Category Archives: Investing

Congressional hearing scheduled on the future of Ginnie Mae

The House Financial Services Committee is set to hear testimony on Wednesday from the acting director of Ginnie Mae on the future of the only entity that securitizes federally insured mortgages.

Unlike Fannie Mae and Freddie Mac, Ginnie Mae only bundles mortgages with the Federal Housing Administration, the Department of Agriculture — or another federal institution — insuring the collateral. Ginnie Mae is not publicly traded and sits within the operations of the Department of Housing and Urban Development.

Therefore, in some ways, the operations of Ginnie Mae could be considered an indication of what might be in store for future, larger housing reform. In other words, should the government wish to modify activities at Ginnie Mae, it stands to reason it may also wish to modify the activities at Fannie Mae and Freddie Mac in a similar fashion.

Wednesday’s hearing may provide more insight into this direction, according to a note this morning from Brian Gardner and Michael Michaud, equity researchers at Keefe, Bruyette Woods.

“Michael Bright, the acting director at Ginnie Mae, will testify for the Trump administration, so we may get some clues about where the administration wants to go on mortgage finance and the future of the GSEs,” they said.

“As a reminder, Mr. Bright used to work for Sen. Bob Corker (R-TN), who has been a proponent of winding down the GSEs and replacing them with a new mortgage finance system.”

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Former Treasury Secretary Jacob Lew joins private equity firm

Former Department of the Treasury Secretary Jacob Lew is returning to the private sector.

Lew, who served as Treasury Secretary from 2013 through end of the Obama administration earlier this year, is joining Lindsay Goldberg, a private investment firm, as a partner.

In this role, Lew will “investments across sectors, institutional relationships and firm management,” the firm said in a release.

“We are honored to have Jack join Lindsay Goldberg and look forward to his playing a key role across all facets of our firm,” Alan Goldberg, co-founder and CEO of Lindsay Goldberg, said.

“His reputation for integrity, along with his global perspective on business, nuanced knowledge of industry and decades of experience in senior leadership roles are unparalleled,” Goldberg continued. “He will contribute greatly to our firm and we are delighted to welcome him to our team.”

Prior to becoming Treasury Secretary in 2013, Lew held various roles both in the federal government and in the private sector.

In the Obama administration, Lew served as White House chief of staff, director of the Office of Management and Budget, and deputy secretary of state for Management and Resources before becoming Treasury secretary.

Prior to serving in the Obama administration, Lew was a managing director and chief operating officer at Citigroup, and executive vice president and chief operating officer of New York University.

Lew also served in several roles in the Clinton administration, including serving as director of the Office of Management and Budget, a role he also held under President Barack Obama.

“Jack is widely recognized as a trusted advisor for his vision, judgment, and creativity,” Bob Lindsay, co-founder and chairman of Lindsay Goldberg, said. “He brings a wealth of insight to Lindsay Goldberg from his years of distinguished service as a senior leader in the public and private sectors.”

In addition to serving as a partner at Lindsay Goldberg, Lew will continue serving as Visiting Professor of International and Public Affairs at Columbia University’s School of International and Public Affairs.

“Lindsay Goldberg has built a reputation as the premier partner for growing family-owned and founder-led businesses,” Lew said. “I am excited to join an organization that is so well-respected for its long term orientation and collaborative approach to investing. I look forward to contributing to the growth of the firm and working with its portfolio companies and partners.”

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Trump administration reportedly considering Mohamed El-Erian for Fed Vice Chair

Last month, Mohamed El-Erian told the crowd at the Mortgage Bankers Association Annual Convention in Denver that it didn’t matter who President Donald Trump chose as the next chair and vice chair of the Federal Reserve, because the path for the central bank’s future was already laid out.

“Expect the Fed to hike interest rates in December. We may get a couple of rate hikes next year, regardless of who leads the Fed,” El-Erian, the chief economic advisor for Allianz and the former chief executive and co-chief investment officer at PIMCO, said last month. “You should not worry about the Fed. I say that even though we don’t know who’s going to be chair or vice chair.”

As it turns out, it could be El-Erian himself taking over for the departed Stanley Fischer as the next Fed vice chair.

The Wall Street Journal’s Nick Timiraos and Kate Davidson reported Tuesday that the Trump administration is considering El-Erian to serve as Fed vice chair.

From the WSJ:

Mr. El-Erian, the former chief executive of Pacific Investment Management Co. and a former deputy director of the International Monetary Fund, is one of several candidates under consideration for the vice chair position, and no decisions have been made, according to the person familiar with the matter. The White House has placed a heavy focus on selecting a vice chair with a strong background in monetary policy, this person said.

El-Erian replacing Fischer as vice chair would be interesting, considering that El-Erian said last month that regardless of who Trump picks as the next Fed chair and vice chair, there will still be a rate hike in December and possibly a few more next year, but that it won’t really matter because the markets have learned how to deal with rate hikes without significant disruption.

As it turns out, Trump chose current Maryland Federal Reserve Governor Jerome Powell to take over for current Fed Chair Janet Yellen early next year.

And now, it could be El-Erian, who’s been outspoken on the role of central banks, filing the role of Powell’s top lieutenant.

Last year, El-Erian was the featured speaker at the ABS Vegas conference, and here’s how HousingWire’s Sarah Wheeler described El-Erian’s thoughts on central banks:

El-Erian likened the central banks of the world to a doctor that doesn’t have the solution for a patient (the economy), but can’t refer the patient to those who could actually do something — the policy makers on Capitol Hill for instance — because they are paralyzed. So, as opposed to doing nothing, the central banks will dispense medicine that doesn’t treat the problem but buys the patient some time. Hence quantitative easing in all its forms. “The patient and the central banks are rightly concerned about side effects,” El-Erian said. “We have this very precarious situation that is dependent on one policy instrument and we’ve over-relied on it. Some central banks are prescribing more meds and some are withdrawing the meds, so we have divergency.”

For more from the WSJ on El-Erian’s potential nomination, click here or below.

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