WASHINGTON — Sen. Bob Corker, R-Tenn., a key voice in the debate over housing finance reform and one of the Senate Banking Committee’s most influential members, announced Tuesday that he will not seek re-election in 2018.
His departure puts a deadline of sorts on his ongoing efforts to unwind and replace Fannie Mae and Freddie Mac, an endeavor he started in earnest four years ago but which so far has failed to gain traction. Corker and Sen. Mark Warner, D-Va., have been the driving force behind a bill to eliminate the government-sponsored enterprises and replace them with private firms backed by a catastrophic government guarantee.
It remains unclear whether Corker can help make that vision a reality in the remaining 15 months he has left in office.
“It puts a deadline on everything he wants done,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, who called him one of the “most knowledgeable” policymakers on the issue.
Jim Parrott, a nonresident fellow at the Urban Institute and former senior adviser at the National Economic Council in the Obama administration, noted that next year is also the last chance for House Financial Services Committee Chairman Jeb Hensarling to significantly shape GSE reform, because he faces a GOP term limit as the head of the panel.
"With next year Hensarling’s last as chairman and Corker’s last in the Senate, we may actually see this get more of a push than anyone expected," Parrott said.
Yet it’s not clear that there is enough support to pass a bill on a topic as complicated and divisive as this.
“There simply isn’t the path to passage in this Congress,” said Isaac Boltansky, director of policy research at Compass Point Research & Trading.
Cam Fine, president of the Independent Community Bankers of America, which has clashed with Corker over GSE reform in the past, said that “aligning all the competing approaches in light of the general paralysis that is gripping Congress will be a heavy lift.”
“Certainly, if it doesn’t get done by late spring, then it probably won’t get done before the election,” Fine said. “And then with Corker gone, a key advocate for his approach to reform will be gone.”
Still, Corker’s vision may outlive his time in the Senate. Senate Banking Committee Chairman Mike Crapo has supported a version of the Corker-Warner bill in the past, and is widely expected to push a similar structure when he unveils a bill. Other allies like Warner will remain in the Senate past 2018.
For his part, Warner lamented Corker’s departure, praising him as a policymaker willing to work across the aisle.
“We have worked closely together on a number of budget and banking-related issues, particularly housing finance reform,” Warner said in a press release. “No matter the challenge, you can always count on Senator Corker to bring a reasoned, thoughtful approach, and to make decisions based not on partisanship but on what he believes is in the best interests of the American people.”
Indeed, that may be the larger impact on Congress as a whole. Corker was a policy wonk, willing to dive into the details of an issue and not give in to knee-jerk partisan reactions. He was a key player in developing parts of the Dodd-Frank Act of 2010, for example, even though he ultimately voted against it. Corker's work helped inform the Federal Deposit Insurance Corp.'s new powers to take down and unwind a failing banking company.
Moreover, GSE reform is a tricky subject that many lawmakers would just as soon avoid.
"Corker was the kind of guy who wanted to stay late at work and he was a moderate and an ally in working with the Democrats," said Chris Whalen, chairman and founder of Whalen Global Advisors, an advisory firm focused on banks and the mortgage sector.
If Corker leaves without finishing GSE reform, it's unclear if there will be another lawmaker willing to take his place. Certainly, other groups are liable to make a push for their own vision of GSE reform.
For example, the Main Street GSE Reform Coalition wants to end the GSE conservatorship that began in 2008 but enact a minimum amount of reform. The coalition wants to create a capital buffer for Fannie and Freddie and ensure equal access and pricing for small lenders.
Corker "has been very active on the issue, but I'm not certain as to what the impact will be on GSE reform," said Glen Corso, executive director of the Community Mortgage Lenders of America, part of the Main Street coalition.
Yet GSE reform cannot be delayed indefinitely. The GSEs are running low on capital and their regulator, the Federal Housing Finance Agency, will have to choose between continuing to sweep the enterprises' profits into the Treasury Department or allowing them to rebuild capital. If Fannie and Freddie run out of funds, they would be forced to borrow from the Treasury.
"It’s only a matter of time before Fannie and Freddie blow up, because any institution as big as the GSEs on zero capital is on life support," Petrou said. "They have to do something."