How Trump plans to get government out of the mortgage business

REISS: Sure. And I’m gonna reference back to that. It’s A Wonderful Life, Bailey Brothers model. So with that earlier model, you think a bunch of small investors go to their local bank, they put in their excess savings from their paycheck that month, and then some people borrow money. That’s the money that was put in by all those savers, those depositors.

What happens when you create a secondary mortgage market? A market that allows financial institutions to move money around the mortgage market. You have those primary originators, like banks, sell off their mortgages to secondary market participants like Fannie and Freddie. Fannie and Freddie would then take a bunch of mortgages, package them into what is called a security.

Which is backed by the collateral of all those mortgages. They then sell those securities to investors around the world. And typically, long-term investors, like pension funds or sovereign wealth funds, organizations with decades-long view of their finances.

And so if you think about it, it’s effectively taking these illiquid mortgages, like very few people would say, oh, I want to buy David Reiss’s mortgage. But if David Reiss’s mortgage was one of 1,000, and the law of large numbers allowed you to assume what percentage would default and when they would pay off early, then investors are very interested in that product.

CHAKRABARTI: Yeah. The law of averages works for as long as there isn’t a high amount of deviation from that average. But of course, that was what was happening prior to 2008, right? That’s the toxin that was spreading through the housing market, and through that securitization process is what it’s spread throughout the entire financial system.

Part II

CHAKRABARTI: Professor Reiss, I really appreciate your explanation of how, okay, an originating bank. Let’s call it the Bank of Meghna. Not that I have enough money anyway. Okay. It’ll be like a small bank puts out a loan to a homeowner, a mortgage. Then the bank sells that mortgage to Fannie Mae or Freddie Mac.

Those two companies put a whole slew of mortgages together in big packages. Securitize them, chop them up into little shares and sell them more broadly to the global financial market. Seems like a really, actually until 2008, it was a very strong system. But there’s something else that these two mortgage finance companies do that I’d love you to explain a little bit more.

I’m looking at Fannie Mae’s own website and they say the company helps ensure that lending partners aka banks have enough funding to offer affordable mortgages. Explain that.

REISS: Sure. One detail that I didn’t get into when I talked about that secondary mortgage market is what happens when the banks sell their mortgages to Fannie and Freddie and other securitizers.

And then what happens when they sell them via their securities. And what happens is the money goes back to the mortgage system. So for instance, once a bank sells its mortgage to Fannie and Freddie and gets money in return, then they can make more mortgages, in the primary mortgage market.

Once Fannie and Freddie sells its securities, it gets money from investors and then can buy more mortgages from the banks. And so what you’ve created is a national or global liquid system of housing finance. And so that’s the big part of it. And then to some extent, Fannie and Freddie have various programs that are geared towards first time homeowners and other populations that don’t necessarily have the funds to get a mortgage with a traditional down payment.

And so they have these special, affordable housing programs. But even more generally, you would say this is a very efficient way of gathering capital in many ways more efficient than traditional banks. And so they can and often do reduce the cost of mortgages. Just because they’re efficiently accessing global capital.

CHAKRABARTI: Okay, that makes a lot of sense. And just another historical note, I understand that these companies are responsible for what may be a uniquely American product, and that’s that 30 year fixed, is that right?

REISS: The 30-year fixed is really pretty much unheard of in most of the rest of the world.

Most of the rest of the world, you’re gonna see mortgages of shorter terms or where the interest rate is maintained for a shorter period of time. So it is really fundamental to the American market and people are really attached to it. Now, many people may benefit from alternatives to that, but I would say as a general rule, people really want access to the 30 year mortgage, and I think both people on the left and the right wanna keep that as part of the firmament of the American housing finance system.

CHAKRABARTI: Yeah. So long story short, this was a system that actually worked. Pretty well, until 2007, 2008. And by the way, folks, the single best piece of journalism I ever heard in explaining the housing market crash of 2008 was from Planet Money from NPR.

It’s a podcast episode of theirs called Giant Pool of Money. Giant Pool of Money. It’s an old one, but go and listen to it and you will understand everything about why the financial crisis happened back in 2007, 2008. Okay, so Professor Reiss, we have like the potential collapse of the global financial industry.

The housing market needs to be shored up. Fannie and Freddie have lost a more than  $100 billion dollars in 2008. They go into government conservatorship. I said at the top of the show that this conservatorship was never intended to be permanent. So take us back to that time. What was the initial plan to keep Fannie and Freddie a afloat?

