Fannie Mae-No Politics (FNMA)

[Donotunderstand]

Calabria

Contradictions

Which way does he turn

?

Calabria is a wild card as far as GSE reform goes. He favors ending the GSE conservatorship and returning the sweep to the companies themselves. But he has been historically critical of Fannie and Freddie’s affordable housing mandate mainly during his years as an economist for libertarian think-tank, the Cato Institute.

Calabria, for example, has questioned the need for 30-year fixed rate mortgages, which is at the heart of the GSE’s mission, and whether securitization – or the GSE’s packaging of mortgages into bonds that are sold to investors – is good for the housing finance system.

He is also wary of returning Fannie and Freddie to their previous incarnations as private companies that have shareholders, but also receive backing from the federal government if they get in trouble as they did in 2008.

That backup from the government allowed Fannie and Freddie to become immensely profitable during the housing boom years, but it also help lead to their demise as they guaranteed increasingly riskier mortgages under pressure from housing advocates to expand home ownership, Calabria is said to believe.