The bipartisan Johnson-Crapo bill being considered by the U.S. Senate was co-written by a former mortgage trader for Countrywide Financial and Wachovia, who worked in the industry up until the 2008-2009 financial crisis. According to several sources, the same individual was also heavily involved in the drafting of the Corker-Warner bill on which the Johnson-Crapo Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) reform bill is closely modeled.
The bill outlines a plan for closing down Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) and replacing them with a new federal mortgage guarantor agency.
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Michael Bright co-wrote the Fannie Mae, Freddie Mac reform bill
The mortgage derivative trader turned consultant/lobbyist who co-wrote the Johnson-Crapo bill is named Michael Bright. He was the senior financial adviser to Sen. Bob Corker, worked as a member of the loan-pricing desk at Countrywide Financial until 2006, and as a senior trader for Wachovia from 2006 until the financial crisis of 2008.
Records show that Bright became a member of Corker’s staff in 2010, and was an influential voice in crafting the initial Corker-Warner housing reform bill as well as the current legislation based on it.
According to Tim Pagliara, a Republican political operative who has taken an active stance against the bill that would eliminate Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC). “[Bright’s] running the show. And Corker listens to him.”
Fannie Mae, Freddie Mac reform: Statement from Corker’s office
When asked, Corker’s office did not deny that Bright had a significant role in writing the Corker-Warner bill, and went as far as defending his former employment at Countrywide and Wachovia as a main reason for his hiring.
“Our office spent a good deal of time to hire someone who has extensive knowledge of housing finance to serve as our senior advisor on these issues and help craft the housing finance reform legislation the senator introduced last year,” explained spokesperson Tara DiJulio.
Fannie Mae, Freddie Mac reform: Statement from public watchdog groups
Not surprisingly, a number of public watchdog groups are up in arms over Bright’s involvement in writing the legislation. “Anyone who really participated in Countrywide and Wachovia before the collapse happened was fully participating in the types of financial arrangements that caused the collapse,” said Public Citizen’s Craig Holman. “We’re seeing some of the rules evolving in this legislation that appear to be rigged for the bigger banks.”
On the other side of the political spectrum, Edward J. Pinto, a resident fellow at the American Enterprise Institute, pointed out that Bright “comes to this definitely from the perspective of those kinds of institutions and Wall Street, and that definitely has colored what’s in the bill.”