moving forward today to replace the current Director with an appointee who reflects the Administration’s values,” the official added.
Calabria responded in a Wednesday statement that he respects the Supreme Court’s decision and Biden’s authority to fire him.
“It has been the honor of a lifetime to serve as Director of the Federal Housing Finance Agency alongside world-class staff. During my tenure, FHFA has fulfilled its mission as the economy fluctuated from record-low unemployment and a strong housing market, to a pandemic-triggered recession that spared house prices but contracted supply,” Calabria said.
The court held Wednesday that the structure of the FHFA, the conservator and overseer of Fannie Mae and Freddie Mac, was unconstitutional because it prevents the director from being fired by the president for reasons other than neglect or misconduct. The court ruled that the FHFA director can be fired at will by the president, opening the window to dismiss Calabria.
Calabria, a Republican, has served as FHFA director since April 2019. He was appointed to the position by former President Trump after serving as the chief economist to former Vice President Mike Pence.
Before joining the FHFA, Calabria was a staunch advocate for removing Fannie Mae and Freddie Mac from federal conservatorship. The mortgage securitization firms have been under federal control since the creation of the FHFA in 2008 following the collapse of the housing market.
“However, much work remains. When the housing markets experience a significant downturn, Fannie Mae and Freddie Mac will fail at their current capital levels. I wish my successor all the best in fixing the remaining flaws of the housing finance system,” he said Wednesday
Fannie and Freddie either own or guarantee roughly $6 trillion in residential mortgages, more than half of the roughly $11 trillion market. Calabria and other critics of and Fannie and Freddie’s conservatorship argue that the companies must be released into the private sector with higher levels of capital to reduce risk to taxpayers and remove potential housing market distortions.
While Calabria did not release Fannie and Freddie, he took steps to ensure both would be able to withstand another housing market downturn once they left receivership.
Democrats, however, have been wary of releasing Fannie and Freddie and want to ensure both maintain support for affordable housing under the watch of the federal government.
“We are facing an affordable housing crisis in every part of the country. Today’s decision gives President Biden the opportunity to make sure that we have an FHFA Director who is committed to addressing the housing needs of renters and homeowners, and to making our housing system work for everyone,” said Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking Committee.
White House press secretary Jen Psaki declined to say during a White House briefing Wednesday whom Biden would nominate to replace Calabria and when he would announce a pick.
Biden’s eventual nominee will likely face a cold reception among Senate Republicans, who were fond of Calabria and his approach to the housing finance system. Senate Democrats cannot afford a single defection if they seek to confirm a nominee without any Republican support.
Sen. Pat Toomey (R-Pa.), ranking member of the Senate Banking Committee, said that while he didn’t object to the Supreme Court’s decision, he fiercely opposed Calabria’s firing.
“Based on Director Calabria’s record of success, I believe the president is making a tremendous mistake by removing him,” Toomey said. “That mistake would be compounded if President Biden were to nominate a new director who does not share Director Calabria’s commitment to fixing the flaws in the structure of the housing finance system, ending the conservatorships, and protecting taxpayers against future bailouts.”
Updated at 2:48 p.m.