Dear John,
President Trump has announced his nomination of private equity executive and philanthropist Bill Pulte for director of the Federal Housing Finance Agency (FHFA), which sets policy for the government-sponsored mortgage companies Fannie Mae and Freddie Mac.
As the guarantors of most mortgages in the U.S., Fannie Mae and Freddie Mac provide liquidity, stability, and affordability to the mortgage market. They make loans more affordable by reducing risk for lenders and investors. Following the housing market crash in 2008, the FHFA placed both companies under conservatorship. Trump plans to remove both companies from conservatorship, and he will rely on Pulte to carry this out.
Private equity has a long track record of destroying entire industries from nursing homes to restaurants and even pet stores. Some of the worst of it is their track record in taking over huge swaths of the housing market to manipulate prices and maximize their own profits. Handing over the Federal Housing Finance Agency to a private equity executive is the housing equivalent of privatizing Medicare: great for billionaires, not so much for the rest of us.
As a private equity executive, Pulte has deep ties to the for-profit real estate industry, creating conflicts of interest, as the FHFA’s mission to enhance equitable access to housing markets may clash with profit-maximization motives. Pulte is likely to favor policies that benefit corporations and big investors rather than homeowners, renters, or smaller community lenders.
Keep Fannie Mae and Freddie Mac free of undue corporate influence. Send your Senators a direct message urging them to vote NO on Bill Pulte for Director of the FHFA.
Running the FHFA requires expertise in housing policy and regulatory oversight. Pulte’s own business experience does not include managing large regulatory agencies or setting policies. His experience running his family’s company does not grant him expertise in the technical aspects of regulating multi-trillion-dollar enterprises like Fannie Mae and Freddie Mac.
In private equity, decision making is dominated by the short-term making of profits through strategies such as cost-cutting or rapidly flipping assets, which can be counter-productive in the long term. This is very different from the FHFA’s mandate to ensure housing affordability and stability, especially during periods of economic downturn.
Similarly, Pulte’s philanthropic work, focused on individual acts of charity, is high profile but leads to short-term solutions. This is very different from the kind of public policy thinking that we need to craft long-term strategies to address the housing crisis, and make housing more affordable and accessible in markets across the country.
In general, the FHFA's task is to prioritize the public good over private gain. This is just the opposite of Pulte’s priorities in the private equity world: to maximize returns for investors. The public must be able to trust that the FHFA is acting in accordance with the public good to overcome discriminatory practices such as redlining and to create more affordable housing.
Bill Pulte has neither the regulatory expertise nor the public-minded priorities that are required to head the FHFA. Tell your senators to reject his nomination now.
Thank you for working to keep the FHFA focused on the public interest.
Robert Reich
Inequality Media Civic Action
