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On the Hill Episode 26: Mark Calabria, Former FHFA Director

In this episode of “On the Hill,” Mark Calabria, former Director of the Federal Housing Finance Agency (FHFA) and Senior Advisor to the Cato Institute, talks with Tim Rood about housing policy trends in the year ahead. Calabria also shares insights from his recent book, "Shelter from the Storm: How a COVID Mortgage Meltdown Was Averted," about critical decisions made to stabilize the housing market during the pandemic. 

Calabria discusses the importance of a principled, data-driven approach to decision-making, noting that the FHFA drew on lessons from the 2008 financial crisis to navigate Covid-19. "If you're driving, your principles are your map of the world, and if you drive into a patch of fog, you need your map more than ever," Calabria said. "Sticking to principle in a data-driven manner is incredibly important. The mortgage finance system is not fixed. And it's taken...record spreads and the more than doubling of mortgage rates since I left office to bring attention to this. The book really is a call for thinking about fixing our mortgage market now, while we can." 

The lack of a clear framework has resulted in contradictory policies, Calabria said. "The Biden administration appropriately talks about supply issues... but at the same time, they're out there saying, ‘we're going to do down-payment assistance, and we're going to have higher debt-to-income ratios,'" he said. "So, which is it? I mean, you either don't think you're going to be successful on the supply, or you simply don't care. The problem fundamentally is, there really is not a framework. Various stakeholders have various interests. From a public policy perspective, you have to think clearly about what you're trying to achieve." 

Rood and Calabria also discuss the prolonged conservatorship of Fannie Mae and Freddie Mac, and the need to revisit Dodd Frank regulations, which Calabria called a "costly failure." 

Listen to the podcast above.