So, Timothy Bowler is one of those “revolving door” Wall Street-Washington officials. Did Mr. Bowler have a view of Fannie Mae and Freddie Mac while on Wall Street?
The following is a passage from a July 2011 article from The Structured Finance News, which featured Timothy Bowler when he worked at Goldman Sachs (where Henry Paulson also served as Chairman and CEO):
Big Wall Street players view REITs as essential to a mortgage-market recovery.
“We see REITs as playing a very important role in the future of mortgage finance, particularly once there’s a resolution as to how Fannie and Freddie will evolve,” said Timothy Bowler, a managing director in Goldman Sachs’ financing group.
He added that his firm is starting to see REITs currently focused only on agency RMBS moving toward more of a “hybrid” model, where they are building the credit expertise to invest in non-agency bonds. “Certainly, when we talk to REITs, they are focused on moving away from an agency-only model.”
Bowler said that Goldman sees three reasons for REITs’ growing importance going forward. First, existing RMBS assets have favorable enough pricing and leverage characteristics for REITs to meet their dividend targets and, in a virtuous circle, attract additional capital. Second, they will be able to buy assets without the capital concerns faced by banks.
And third, “REITs should develop over time the operational advantages and infrastructure to enable them to very efficiently assess credit and interest-rate risk,” Bowler said. “REITs are uniquely positioned to develop that expertise in-house because they’re primarily focused on mortgage products.”
It is established that Mr. Bowler is in a position of authority now to influence the fate of Fannie and Freddie. It is also established that, prior to joining Treasury, he had opinions about Fan and Fred and in particular what Wall Street financial instruments could take there place if FnF ceased to exist. It will be curious to watch if Mr. Bowler returns to Wall Street to manage the increased mortgage business as a result of a diminished Fannie and Freddie.
Is there any proof that Mr. Bowler, while he was the lead Treasury official responsible for managing the aftermath of the financial crisis, played any role in attempting to weaken or terminate Fannie Mae and Freddie Mac?
Well, yes, Mr. Bowler’s fingerprints appear to be are all over the Sweep Agreement (the one that serves to wind down Fan and Fred so that Wall Street REITs can take their place).
In Fairholme’s Annual Report released last week, it cites documents that the US Government classifies as “confidential and privileged.” Each of these documents have Timothy Bowler’s name associated with them and they all relate to the 3rd Addendum or Sweep Agreement (which occurred on August 17, 2012).
