David Axelrod, former senior adviser to President Obama, said repairing housing and a creating fairer mortgage finance system would help ease the anger and frustration the country has with Wall Street as the economy remains stagnant.
“America and the American people need a strong financial system — a need you provide,” he said, making his comments Tuesday at the Mortgage Bankers Association annual conference in Chicago.
The mortgage finance system must be completely transparent, he said. Further, the frenzied packaging of toxic subprime mortgages into securities, as he put it, contributed greatly to the economic downturn and should have been prevented.
And while he doubts such mortgages will return, he called for fair lending standards.
“Loans need to be given on terms borrowers can understand and afford,” he said, adding some borrowers share the blame for agreeing to these problematic mortgages.
One way to help this along, he said, is with the immediate appointment of Richard Cordray as head of the Consumer Financial Protection Bureau.
“There is little energy in real estate reform,” said Jeb Bush, former governor of Florida. “Businesses have got too timid in pushing themselves. People are marching on CEOs in New York. Stand up for yourself,” he advised the crowd, in a reference to Occupy Wall Street, a three-week protest in Manhattan in which protesters promised Tuesday to march outside the homes of wealthy CEOs in New York.
Bush said the mortgage business needs to be more aggressive with promoting solutions to the housing crisis. He also criticized the sheer bulk of the Dodd-Frank financial reform to loud applause.
Axelrod said calls to reduce regulation in order to drum up business should be clearly thought out.
“Simply filing reforms under the guise of protecting the economy is not going to fly,” he said. “The American people demand solutions that, at the core, demand the security they have lost.”
He also said government-sponsored enterprises remain part of the housing finance problem.
“We have to end Fannie and Freddie as we know them,” Axelrod said. “There is no reason Fannie and Freddie should own 300,000 homes.”
Axelrod added that a bulk REO sales might work, if lenders let investors buy the home for rentals. “We need to take advantage of these low interest rates,” he said.