Regulator Finds Financial Sector Payday

NEW YORK (TheStreet) -- James Lockhart, who until recently oversaw bumbling mortgage giants Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote), on Wednesday became the latest example of the symbiotic -- and some would say too-cozy -- relationship between government regulators and financial companies.

Lockhart, who announced his departure as director and chairman of the Federal Housing Finance Agency on Aug. 6, will join WL Ross & Co., the private equity shop Wilbur Ross sold to Invesco (IVZ Quote) in 2006. The FHFA is the regulator for Fannie Mae and Freddie Mac.

Lockhart had worked in the government for more than a decade, starting with his Navy service, and through several roles in both Bush administrations, including the Social Security Administration and the Pension Benefit Guaranty Corp.

"With his extensive government experience, deep knowledge of the U.S. mortgage markets and strong background in public/private finance, Jim is ideally qualified to help expand the financial services portfolio of the funds we manage," Ross said in a statement. "Our investment team will benefit from Jim's unique insights into the U.S. mortgage markets, which will help us expand the compelling investment opportunities we can offer our institutional and individual clients."

WL Ross has been actively searching for deals to purchase troubled or failed banks, and was part of a consortium that successfully bid on BankUnited earlier this year. Ross is hoping to coax the Federal Deposit Insurance Corp. into easing proposed restrictions on private equity firms that want to purchase bad banks. "I assure you that my firm will never again bid if the proposed policy statement is adopted in its present form," he wrote in a late-July letter to the FDIC.