Hagerty Leads Banking Committee Republicans in Calling out Race-Based Housing Plans by FHFA

September 19, 2023

Letter comes after recent Supreme Court ruling against Affirmative Action, which opens broader legal fight against race-based programs in the government

WASHINGTON—United States Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, yesterday led the Republican members of the Senate Banking Committee in sending a letter to Federal Housing Finance Agency (FHFA) Director Sandra Thompson calling out racial equity housing plans that encourage discrimination on the basis of race, rather than focusing on ensuring the safety and soundness of Fannie Mae and Freddie Mac.

“We wrote to you last year and expressed our deep concern with the Equitable Housing Finance Plans (Plans) developed by Fannie Mae and Freddie Mac (the Enterprises) at the direction of the Federal Housing Finance Agency (FHFA). Though we had asked you to refocus efforts on ensuring the safety and soundness of the Enterprises, FHFA ignored our request and instead published a proposed rule on April 26, 2023, that codifies a requirement to develop and measure implementation of the Plans,” the Senators wrote.

“As we made you aware, the Plans are inherently problematic. They are manifestly unfair and encourage discrimination on the basis of race. The Plans may very well be unconstitutional and violate the Equal Protection Clause as they express a clear, discriminatory intent,” the Senators continued.

The Senators explained their rejection of the “proposal to codify these Plans in regulation for the same reasons [they] rejected [the] plans when FHFA first required them as conservator,” and outlined specific concerns regarding legal challenges that will arise if the Plans are codified.

“While perhaps well-intentioned, we have seen the consequences of relaxing underwriting criteria and lowering down payment requirements after years of record home price appreciation; many minority families lost significant, generational wealth when they were pushed into highly-leveraged home purchases shortly before the last housing crisis,” the Senators continued.

Co-signing Republican members of the Banking Committee include Senators Tim Scott (R-SC), Katie Britt (R-AL), Kevin Cramer (R-ND), Mike Crapo (R-ID), Steve Daines (R-MT), John Kennedy (R-LA), Cynthia Lummis (R-WY), Mike Rounds (R-SD), Thom Tillis (R-NC), and J.D. Vance (R-OH).

A copy of the letter can be found here.