REISS: Sure. So, as you say, some of your listeners probably remember this period very well, and some of your listeners may have been too young to remember this period.

CHAKRABARTI: That was me. I was only five.

REISS: Yeah. Okay. So for all of us, we probably forget just how dire it felt and how rapidly actions happened in Congress.

Which is not typically the case, as we are all very familiar where we really felt that we were heading into something like the Great Depression again. And so Congress acted with alacrity. There was the housing, emergency HERA housing. I’m totally forgetting what HERA stands for.

CHAKRABARTI: It’s been time.

REISS: Yeah. In 2008. And this gave extraordinary power to the government to intervene with Fannie and Freddie and created what’s we call this conservatorship structure that they are now in.

CHAKRABARTI: Okay. And so the conservatorship did what?

REISS: So it effectively took primary power away from the private shareholders who elected the board and really were the private controllers, subject to some regulation, by the federal regulator and gave ultimate power to the regulator.

So the regulator stepped in. You could think of it as a trustee or as if the companies were in bankruptcy, how the bankruptcy trustee would oversee the bankruptcy estate. But effectively, taking power away from the private shareholders and giving it to the government. Because the government was providing extraordinary financial support to these two companies that were on the verge of imploding.

CHAKRABARTI: Right. And at the same time, as you noted earlier, there were a lot of laws passed, Dodd-Frank being a big one about, do not be issuing banks, don’t issue these toxic mortgages. Someone, people need to have pay stubs and the ability to show that they can afford the mortgages, things like that.

So that would help then clean out the mortgage system and Fannie and Freddie under conservatorship. Then ideally wouldn’t be buying so many toxic mortgages or toxic assets, I should say. But, so Professor Reiss, the government does not actually, did not want to be in this business full time.

The whole point of the creation of Fannie and Freddie and then its privatization in the ’60s, as you said, was to get the government out of this business and let, essentially, a highly regulated but private market smoothly handle the U.S. housing market. How did it end up staying under, these companies end up staying under conservatorship for so long?

REISS: I think Mark Calabria was exactly right that nobody really intended this. But I think there’s two important themes here. One important theme is with the kind of the lack of bipartisan movement, it was incredibly difficult to create something, to get a sufficient number of senators and members of the House to agree upon, even though there was some, very realistic, roughly middle of the road proposals out there, the Johnson-Crapo bill and a few others.

But they couldn’t get it passed. And then the other surprising thing was that it kept functioning. And so there’ve been no real crises, and to be honest, at the time, I was saying if this goes on too long, there’s gonna be some mishaps because it’s gonna be like a black box.

We don’t know what’s going on. The typical incentives that people at the companies have would disappear and efficiencies would be impacted. But, effectively, most people think it’s going well enough. And I think someone like Mark Calabria thinks that this may be building up to a crisis.

And I think there could be some truth to that. But the fact is that it’s operated in conservatorship much better than people expected.

CHAKRABARTI: Black box, though I’m not clear if, maybe I’m just being naive here, but if it’s in conservatorship, it should be the opposite of a black box.

REISS: I guess I’m just thinking black box in the sense that you have mixed motives.

When you are working at a company in conservatorship, you don’t know how long it’s gonna be in conservatorship. You don’t know what you’re gonna be rewarded for. Fannie and Freddie were rewarding profits to a large extent before they went into conservatorship. When they become these quasi-governmental entities, are they supposed to speak to government priorities?

Are they supposed to reduce the risk of financial calamity by avoiding bailouts, are they supposed to be innovating and bringing new products and new approaches to the mortgage market. And I, maybe black box isn’t the right word, but I guess it has, loses a clarity to its mission.

It’s in limbo and the two companies are not sure what they should be doing until they get some clarity. I think because of the supposed short-term nature of a conservatorship; I would think that it would cause confusion.

CHAKRABARTI: Understood. Okay. But of course, in this case, short term has become rather long term.

But to your point about conservatorship, and just let me highlight this, and correct me if I’m wrong, it means that Fannie and Freddie, as after 2008, were no longer publicly traded companies if they were under government conservatorship? Is that right?

REISS: They still had shares. They still had shares.

