Mortgage Reform of Biblical Proportions
WASHINGTON ( TheStreet) -- Alex Pollock seems to know that no one agrees with him, but he doesn't seem to care. That's because he seems to think he's right.
If there were any living representation of the cheese who stood alone, it'd be Pollock at the Treasury Department's panel discussions about the future of the housing-finance industry on Tuesday. A former banker and regulator, Pollock is now a fellow at the conservative think-tank the American Enterprise Institute. His ideas for reform don't quite jibe with the industry's -- or a good portion of the political establishment.
Calling his idea a "Julius Caesar strategy," Pollock, who prides himself on cleverness, said he'd first divide the system into three parts ("like Gaul") during a transition period leading up to a system that had no GSE involvement at all. The parts active in the market would be privatized, the regulatory parts would go to the Federal Housing Administration. The existing mortgage portfolios of Fannie Mae and Freddie Mac would be wound down over time.
"There is a verse in the book of Proverbs which addresses guarantees," said Pollock, " ... and it goes like this: 'He who stands a surety for the debts of another shall smart for it.' "He later cracked, "This may also be known as the FDIC verse," referring to that agency's reputation for being a much stricter regulator than others. The closest anyone came to agreeing with Pollock during the conference's main discussion panels was Moody's (MCO) Chief Economist Mark Zandi. Though he stopped short of saying the government ought to outright abandon the mortgage market, he did call current policy unaffordable and advised that "the government's role in housing needs to be pulled back quite significantly." Most other panelists -- from mortgage executives at Bank of America (BAC) and Wells Fargo (WFC), to MBS buyers like
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV