Andrew D. Herman, Counsel with Washington, D.C.-based firm Miller & Chevalier , practices in the areas of civil and criminal federal litigation with a focus on campaign and election laws, and congressional ethics and investigations. Herman has prevailed in the U.S. Supreme Court and represented clients before the U.S. Congress and federal juries. During his 15 years in Washington, Herman's knowledge and judgment have helped Fortune 500 corporations, national non-profits, members of Congress, and others address their legal and political problems. Herman recently spoke with DS News about congressional oversight in the mortgage industry and the government's role in housing.
FHFA Director Mel Watt testified before Congress on January 27 and defended his controversial housing policy changes. Is he on the right track as far as the housing policies FHFA has instated?
From my perspective, looking at the Congressional interest, I think it's clear there's a distinct gap between what the majority Republicans would like Mel Watt to be doing and what the administration has asked Mel Watt to do. There's not a lot that Congress can do right now to affect the direction of the Federal Housing Finance Agency. So regardless of how anyone feels about the policy, this is going to be the policy for the next few years. Even if the House and Senate could agree on some sort of regulatory change, it's just not going to happen.
Since this is going to be the policy for a while, where do you see housing in two years at the end of the Obama Administration?
Federal Reserve Chair Janet Yellen told Congress earlier this week that they're not going to do anything radical with the interest rates in the near future, much to the consternation of the members in the majority. Interest rates are going to stay low, and that's good for people who are looking to sell and buy houses, because it's going to keep the price of the housing market propped up.
Tell us about the congressional oversight alert you recently sent to your clients saying that mortgage-related rules will receive attention from Congress and could be subjected to significant oversight activity.
The House Judiciary Committee Regulatory Reform Subcommittee's review of the mortgage lending settlements is an interesting one. They had that hearing on February 12 (titled "Consumers Shortchanged? Oversight of the Justice Department's Mortgage Lending Settlements ") and there really wasn't a whole lot of follow-up after that hearing. But that could be an area that could continue to be rife for interest. Anytime you throw organizations like La Raza into the mix, it's going to perk the attention of the Republicans in Congress. I wouldn't be surprised to see them continue down that road and see where it leads them. Obviously, that's a very unpopular settlement for many on the right.
When I went back to the Judiciary Committee's website to see if there was any follow-up on the mortgage lending settlement hearing, it's all about immigration now on there. That's really what they're focused on. They only have so much bandwidth.
The other thing I noticed that's come up in the last week or so is there's a bipartisan move for legislation to implement an inspector general at the Consumer Financial Protection Bureau. It's hard to believe that an agency with that much power and authority over regulatory affairs related to consumers wouldn't have an inspector general. I'd be curious to see if that goes anywhere.
What do you think the chances of that passing are?
I think it's going to be difficult. The Republicans can't figure out whether or not they want to fund Homeland Security. They're still fighting over how they're going to deal with that. That certainly takes priority over almost anything else. If they can't get their act together there, I think it's going to be very hard to get a consensus on anything we've discussed here, much less figure out a way to get a bipartisan agreement in a way that would be palatable to the administration.
I just read something yesterday where (former FDIC Chair) Sheila Bair is arguing for a legislative solution that could reduce regulatory burdens on community banks. Maybe that's an area where they could ultimately get some kind of bipartisan agreement, given that there are calls from the left to do things and not just from the right.
In a presidential cycle, it's election year every day, basically. We're not waiting for 2016. Everything both parties do now is going to be focused on the election and on establishing their platform. I think there is going to be very little change as far as housing that's going to happen in the next 20 or 21 months. If you want to really get speculative, I think it's going to be hard in 2017, too, because I think it's going to be very likely that there's going to be a Democratic president in a Republican-controlled Senate and Congress. Something's going to have to occur to break the logjam but I don't know what that is.