KBW: GSE Reform Has Better Chance if Obama Wins

If you’re voting for president based on which candidate will reform Fannie Mae and Freddie Mac faster, go with Obama.

That’s the opinion of Brian Gardner, senior vice president of Washington research at Keefe Bruyette & Woods, who said at a New York bond conference that the odds of GSE reform in the next four years are “slightly higher” if President Obama wins.

A second-term president is “in better shape to take some risk,” he said during an economists and analysts discussion at the Securities Industry and Financial Markets Association annual meeting.

Some of the groundwork for GSE reform has already been put in place during the past four years, Gardner noted. (In particular, the Federal Housing Finance Agency has tighten underwriting and passed several guarantee fee hikes.)
Still, Gov. Mitt Romney could pick up where the Obama administration left off if he wins, but in some ways he will be starting from scratch. Gardner said based on information to date, he is predicting a Romney win.

Answering other questions about broader fiscal issues, Gardner noted that whatever mortgage reform does occur it will need to fit into the federal budget.

The hottest issue for mortgage bankers? According to Jeremy Siegel, a professor of finance at the University of Pennsylvania’s Wharton School, that would be the mortgage interest deduction which could be reduced as part of a budget reduction deal.