Lockhart Says He Will Leave FHFA Director’s Post Next Month

James Lockhart, the Federal Housing Finance Agency director who oversaw the government’s seizure of mortgage giants Fannie Mae and Freddie Mac, said Wednesday that he will step down and return to private finance. A government official with knowledge of the situation confirmed to DS News that Lockhart was planning to resign. He "told the Washington Post":http://www.washingtonpost.com/wp-dyn/content/article/2009/08/05/AR2009080502619.html in an interview Wednesday that he would step down by the end of August. Lockhart, 63, is a longtime friend of George W. Bush who was appointed by the then-president in April 2006 to direct FHFA. On his tenure, the U.S. dipped into its longest, deepest recession and housing crunch since the Second World War. His response to the crisis was akin to tough love, seen in his fight against excessive compensation for executives of investment banks and other firms that stood at ground zero of the crisis. Lockhart’s spirit of measured capitalism was best seen in his takeover and reform of Fannie and Freddie, government-sponsored enterprises who lost big by going long on mortgage securities backed by subprime loans. The companies’ debts, size and standing in the mortgage market ultimately forced FHFA to step in, Lockhart told an audience last week at the National Press Club. “If we had not taken the conservatorship action, the Enterprises would have had to pull back dramatically from the market, which would have accelerated the downward spiral and caused a far greater financial crisis,” he said. News of Lockhart’s resignation sent ripples through the real estate industry. Fannie Mae shares rose 30 percent to sell at 74 cents, and shares of Freddie climbed 31 percent to 80 cents in New York Stock Exchange trading at 4 p.m. EDT. Washington, too, was abuzz after the announcement. Lockhart himself confirmed to the Post that the Obama administration had begun searching for his replacement. "I actually didn't expect to stay as long as I have stayed," he told the Post. "Given what happened a year ago, it meant I had to help work our way through this. Now we're at the point where we're seeing some stabilization." Those comments belied his more sober speech in Washington last week, in which he laid out principles for the housing industry and for Fannie and Freddie, without giving any indication that he might leave office before a full recovery was in effect. “The last 12 months have been action-packed and have set us on the right path,” he said then. “We have accomplished a lot, but we have much more to do.”