Earlier this year, leading House Republicans proposed privatizing mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC) or placing them in receivership starting in two years.
Now, as Republicans prepare to assume control of the House next week, they are offering a more nuanced message: Any retreat of government support in the housing market should be gradual.
“We recognize that some things can be done overnight and other things can’t be,” said Rep. Scott Garrett, (R., N.J.), incoming chairman of the House Financial Services subcommittee that oversees Fannie and Freddie. “You have to recognize what the impact would be on the fragile housing market as it stands right now.”
Cautious statements from key Republicans on the House Financial Services Committee are a shift from the debate over the Dodd-Frank financial overhaul during the spring and summer, when Republicans blasted the Obama administration for leaving Fannie and Freddie out of that legislation.
It was just nine months ago when House Republicans were rallying behind a bill to cut off federal backing for the mortgage giants altogether. Indeed, the GOP insisted that this was entirely necessary.
Now that they’re poised to retake the House majority, these same Republicans have concluded they can’t quite do what they said they’d do, at least not yet, without devastating the struggling housing market and making matters much worse.
This isn’t necessarily surprising — officials sometimes have to rethink their policies once they’re actually in a position to implement them — but it should make for an interesting parlor game in 2011. What Republican policy prescriptions will the House GOP be forced to abandon in the next Congress once they realize their original approach was crazy?