There were still shareholders. Their shares fell to almost no value at all. But once President Trump was elected to a second term, those private chairs have skyrocketed in value, I think maybe as much as 350%, at some point, at their heights, since then. There’s a bevy of sophisticated investors and also small investors, but names that some of your viewers would recognize, Bill Ackman and John Paulson.

And Millennium Capital Management. Major hedge funds and financial investors who have been playing a long bet that these stocks will increase in value dramatically if privatization goes through.

CHAKRABARTI: If privatization goes through. Okay. So that’s why some of the pressure from this is coming from these hedge fund titans, as you’re saying.

REISS: Yeah. And Bill Ackman is very vocal on social media about how this isa  really important thing for Trump to do.

CHAKRABARTI: Okay. But one can have whatever opinion they want about hedge fund managers, but they’re making a long bet as you’re saying here and have the means to do. But fundamentally, let’s just go down at the foundational, philosophical level, David Reiss.

We’ll talk about implementation in a second, but given Fannie and Freddie’s history, I don’t necessarily see a very persuasive argument against moving these two companies out of government conservatorship.

REISS: I think you really need to think that there’s a range of views on this issue and to some extent, driven by ideology and some extent driven by historical practice.

But I think on the right, you have a real libertarian thread in the Republican party and in the Trump administration. And I think Mark Calabria is a great example of that. He’s well versed in housing finance and the regulation of housing finance. And he’s committed to a bigger role for the private sector in pricing risk and wanting to ensure that the government and the taxpayers are not on the hook for bailouts.

And on the right, you have a strand of people, I’m sorry, on the left, you have a strand of people who are very focused on access to housing and consumer protection, like Senator Warren. And she’s very focused on creating a system that is equitable. And protective. And then in the middle. But the middle has not been able to come up with any movement in Congress. You have people who say we wanna have a big role for the private sector, but we wanna have a lot of regulation to both promote home ownership and also to protect consumers from abuse of practices by financial companies.

CHAKRABARTI: But doesn’t that seem to be the most sensible approach? Because again, prior to 2008, the description that you gave, laid out of Fannie and Freddie, was basically a private system that was functioning very well except for the hands-off regulation. So if we move to a privatized version of Fannie and Freddie that maintained a strong regulator, wouldn’t that be ideal?

REISS: So that is the direction that I would go. But the criticism of that, Mark Calabria’s criticism of that, for instance, would be that companies that have a regulator, especially when the companies are very powerful and there’s very few of them, there’s just Fannie and Freddie, effectively, in this space, that there’s always the risk of capture by the regulated companies, where they can tell the regulator what to do, informally, behind the scenes. And so that’s the critique of it.

But we have large swaths of the American economy where we have regulators who look to protect the consumer, whether it’s in consumer safety or financial regulation. But as we all know, there are people who oppose that.

There is a kind of a libertarian strand that wants to let the free market run free and create wealth. To some extent, Alan Greenspan, when he was the chair of the Federal Reserve, during the Bush administration, took that approach. What came after that approach was the financial crisis of 2007, 2008.

And so the notion that there’s no role for regulation is at least inconsistent with that strong example from history.

CHAKRABARTI: Irrational exuberance on steroids.

REISS: Yes. Yes.

CHAKRABARTI: Okay. So what do we know? It’s actually been a little challenging for me to get clarity on what the Trump administrations’ ostensible plans would be for how to implement privatization from Fannie and Freddie. What have you been able to discover, professor?

REISS: I want to talk about a few things in that regard. One is just how he’s staffing this, and we’re still very early in the administration, there are some people in the administration who I think are very sensitive to the practicalities of changing a mass of regulatory structure and financial structure in the American economy. And I think Secretary of the Treasury Bessent has that level of sophistication. I think Mark Calabria, who’s now at OMB, has that sophistication, but then Trump has brought in some people into this world who are adjacent to it.

The Secretary of HUD, Scott Turner doesn’t really have experience with this, but says he will be playing a significant quarterbacking role in this. And Bill Pulte, who’s now the FHFA director is housing adjacent, but doesn’t have experience in this. And so there’s a kind of an experience question you have about some of the important people on the team for this.

And then you also get totally thrown off by the people who seem that they want to destroy the agencies they’re in charge with, so with the Consumer Financial Protection Bureau, you have Vought and others who seem to be trying to just shutter these agencies that have an important role in the mortgage markets.

