For nearly a decade, “wait ’til next year” has been the refrain for proponents of overhauling mortgage giants Fannie Mae and Freddie Mac. For Sen. Bob Corker, R-Tenn., arguably the biggest advocate of that push, it will either be next year or never.
Corker said Tuesday that he won’t seek re-election for a third term, leaving him roughly 15 months in office. Analysts and others in the housing-finance industry said the announcement could lead to a final aggressive drive for reform. But since housing-finance legislation would still be a long shot, his departure could leave a leadership vacuum in addressing one of the last vestiges of the 2008 financial crisis.
Corker’s impending retirement “will surely lead to him pushing aggressively for GSE reform before he leaves the chamber,” according to Compass Point Research & Trading analyst Isaac Boltansky, who said he expects the effort to fail.
Fannie and Freddie don’t make mortgages but buy them from lenders, wrap them into securities and make guarantees to investors if the loans default. The government took over the companies in 2008, eventually injecting them with about $187.5 billion in bailout money.
Lawmakers have tried and failed several times to pass legislation that would overhaul the mortgage-finance system. In the meantime, Fannie and Freddie have returned to profitability and since 2012 have paid taxpayers more than $270 billion. The terms of their bailout agreements require them to send nearly all profits to the U.S. Treasury.
Corker was at the forefront of some of the failed efforts. He and Sen. Mark Warner, D-Va., spearheaded legislation that would have wound down Fannie and Freddie and replaced them with a new system. That bill passed the Senate Banking Committee in 2014 but withered amid opposition from progressives.
More recently, the two lawmakers have tried to build a bipartisan coalition to work on the issue. They have considered more modest changes, including introducing competition to Fannie and Freddie and ending their too-big-to-fail status. The push has also become a priority for Senate Banking Committee Chairman Mike Crapo, R-Idaho, who has held a series of housing-finance hearings in recent months.
Corker’s impending retirement gives that effort new urgency, said Charles Gabriel of Washington-based research firm Capital Alpha Partners.
“While Corker is leaving, that may not mean that he is a spent force,” Gabriel wrote in a note Tuesday, predicting a possible push for a limited Fannie-Freddie bill before the senator leaves office.
At the same time, Fannie-Freddie reform could take a back seat to more pressing matters for Corker, who in addition to his work on the Banking Committee deals with international issues as chairman of the Senate Foreign Relations Committee.
Cowen Inc. analyst Jaret Seiberg in a Wednesday note wrote that he expected Corker to devote more time to that committee than to housing finance.