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NY Times Takes Aim at Mortgage Bankers

Mortgage bankers fired back at the New York Times for a front-page story that alleges government officials turned lobbyists are aiding big banks that seek to capture profits currently being earned by the government-sponsored enterprises.

The story was published on the home page of The Gray Lady
as of Monday under the headline, A Revolving Door Helps Big Banks’ Quiet Campaign to Muscle Out Fannie and Freddie.

The article was written by
Pulitzer Prize winning financial journalist Gretchen Morgenson, who served as press secretary to former presidential candidate Steve Forbes in 1995. Morgenson was previously the assistant managing editor at Forbes.

According to the Times, former government officials like Mortgage Bankers Association President and Chief Executive Officer David H. Stevens — who served as Federal Housing Commissioner in the Obama administration — are working behind he scenes with Wall Street banks to unseat Fannie Mae and Freddie Mac and capture their profits.

“A review of lobbying records, legal filings and internal emails and memorandums, as well as housing officials’ calendars and White House and Treasury visitor logs, illuminates the banks’ effort,” Morgenson wrote. “Assisting in this work, the documents show, is a group of high-level housing finance specialists who have moved back and forth between public service and private practice in recent years.”

Fannie and Freddie collapsed in 2008 at the height of the global financial crisis and were thrust into conservatorship by their then-newly created regulator, the Federal Housing Finance Agency.

The Times reports that the Obama administration’s plan to eliminate Fannie and Freddie would benefit big banks while increasing costs for borrowers served by smaller institutions.

Former chief ethics lawyer for the George W. Bush administration, Richard W. Painter, was quoted in the story as saying that Stevens and two other former Obama administration appeared to have personally and substantially participated in the administration’s decisions about resolving the financial difficulties of Fannie and Freddie.

“This means that they each have a lifetime ban on representing back to the United States government on either of these two particular party matters involving Fannie and Freddie,” Painter reportedly said.

MBA issued a statement indicated that the Times’ allegations were “inflammatory and unfounded.”

The association noted that the story lacks substance and merit and is “completely pointless.”

“At no point during David Stevens’ tenure in the government and now as president and CEO of the Mortgage Bankers Association, did he ever violate any ethics statute,” the statement said.

Also chiming in was former MBA chairman Bill Cosgrove.

“MBA, and Dave Stevens in particular, have been staunch advocates for independent mortgage bankers and the allegations in this storybook view could not be further from the truth,” Cosgrove stated. “As the owner of a small independent mortgage bank, and having been involved in MBA leadership for over a decade, I have watched as MBA consistently fights on behalf of all of its members, regardless of size or business model.”

The trade group said it plans to issue a more detailed response later today.

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