And so to say what is the consistent plan is a little difficult when you think about how do you execute with a team that has those, that range of people in it. That being said, I think there is a clear path that has been developed in the first Trump administration by Mark Calabria when he was the FHFA director, and that would include building up sufficient capital for the two companies to be released from conservatorship and comply with the regulations regarding their capital requirements. So that’s gonna take a few years to build up tens of billion, billions with a B, more of capital.

But that could potentially happen in a few years, two or three years. And then the next stage would be we have to remember that the federal government owns an extraordinary majority set of shares of the two companies. And so to really fully privatize, you then have to sell off those shares.

And then there’s talks of IPOs for those two companies. Those IPOs would be amongst the biggest that ever happened, or even larger than those that ever happened. So massive initial public offerings for those two companies, or they may be secondary offerings if they sell the shares that the treasury owns.

Part III

CHAKRABARTI: You had mentioned Massachusetts Democratic Senator Elizabeth Warren a few minutes ago. Here she is last month at Bill Pulte’s confirmation hearing, expressing some of her concerns.

WARREN: President Trump’s plans for our housing finance system will raise housing costs for American families and that Mr. Pulte, if confirmed, will be the one to carry out those plans. FHFA oversees Fannie Mae and Freddie Mac. Which helps make sure that families can afford home mortgages. FHFA has helped run these multimillion-dollar companies, but now a group of Trump’s billionaire friends are pushing to privatize Fannie and Freddie so they can make billions of dollars for themselves, and in the process, they could jack up costs for people trying to buy a home.

This could end up as another Trump administration giveaway for his cronies. Great for billionaires. Terrible for hardworking people.

CHAKRABARTI: Professor Reiss, let’s have some sympathy for the American people. Because I think language, political language around all issues, but especially this one … it’s been distilled down to such overly simplistic nuggets that it’s hard to really understand what’s going on. Because Senator Warren there saying, oh, they’re pushing to privatize Fannie and Freddie.

But as we talked about, that’s exactly what they were before 2008. And then she’s also saying, President Trump’s quote-unquote billionaire friends are gonna make all the money from the privatization. Professor Reiss, now, please do correct me if I’m wrong, that might be true regarding the current hedge fund shareholders of Fannie and Freddie.

But you just said before the break that if the federal government does indeed privatize these two companies, that means the government will share, will sell its share of the ownership, the largest IPOs potentially in the history of the stock market. My understanding is when we say the government, we mean the taxpayers.

So couldn’t that money be coming back to U.S. taxpayers, or at least back to the treasury?

REISS: So I think the big question is, what do we want our financial, our housing finance system to look like for the next 100 years? The last one, really started in the Great Depression until, I guess, the turn of the century, till the financial crisis.

And we’ve just been in limbo as to what it should look like for the 21st century. So our eyes should be on, what is the best system? And if that system is privatized with consumer protection, let’s go there. There may be some people who benefit from that as we get there, the private shareholders perhaps, but we wouldn’t want the fact that they’re benefiting from it to stop us going to the best system we could have.

I think a lot of people around the time of the financial crisis thought that the private shareholders should have been totally wiped out. The way it worked, they weren’t totally wiped out. Some people are still holding shares they had before the financial crisis.

Some have been speculators, playing the long game, like some of the hedge funds who came in after their shares dropped to pennies. But there’s also no question that those investors are looking to make as much money as they can and are pushing for something that makes them lots of money.

CHAKRABARTI: But that’s capitalism, right? I mean that just, that’s, it is what it is. But I’m wondering about, I take your point about, like we need to, there needs to be some clarity in what the best plan would be for the country. And I’m gonna come back to that in a second, but at the risk of just, again, sounding naive, this IPO that you raised as a possibility.

Again, simply put, the government sells its shares in an IPO and the government gets the money. Right?

REISS: Yes. And the government would make, effectively, hundreds of billions of dollars from this sale. But then the devil will be in the details. One theory is that money could just help pay down the deficit.

Not a humongous part of the deficit, but not an unmeaningful part of the deficit or be spent however the political branches want to spend that money. Bessent kind of hinted recently that these shares could go into a sovereign wealth fund that President Trump has been touting. But let’s keep in mind, and that’s just another form of government control.

If it’s kept within a sovereign wealth fund, it’s just instead of treasury calling the shots, then the Sovereign Wealth Fund will be calling the shots on those shares. And the devil will really be in the details. What are we trying to achieve? And what are the steps that will best help us achieve it?

