GSEs Still a Good Thing, Ranieri Says

IDD Magazine (10/06/08); Rozens, Aleksandrs
Speaking before senior home builder executives at Harvard University's Joint Center for Housing Research on Oct. 2, Hyperion Partners Chairman Lewis Ranieri--an early pioneer of mortgage securitization--emphasized the importance of Fannie Mae and Freddie Mac in rebuilding the mortgage market. Ranieri said the structure of the agencies needs to be made "more responsible," however, and insisted that the agencies must maintain their government guarantee without the government assuming too much of their risk. He suggested a structure similar to the Federal Home Loan Bank system, in which lenders would purchase a stake in Fannie Mae and Freddie Mac while the government charges a fee to guarantee the securities. To bolster the mortgage market, Ranieri also recommended using covered bond structures, altering risk-based capital requirements on agency debt and beefing up regulation of the credit default swaps market.