The National Association of Realtors (Jamie Gregory and Joe Ventrone) and their California colleagues (the CAR [Joel Singer and Leslie Appleton Young]) invited me to attend a segment of their, multi-day, San Francisco conference, held at the Moscone Convention Center, and hear a discussion/debate between the American Enterprise Institute’s (AEI) Peter Wallison and the University of California’s, David Min. David Min is a nationally recognized expert on financial markets regulation, and his research interests focus on the law and policy of banking, real estate finance, and capital markets. Peter Wallison is a lawyer, Former White House Counsel Member, and Fellow in Financial Policy Studies at AEI.
I was fortunate enough to ask a question in regard to the Wallison (along with his colleague Ed Pinto at AEI) arguments that low income lending by Fannie Mae (and Freddie Mac) were the cause of the 2008 financial meltdown.
Specifically, I asked Mr. Wallison why the AEI never makes mention of the valueless $2 Trillion in near worthless private label mortgage backed securities (PLS) issued outside the Fannie and Freddie systems, by Wall Street banks and investment banks, and sold throughout the world, causing the US real estate softening to become an international crisis, costing hundreds of billions in losses. Those PLS securities fared 5 to 10 times worse (frequency and severity of default) than the Fannie/Freddie bonds, but AEI always singles out the former Government Sponsored Enterprises for scorn, never the banks and now their investment banking subs.
Wallison denied that Wall Street efforts were that large and before I could follow up, Professor Min, whose presentation had strong supporting facts, jumped in and said to Wallison (paraphrasing) "you denier, myth inventor, you…”
I had an opportunity to throw in a few statistics about big bank’s LIBOR manipulation, fraudulently rated AAA mortgages, and wrongly foreclosing on homeowners. But Mr. Wallison shrugged-off any bank wrongdoing, ignoring the Presidential Financial Inquiry Commission, headed by former California Insurance Commission, Phil Angeles, and the Federal Reserve Board staff study, which said Wallison and Pinto were wrong. There also are about four or five other strong AEI rejections by widely known financial types.
I also had a chance to question the validity of the Corker/Warner bill, which aims to replace Fannie and Freddie with a system owned by the big banks, increases costs for homebuyers, and replaces the 30-year fixed rate mortgage with ARM/jumbo loans. The bill would also cost taxpayers billions of dollars, introduce new risks, and likely produce little, if any, benefits to taxpayers; as others have noted more eloquently, Replacing Fannie Mae and Freddie Mac Is a Fix That Has Nothing To Do With the Problem.
Rep. Jeb Hensarling’s big bank supporters were out in full force at the conference, tweeting heavily about their proposal to eliminate Fannie and Freddie. I’ve already had an opportunity to provide statistics to the Financial Services Committee back in July when they tweeted to Restore Fannie Mae. Hensarling’s bill is also on hold status in Congress based on its low probability of ever passing full vote in Senate.
America has come a long way since the 2008 financial crisis, and I am more confident than ever that the National Association of Realtors and the California Association of Realtors are leading the way in innovation and sustainable, real estate market growth. Their openness to grass roots efforts such as Restore Fannie Mae, underscores their positive, broad-based support for industry discussions on housing finance.
The National Association of Realtors and the California Association of Realtors know how to put on an amazing event, and I was honored to attend. It was also a pleasure to get to see Hillary Clinton's keynote. The expo and panels were all very interesting; the people were friendly, and very well organized. I want to give a special thanks again to NAR's Joe Ventrone and Jamie Gregory, and CAR's Joel Singer and Leslie Appleton Young. I hope to see you again next year with a newly restored Fannie and Freddie!