CHAKRABARTI: Since you mentioned the Treasury Secretary Scott Bessent, he was asked in a recent interview with Bloomberg on what his plans would be for taking Fannie and Freddie out of conservatorship. And here’s what he said.

SCOTT BESSENT: Right now, the priority is tax policy. Once we get through that, then we will think about that. The priority for a Fannie and Freddie release, the most important metric that I’m looking at, is any study or hint that mortgage rates would go up. So anything that is done around a safe and sound release is going to hinge on the effect of long-term mortgage rates.

CHAKRABARTI: Okay, so two quick things there. When the Treasury Secretary says right now the priority is on tax policy translation.

The priority for the Trump administration is getting that extension of the 2017 tax cuts made into law. And secondly Professor Reiss, when the Treasury Secretary talks about impacts on long-term mortgage rates, tell me what those impacts could be with privatization of Fannie and Freddie.

REISS: So I think I would focus on two aspects of that, and I’m gonna get a little bit in the weeds, but just bear with me a little bit. But mortgage rates that are available for mortgages that are able to be bought by Fannie and Freddie, have a base that is fundamentally based on the 10-year treasury.

And then they have a spread, which is the money that gets charged to pay for the operations of Fannie and Freddie, for the risk of loss. A rainy-day fund for defaults. And then for whatever kind of profit they make. But then there’s some other things that could affect what we call the spread above the treasuries.

And that could be operational risk. That if people think that somehow Fannie and Freddie will not be a well-functioning machine and not pay their obligations in a timely way, or be somehow hard to understand how they’re presenting their products to the market. That may increase the spread.

People will demand a higher spread, and that will increase mortgage rates for the homeowner. And secondly, the implied guarantee or explicit guarantee of the federal government will push mortgage rates down. And to some extent, I think what Senator Warren was talking about was that if you fully privatize and you get rid of any kind of guarantee, that will most certainly increase the interest rates for Fannie and Freddie eligible mortgages.

Perhaps by a half a percentage point. So a 6.5% mortgage might be a 7% mortgage or even more than half a percentage point. Those are the two ways that privatization could have big impacts on mortgage rates.

CHAKRABARTI: Okay. But people see this from all, per different perspectives. You had mentioned Mark Calabria and the first Trump administration back in 2019 had released a plan to privatize Fannie and Freddie back then.

It was never enacted because COVID intervened. But back then, I’m seeing that some of the recommendations to limit the government’s role, the idea was to inject more private competition, which the first Trump administration said would potentially bring down mortgage rates, which is the opposite of what people like Senator Warren are saying.

So some of the reform bills in Congress contemplated that. And said the amount of competition you’re gonna have when you have a duopoly, just Fannie and Freddie, is gonna be nothing like the amount of competition you’d have if you created a bunch of regulated smaller housing finance companies like mini Fannie and Freddie’s, and just the nature of competition would drive down mortgage interest rates.

That may be true, that may not be true. It doesn’t seem that model had a lot of traction, even though it was in a credible bill in the Senate. I don’t think it retained traction. So I think it’s like an idea that would need to be fleshed out more before it got serious legs.

CHAKRABARTI: Okay.

Also in 2019, again, I’m looking to that plan, because at least we’ve had a few years to consider it in detail. I believe that the first Trump administration said it wants to do things like preserve the 30-year fix, right? So they would support efforts from Congress to really make explicit federal guarantees that would back those mortgage-backed securities.

I don’t think, has that thinking changed?

REISS: If I’m understanding your question I think, no, that thinking hasn’t changed. I think there’s broad support across the political spectrum. Not 100%. I think some on the far right don’t really care what happens in 30 years, say. And say we could be like other countries and have mortgage rates reset every five years, like in Canada. But if I’m understanding your question, I think it’s broad support to maintain the third-year mortgage, because people are used to it. People like it, people like the security of it. Which isn’t to say it doesn’t come with costs.

They’re invisible costs, but their costs. But it is very politically popular.

CHAKRABARTI: So I apologize for being unclear, but I’m looking back at the reporting around the first Trump administration’s plan from 2019. And I’m seeing here that the first Trump administration, in its desire back then to privatize Fannie and Freddie, said yeah, we also want to preserve these iconic and very important things like the 30-year fixed. So in order to allow Fannie and Freddie in privatization to continue to securitize them, we will support Congress if it says yes, the government will guarantee we’ll put a federal guarantee behind those mortgage-backed securities.

