Experts Join in D.C. to Discuss the U.S. Mortgage Market

The Center for Financial Policy held its spring roundtable, “Revitalizing the U.S. Mortgage Market” on May 24, which explored the issues leading to the conservatorship of mortgage giants Fannie Mae and Freddie Mac. The roundtable provided an opportunity for exchange of views on the diagnosis and policy reforms of the government sponsored enterprises (GSEs). The panelists included leading policy and academic experts, and the keynote address was delivered by Mark Zandi, Chief Economist, Moody’s Economy.com

"The financial crisis exposed the core of GSEs in that the implicit government guarantee became explicit, with the tax payers being exposed to huge losses accumulated by these institutions over the years,” says Lemma Senbet, director of the Center for Financial Policy and the William E. Mayer Chair Professor of Finance. “Of course, GSEs have been perceived to have considerable benefits in the form of promoting home ownership in the U.S. and in fostering liquidity of the mortgage market, as well as facilitating securitization. However, it is debatable as to whether these benefits have social value, or if they could be replicated by private agencies without implicit or explicit guarantee. What is clear is that the enormous costs generated by the GSEs are being socialized.”

Senbet adds, “It is amazing that there is no urgency in the legislative and policy circles to reform the GSEs so as to maximize their benefits while minimizing costs to society. These institutions are in unviable situation, and the problem needs to be dealt with urgency, at least to the same extent as the overall financial sector reform which has progressed well in Congress.”

Speakers Included:

• G. “Anand” Anandalingam, Dean, Robert H. Smith School of Business
• John Dalton, President, Housing Policy Council for Financial Services Roundtable
• Greg Hawkins, Managing Director, Product Chief Risk Officer, Global Real Estate and Mortgages, Citigroup
• William Longbrake, Executive-in-Residence, Center for Financial Policy; Chairman Emeritus, Financial Services Roundtable’s Housing Policy Council
• Clifford Rossi, Tyser Teaching Fellow and Managing Director, Center For Financial Policy; Former Managing Director and Chief Risk Officer, Citigroup Consumer Lending Group
• Lemma Senbet, The William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy
• Haluk Unal, Professor of Finance, and Financial Institutions and Consumer Finance Academic Track Leader, Center for Financial Policy
• Robert Van Order, Professor of Finance, and Oliver T. Carr Professor of Real Estate, George Washington University
• Peter Wallison, Arthur F. Burns Fellow in Financial Policy Studies, American Enterprise Institute for Public Policy Research
• Mark Zandi, Chief Economist at Moody’s Analytics

For highlights from the conference, visit the Center for Financial Policy website.