Election Year Adds Political Twist at FHFB
Sloan, Steven, American Banker
WASHINGTON -- As the race for the White House intensifies, so too does the politicking at the Federal Housing Finance Board, whose two Democratic directors are jockeying to become its next chairman.
Geoff Bacino, one of the Finance Board's four directors, has been the most overt in his political maneuvering. In letters, editorials, and speeches, he has opposed legislation reforming the government-sponsored enterprises - a position at odds with that of the agency's current chairman, Ronald Rosenfeld.
In his 18 months at the board Mr. Bacino, 45, has used his position to influence debates ranging from retained earnings to Federal Home Loan bank mergers.
His fellow Democratic director, Allan Mendelowitz, 64, is seen as more low-key, opting for long, private policy discussions with agency insiders instead of finding the political spotlight. Still, many observers say they have no doubt he is also eyeing the chairman's gavel.
"They are positioned to be the next chairman," said Alfred DelliBovi, the president and chief executive of the Federal Home Loan Bank of New York. "One of them will clearly be the next chairman if a Democrat is elected."
Who would emerge as the chairman may depend in part on which of the two is more closely aligned with the party's presidential nominee; currently the race is being dominated by Sens. Barack Obama, D-Ill., and Hillary Rodham Clinton, D-N.Y.
On paper, at least, Mr. Bacino has more affiliations with those candidates, as well as to the party's leadership in Congress. He met Senate Majority Leader Harry Reid, D-Nev., through a personal acquaintance years ago and was appointed by President Bill Clinton in 2000 to the board of the National Credit Union Administration.
Since 1999, Mr. Bacino has donated large sums to Democratic candidates, including $5,100 to Sen. Clinton's previous campaigns, according to the Federal Election Commission.
Alternatively, if Sen. Obama wins the nomination, Mr. Bacino could cite the Illinois roots he shares with the senator.
Mr. Mendelowitz has connections both to the Clinton administration and Capitol Hill. His former assistant, Chuck Jones, worked in President Clinton's personnel office and is now an aide to Sen. Tom Carper, D-Del., a member of the Senate Banking Committee. According to the FEC, Mr. Mendelowitz has donated $5,250 to Democratic causes and candidates since 2000, including $250 to Sen. Clinton.
Under its next chairman, the Finance Board is likely to decide whether to allow the Home Loan Bank System's first merger in 62 years. (The Home Loan banks of Chicago and Dallas are negotiating a tie-up.)
The agency also must manage a record volume of business; the credit crunch has sent institutions scrambling to the Home Loan banks in droves searching for cheap liquidity. In November the system said its advances had grown 28.6% from yearend, to $824 billion.
Observers said a smooth transition at the helm is crucial.
"With whatever leadership you've got at the Federal Housing Finance Board, what the market would be looking for and hope to see is some consistency over time in the core regulatory principles applied at the banks," said Jim Vogel, the head of fixed-income research at First Horizon National Corp. …