It’s been a decade since the housing bubble collapsed, sending shockwaves through the mortgage industry and creating economic impacts that are still being felt throughout the nation to varying degrees. In its December 2017 issue, DS News spoke to several prominent industry leaders, examining whether another housing bubble could be on the near horizon, and it’s a question that runs just under the surface of every market report. One person with a unique perspective on what it was like to be in the middle of the recovery from that crisis is Timothy Mayopoulos, President and CEO of Fannie Mae. He recently spoke with the National Public Radio program Marketplace, looking back at the housing crisis, his tenure at Fannie, and the state of the industry as we move into 2018.
Prior to joining Fannie, Mayopoulos had a long legal career that included serving as EVP and General Counsel for Bank of America from 2004 - 2009. He joined Fannie in 2009, working initially as EVP, General Counsel, and Corporate Secretary, then taking on the role of Fannie’s Chief Administrative Officer in 2010. Mayopoulos became CEO of Fannie in 2012, several years after the crash and as the work to repair its damage was in full swing. “There are a lot of people who would say that Fannie Mae and Freddie Mac were really at the cause of the financial crisis,” Mayopoulos said to Marketplace host Kai Ryssdal. “I don't agree with that. There are many contributing causes to the crisis, but clearly being able to sustain the housing finance system through the crisis was absolutely critical to the recovery.”
However, there are critics who believe the GSEs should are long overdue for reform, or even for elimination entirely. With the Trump administration focused on updating or streamlining governmental regulations across many sectors, housing reform has been a key talking point. During November 2017 testimony before the House of Representatives’ Housing and Insurance Subcommittee, Peter Wallison, Senior Fellow and Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute, told Congress, “The best and most effective housing finance reform would be to completely eliminate the government’s role in housing finance, and to let private capital and the private sector operate the housing finance system. There is nothing about the way the government has managed the housing finance system for the last 50 years that would remotely recommend a continuing government role.”
While Mayopoulos makes the case that the GSEs continue to serve a valuable function, he suggests there is ample room for the system to evolve—even if that eventually means the end of Fannie. “We're not wedded to an old system,” Mayopoulos says. “We're actually committed to making a better housing finance system. I’m probably one of the very few CEOs who stood up in front of his entire company and said, ‘You know what, we have to recognize the fact that the legal entity that we work for, Fannie Mae, may cease to exist at some point.’ … A lot of people are focused on what happened 10 years ago, and what we really need to be focused on as a country is what do we want the housing finance system 10 years from now or 20 years from now to look like?”
You can listen to the full Marketplace interview with Fannie CEO Timothy Mayopoulos by clicking here.