News From The MBA’s Secondary Conference

What is the legitimate  purpose of the government sponsored enterprises? That was a question discussed at a panel at the Mortgage Bankers Association’s secondary conference in New York.

Fannie Mae and Freddie Mac ought not to be relied upon as social policy makers, noted Joshua Rosner, a managing director with Graham Fisher and Co. The original role of the government sponsored enterprises was defined as “liquidity providers of last resort but the over time they became the drivers “drivers of excess liquidity,” said Rosner,  who is also the co-author of  “Reckless Endangerment.”

The government does have a role, but ought to be limited to being a “back stop,” while private capital remains the main source of funding, said Phillip Swagel, professor with the University of Maryland School of Public Policy and a former Treasury official. He would like to see private capital and competition drive the marketplace.