Does that make sense?

REISS: Yeah. And I think that even the Trump administration is going to want to have enough government regulation to keep that feature of the housing finance market because it’s so popular. So that doesn’t, that’s totally consistent, I think with what they’ve said in the first administration.

And what we’ve been hearing so far. I hear no talk by leaders in the Trump administration about threatening the 30-year fixed mortgage.

CHAKRABARTI: Got it. Okay. In just a minute, I wanna get to some of the things that Bill Pulte has done recently. But I really wanna go back to one other thing you said earlier.

We talked about what would happen if it was privatized, if they were privatized and the federal government would sell its shares. You had mentioned before that a really important part of privatization would mean, would require Fannie and Freddie to build up enough capital in the form of extra billions of dollars that they would have to have.

Interesting to me, because right now there’s also this sort of parallel move amongst the nation’s biggest banks to reduce their capital requirements under federal law. Because we did a whole show about stress testing. Who would determine how much capital Fannie and Freddie need to have in order to be released into privatization.

I mean at this stage, it’s their regulator, the FHFA, but if Congress were to be involved, they could change it up. And we would wanna think, in terms of the merits of it, we want to think, what kind of financial crisis do we wanna ensure they have sufficient capital to survive?

And this is always the big tradeoff between financial institutions and their regulators. Financial institutions are worried about safety and soundness and want to have a good capital cushion to protect from the stresses of the business cycle. And even black swan events, to some extent.

And regulated entities like banks are, A, we’re not gonna make as much money if we’re required to have a lot of capital. Because that’s capital that’s sitting around and not being invested to make money. And B, we face competition from less regulated entities like non-banks and other financial institutions.

And we’re seeing that with the private credit industry that is taking a big chunk away from traditional banks, because of their capital requirements and their regulatory environment, which is much less restricted than traditional financial institutions like banks.

CHAKRABARTI: Gotcha. Okay. Here’s Bill Pulte, new director of the Federal Housing Finance Agency. He was on Fox News recently, and here’s what he said about Fannie Mae and Freddie Mac.

PULTE: President Trump had great businesses, Fannie Mae and Freddie Mac in the first term. Now we’re gonna make ’em better.

Stronger than ever. And I’m very confident that these two businesses will be great American icons once again.

CHAKRABARTI: Professor Reiss, Pulte has made some pretty significant changes, or at least headline making changes recently at FHFA, where he appointed himself as chair of Fannie and Freddie and also fired what, 14 of the 25 board members from the companies.

Is this a reasonable part of a process of privatization?

REISS: I would say just straight off the bat, no, that if you make the regulated the regulator, then, you know, the left hand is telling the right hand what to do. So I don’t think in any system where a regulator’s job is to supervise and ensure safety and soundness of the regulated institution that you would want the head of the regulator to be the head of the companies that they’re overseeing. It just is just bizarre. My understanding, although I’ve not independently confirmed this, is that it’s not even allowed, that this is a move that could be challenged in the courts.

We talked about the different kinds of appointees that Trump has had, and Pulte as the director of the FHFA seems to be in that kind of chaos mode. Where they don’t seem to be following the norms of regulations that affect their industry. And it’s just hard to get your hands around, he probably was well within his power to push out some of the directors, but to appoint himself is a whole other bowl of wax.

CHAKRABARTI: It seems to me that we’re in a situation where here’s a potentially good idea, right? Releasing Fannie and Freddie from conservatorship. But because of the chaos factor in the Trump administration, the implementation of that good idea, it’s reasonable to have doubt about that, that it would go well.

Because as you’re saying, it would need to go hand in hand with some pretty strong regulation to protect American home buyers. I’m just not sure any aspect of Washington is prepared for that, to make that kind of decision right now or action.

Do you have any faith that it could happen?

REISS: It’s a tough question. I think when you see who’s in charge of the big lever. So when you see Pulte in charge of FHFA, that’s a big negative. But on the other hand, the Secretary of the Treasury is a well-respected Wall Street executive.

And he, I think, appreciates the complexity and importance of housing finance in the American economy. So he might try to push it forward. As I mentioned before, Mark Calabria knows this industry in and out. He could push it forward, you contrast the two of them with the person whose hand is most directly on the lever.

And that is a worrisome sign for the possibility that this could be done.