The fateful history of Fannie Mae: New Deal birth to mortgage crisis fall
Book Forum
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About This Event

Event Summary

Similar to a Shakespearean tragedy, James R. (Bob) Hagerty's recently published book "The Fateful History of Fannie Mae: New Deal Birth to Mortgage Crisis Fall" outlines a classic rise and fall — in particular, that of government-sponsored enterprise Fannie Mae, explained AEI's Alex Pollock at an event on Wednesday. Hagerty outlined how Fannie grew far beyond its humble beginnings; initially a small detail of Roosevelt's New Deal, it eventually became a subsidy to the housing market supported by a powerful group of realtors and home builders. Reforming Fannie Mae was not a major priority, said Hagerty, yet few realized the contradiction of intertwining public policy with the expectations of private shareholders.

Hagerty emphasized that after surviving several abolishment attempts and arising victorious after the Savings and Loan crisis, Fannie Mae began its ultimate ascent, hiring politicians to perfect its lobbying efforts and maintain its benefits. He then explained how Fannie's weak regulation, promises of increased homeownership, and poor accounting practices drew attention away from the swelling asset bubble of the housing market, although Wall Street was paying attention and profiting. Underestimating the risks, Fannie invested at exactly the wrong time, crumbling at the feet of American taxpayers. Hagerty concluded with a lingering question: will Congress now trust housing finance to the free market?
--Emily Rapp

Event Description

The protagonist starts humbly, progresses in the world, survives various scrapes and threats, finally grows exceedingly rich, admired, feared, powerful and exceptionally arrogant. Then come the dizzying collapse and utter humiliation. Thus there is a classic rise, hubris, nemesis and fall. It could be a Shakespearean tragedy, but it is “The Fateful History of Fannie Mae: New Deal Birth to Mortgage Crisis Fall,” a new book by James R. (Bob) Hagerty, who covered the drama of Fannie and related events from 2004–2010 for The Wall Street Journal. 

Hagerty will present his story of big-time government-sponsored finance, high and low politics, little-known history, colorful personalities, risk come home to roost and unintended consequences through the skillful lens of a veteran journalist. A panel of experts will then discuss Hagerty’s book.

Agenda


4:45 PM
Registration and Book Sale

5:00 PM
Introduction
Alex J. Pollock, AEI

5:05 PM
Keynote Address
James R. (Bob) Hagerty, Wall Street Journal

5:30 PM
Panelists:
Tom Lamalfa, TSL Consulting
Edward J. Pinto, AEI

5:45 PM
Question and Answer Session

6:00 PM
Autograph Signing and Wine and Cheese Reception

Event Contact Information

For more information, please contact Emily Rapp at [email protected], 202.419.5212.

Media Contact Information

For media inquiries, please contact Véronique Rodman at [email protected], 202.862.4871.

Speaker Biographies

James R. (Bob) Hagerty, based in Pittsburgh, PA, is a staff reporter for The Wall Street Journal (WSJ). Over the past 30 years, he has worked as a reporter, editor, and bureau chief for The WSJ and the International Herald Tribune in Hong Kong, London, Brussels, Paris, Atlanta, and New York. He served as managing editor of The Asian Wall Street Journal (1994–98) and London bureau chief of The WSJ (2000–03). Hagerty was a member of a Wall Street Journal team that won the Distinguished Business Reporting award for articles about the subprime mortgage crisis, granted by the New York Newspaper Publishers Association in April 2008. He was one of three Wall Street Journal reporters awarded the 2008 Excellence in Urban Journalism Award.

Tom Lamalfa has been in the mortgage research business for the past 35 years and is a longstanding critic of government-sponsored enterprises (GSEs). He began his career at Mortgage Guaranty Insurance Corporation, where he worked in the secondary marketing group for 11 years. For a decade, he co-authored a weekly newsletter and managed secondary market services for the company. Having developed a strong interest in wholesale mortgage banking, Lamalfa went to North American Mortgage and then Asset Backed Capital Research, where he studied wholesale banking and wrote a monthly journal on the topic. In 1991, Lamalfa and economist David Olson founded Wholesale Access, a boutique research company and consultancy. For the next 16 years, Lamalfa monitored developments in mortgage banking, tracked the players and studied the cost structure of the various production channels.  He has followed the industry since 2008 and writes about it for the Holm Mortgage Finance Report and Mortgage Banking.

Edward J. Pinto, former executive vice president and chief credit officer for Fannie Mae until the late 1980s, has done groundbreaking research on the role of government housing policies in the lead-up to the financial crisis. In particular, his data have revealed striking facts about the contributions of housing policy to the mortgage crisis. Two of his major research papers have been submitted to the Financial Crisis Inquiry Commission: "Government Housing Policies in the Lead-up to the Financial Crisis: A Forensic Study" and "Triggers of the Financial Crisis." At AEI, Pinto is continuing his work on the role of housing policies in the financial crisis and researching policy considerations and options for rebuilding America’s housing-finance sector.

Alex J. Pollock joined AEI in 2004 after 35 years in banking. He was president and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004. He is the author of numerous articles on financial systems and the organizer of the “Deflating Bubble” series of AEI conferences. In 2007, he developed a one-page mortgage form to help borrowers understand their mortgage obligations. At AEI, he focuses on financial policy issues, including housing finance, government-sponsored enterprises, retirement finance, corporate governance, accounting standards, and the banking system. He is a director of the CME Group, the Great Lakes Higher Education Corporation, the International Union for Housing Finance, and is the chairman of the board of the Great Books Foundation.

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