In this episode of On the Hill, Tim Rood talks with James Lockhart, former Director of the Federal Housing Finance Agency (FHFA), about what it took to bring Fannie Mae and Freddie Mac into conservatorship during the height of the Great Recession, and the current state of the housing finance market.
Rood and Lockhart compared the government's response when the housing bubble burst in 2007 to recent action taken to alleviate the impact of the pandemic in the housing market. "The difference is that we were much better prepared this time around," said Lockhart. "Legislation came quicker than it did last time and a lot of pieces were already in place, so that made it easier."
When asked about the current state of housing finance and GSE reform, Lockhart stated that regulators "need to figure out a way to slim down Fannie and Freddie" and get the private sector back into the market. "It's hard to compete with them," he added. "I've always said that the government had to be countercyclical in the regulatory process. We're just the opposite. We're doing everything procyclical at the moment."
Lockhart is a Senior Fellow at the Bipartisan Policy Center (BPC) where his also serves as Co-chair of Commission on Retirement Security and Personal Savings. Prior to joining the BPC, he sat on the management committee at WL Ross & Co. LLC, where he led the firm's financial services investment team. During his tenure as the Director of the FHFA, Lockhart oversaw the conservatorship of Fannie Mae and Freddie Mac following the 2007 housing market crash. He's also held positions at the Social Security Administration, and was a member of President George W. Bush’s management council.