Mel Watt, who now heads the Federal Housing Finance Agency, testifies before a Senate committee in 2013. (Yuri Gripas/Reuters)

ONE OF the most powerful men in the United States testified before a Senate committee on May 23. We are referring to Mel Watt, director of the Federal Housing Finance Agency (FHFA). And even if neither Mr. Watt nor his agency are household names, we hardly exaggerate their influence, because FHFA has supervisory authority over a portfolio of government-backed mortgages worth some $5.3 trillion, thus affecting the price of practically every house in the United States.

We intend no criticism of Mr. Watt, but this is too much economic responsibility for one unelected regulator to shoulder indefinitely. Yet FHFA control has been the status quo in housing finance since the financial crisis of 2008, when the George W. Bush administration ordered FHFA to take over the giant federally backed mortgage guarantors, Fannie Mae and Freddie Mac, and bail them out to the tune of $187.5 billion. Hence the title of the Senate Banking Committee hearing before which Mr. Watt appeared: “Ten Years of Conservatorship: The Status of the Housing Finance System.” Though inconclusive, the session was appropriate, because it’s Congress’s responsibility to come up with a permanent fix to this “temporary” takeover.

Some clear and constructive input from the executive branch would help. Fortunately, there was a smidgen of that buried deep within the Trump administration’s new plan to reorganize government agencies. Though light on specifics, the proposal would end the conservatorship of Fannie and Freddie and replace their duopoly with a system in which an array of entities could participate, subject to strict federal regulation of capitalization and underwriting standards. Government would guarantee the mortgage-backed securities they issue but only against a catastrophic market meltdown, and in return for a fee. The government’s risk would be explicit and carried on the federal budget. Meanwhile, efforts to meet government low- and moderate-income home-buying objectives would be channeled from Fannie and Freddie to a revamped Federal Housing Administration.

The plan resembles one already embodied in a bipartisan Senate bill co-sponsored by Sens. Bob Corker (R-Tenn.) and Mark R. Warner (D-Va.). As such, it abandons the old business model, whereby Fannie Mae and Freddie Mac shared the risks of backing mortgages with the taxpayers but the profits only with shareholders. The proposal remains vulnerable to the same interest-group pushback that thwarted the Corker-Warner effort.

Meanwhile, FHFA presides over a duopoly that has long since repaid the bailout and does observe tighter underwriting standards than it did before the crisis. In December, Treasury Secretary Steven Mnuchin allowed Fannie and Freddie to retain $3 billion in earnings each, to prevent technicalities in the 2017 tax bill from wiping out their capital. Mr. Watt, who was appointed to his five-year term by President Barack Obama in 2014, tried to nudge Fannie and Freddie toward the future by announcing that he would soon propose a new capital requirement for the agencies. Still, FHFA is quietly letting them guarantee slightly larger and riskier mortgages. The specter of another politically embarrassing bailout has been banished, but nothing fundamental has been achieved, nor will it be before the November election. With the Trump administration now on record, however, maybe 2019 will finally be the year for reform.