The U.S. mortgage market is huge — $5.7 trillion — and two of the major players are government-sponsored entities (GSEs) Fannie Mae and Freddie Mac. The country's big banks have long tried to eliminate the GSEs and the housing market collapse gave them additional ammunition. Even the Obama administration seems willing to limit, if not close, the GSEs.
Monday's New York Times published a story by Gretchen Morgenstern alleging that there exists a revolving door that includes "a group of high-level housing finance specialists who have moved back and forth between public service and private practice in recent years." Her first example is Michael Berman, past chairman of the Mortgage Bankers Association (MBA), which she identifies as "one of the industry's most influential lobbying groups." Morgenstern also notes that Berman was a senior adviser to former HUD Secretary Shaun Donovan and is responsible for recruiting David H. Stevens to as the MBA's current president and CEO.
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The Times article goes on to recall the $187.5 billion bailout of Fannie and Freddie following the housing market collapse in 2008. It was at that point that private lenders got more serious about eliminating the GSEs. The mortgage bankers' plan, according to Morgenstern, was "to take over the [GSEs'] business and divide their prized assets." The New York Times article goes on in more detail from there.
The MBA is not about to let the Times get away without an argument. The group issued this statement Monday morning:
This story lacks substance and merit and thus is completely pointless. MBA advocates tirelessly on behalf of all of its members, both large and small, who represent the entire real-estate finance industry. At no point during David Stevens' tenure in the government and now as president and CEO of the Mortgage Bankers Association, did he ever violate any ethics statute. MBA will be putting out a more detailed response to specific points in this story later today.
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The fight over the futures of Freddie and Fannie is not over, and neither, apparently, is the fight over their recent history.
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