GSEs Express Compromise on Pricing

The government sponsored enterprises indicated a willingness at the Mortgage Bankers Association convention to jettison their long-held allegiance to the bottom line in favor striking a balance between serving their shareholders and the housing markets. Instead of concentrating on maximizing profits, Fannie Mae will focus on the minimum returns necessary to insure the company's safety and soundness, the GSE's new president, Herbert Allison, told the San Francisco meeting. "Once we do that," Mr. Allison said, "we will review the pricing necessary to grow the company." David Moffett, Mr. Allison's counterpart at Freddie Mac, said his company is reviewing pricing "across-the-board" with the intent of readjusting "for the 30-year risk we are taking." Their remarks were seconded by director James Lockhart of the Federal Housing Finance Agency. While Fannie Mae and Freddie Mac serve two masters, Mr. Lockhart said, "they serve an extremely important mission, and that's what everybody should be focusing on. The key thing going forward is to get them through this market first."