In a Room Full of Geniuses…
It’s like something out of a movie. There’s been a crisis that affects the whole country .. maybe the whole world .. and the President convenes a group of the smartest experts and the most powerful investors he can assemble to advise him. But of course, in the movies, after a long dramatic argument, somebody proves their case…and a course of action is decided upon.
Last week, at the Future of Housing and Finance conference in Washington, DC, there was an incredible cast of characters assembled, but unfortunately, there was no Hollywood ending in sight. The headline from Newsweek says it all, I’m afraid: “No Consensus on the Future of Housing Finance.”
The Cast of Characters
The most-quoted voice at the conference was Bill Gross, the manager of the massive investment conglomerate PIMCO. “To suggest that there’s a large place for private financing in the future of housing finance is un-realistic,” he said. “We need a government balance sheet.” He also advocated an ambitious mortgage refinance plan that was making headlines all last week. That’s not surprising, though .. “Full Nationalization” makes for one heck of a headline!!
In sharp contrast, Timothy Geithner never broke his role as a moderator. In fact, he was so vague most of the time, it felt like a Saturday Night Live skit: “Some suggest that, as a government, we have provided too much support for housing, while others suggest we provided too little…It’s safe to say there is not yet any clear consensus.” Thanks, Tim.
HUD Secretary Shaun Donovan wanted to see less government involvement in the future .. much, much less: “To be clear, the government’s footprint in the housing market needs to be smaller than it is today – where FHA and the GSEs collectively guarantee over 90 percent of all mortgage loans.” His remarks made it clear that everyone in the control tower at Fannie and Freddie is not comfortable under-writing the entire housing market at once.
Here’s an important detail: the executives of Fannie and Freddie didn’t even make an appearance at this conference. Because of this, a lot of experts have been brushing off the whole event as more political theater. Mortgage analyst Laurie Goodman told Newsweek: “Nothing will happen on reform for years. The conference is a big blah, blah, blah.”
What’s Your Call?
Do you think this conference was worth all the coverage, or was it just a bunch of noise. In a room full of geniuses…does anything get done?
