Franklin Raines
Franklin Raines
Franklin Delano "Frank" Rainesis an American business executive. He is the former chairman and chief executive officer of the Federal National Mortgage Association, commonly known as Fannie Mae, who served as White House budget director under President Bill Clinton. His role leading Fannie Mae has come under scrutiny. He has been called one of the "25 People to Blame for the Financial Crisis" according to Time magazine...
NationalityAmerican
ProfessionBusinessman
Date of Birth14 January 1949
CountryUnited States of America
Well, we're just now seeing the reductions in mortgage rates. The mortgage rates are based on the ten-year rate and the Fed controls the overnight or the shorter rates.
And so Fannie Mae produces very strong results for investors in - when interest rates are high and when interest rates are low, in recession and during booms.
And so the danger for the housing industry is if we see interest rates rise.
And so we have to be careful with looking at additional stimulus that we don't provoke an increase in the bond rate and then offset a lot of the stimulus we've already got.
I think if you go beyond a year - if this continues into the system in the out years, I think there is a risk and that - that we could have a negative reaction in the bond market and that will offset the good that was attempted to be done.
Right now the long-term investors are telling us that they're not as concerned about inflation and so we're seeing these rates now move into the marketplace and out to the street - rates that individuals can get.
So from the housing standpoint, steady as you go, I think, would be the best medicine.
If there's a severe recession, the automatic stabilizers will come into effect, and we will still try to reduce the structural deficit, but we will not try to keep cutting the budget so that we keep worsening a severe recession.
They flooded liquidity in the marketplace but the mortgage rate is based much more on expectations of inflation. So if the average investor believes that there is inflation coming, they'll move that rate up.
Well, I think as long as people are talking about stimulus, I think the Fed will be thinking about cutting rates because monetary policy is the better way to go because you can turn it on and turn it off.
Well, I think the best form would be to put money directly in the pockets of consumers.
Well, now, and there's - for every dollar the federal government spends, there's real people on the other side, and so when we talk about reductions that are going to affect providers, that's going to affect hospitals and doctors and others.
Right now we think that rates will stay low, that you'll be able to get a mortgage below seven percent and that's kicked off a refinance boom that's going to put more money in the pockets of consumers.
That is - the reason for that is that home prices are only going to go up. Now, they've never gone down nationwide in our - since we've been keeping track of this.