Did Mortgage Bankers Association President David H. Stevens keep one foot in government and the other in the private sector, thereby helping to grease the skids for a handoff of Fannie and Freddie’s business to big banks?
That question is at the core of The National Legal and Policy Center’s call for the U.S. attorney for the District of Columbia and the inspector general at the U.S. Department of Housing and Urban Development to conduct an official review of Stevens’ activities while he was at HUD and after he left the agency in March 2011 to lead the MBA.
NLPC’s request for an ethics investigation follows an eye-opening story in the New York Times late last year on Washington’s revolving door in the housing finance sector. The story provided a detailed look at how former top housing officials seemed to be in common purpose with large banks in efforts to dismantle Fannie Mae and Freddie Mac and get a bigger share of the $5.7 trillion mortgage market. TheTimes reported that between February 2012 and April 2015, Stevens met 13 times with officials at the White House working on Fannie and Freddie policy. The question is whether his contacts and communications violated the statutory one-year ban on having contact with his former agency, as well as the lifetime ban on having contact with officials regarding matters on which he worked while in government.
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NLCP wants to resolve that question, as well as whether Stevens violated the law by trying to influence matters of interest to the mortgage bankers for a brief period after he had accepted the lobbying post but was still working for the government. He was the Federal Housing Agency commissioner, a post within HUD, from mid-2009 through March 2011.
In addition to the NLPC’s call for a probe, the nonprofit Campaign for Accountability has asked the Justice Department to investigate Mr. Stevens for possibly violating laws designed to curtail the revolving door policymaking.
An MBA spokesman assured that Stevens has regularly consulted with attorneys inside and outside MBA to make sure that he and the association are always in full compliance with both “the letter and spirit of the law.” He charged the query is part of “a concerted campaign” to discredit Stevens and the MBA.
The December Times story brought scrutiny to the activities of Jim Parrott, who was a top housing official in the Administration but left government service in 2013 and worked as a senior fellow at the Urban Institute, as well as an independent consultant for financial services companies. It also looked at the relationship of Michael D. Berman, who recruited Stevens to be president while serving as MBA Chairman. Berman himself served as a senior advisor to HUD in 2013 before starting his own firm advising real estate lenders in 2014.
These reported ties cause us to be alert to situations when it looks as though private sector interests and government officials are in lock step in what they are saying about the conservatorship. Just yesterday, for example, we noted that Stevens’ explanation of why the GSEs cannot be recapitalized is very similar to the same faulty rationale that Treasury reiterated just a few days earlier.
More broadly, for our part, the conservatorship of Fannie Mae and Freddie Mac, now in its eighth year, has been conducted in an illegal fashion. As a result, Fannie and Freddie’s shareholders are worse off, the liquidity of the housing market and the average American’s access to homeownership remains uncertain, and taxpayers remain needlessly exposed to paying for another bailout if the undercapitalized GSEs have a bad quarter or two. The more we can find out about why and how this happened, the better.