As president and CEO of the Federal Home Loan Bank of Chicago, Alex Pollock devised a mortgage financing program that posed a rare competitive challenge to Fannie Mae and Freddie Mac. Now, as a resident fellow at Washington think tank American Enterprise Institute, he’ll have a new platform from which to confront the two mortgage titans.
A free-market proponent, Pollock shares the concern of AEI and other critics who have called for tighter regulation of Fannie and Freddie. At the Chicago home-loan bank for 12 years until his retirement last month, Pollock mounted a guerrilla attack on those government-sponsored enterprises. Under the Mortgage Partnership Finance program -- launched by Pollock’s bank in 1997 and subsequently adopted by eight of the 11 other regional home-loan banks -- the banks fund or purchase mortgages but, unlike Fannie and Freddie, bear the risk on loans they underwrite. The lenders collect risk management fees from the funding institutions rather than pay guarantee fees to a secondary agency. The MPF program has $88 billion in assets -- hardly in the same league as Fannie’s $1 trillion balance sheet, but enough to make a point. “We’re growing faster than Fannie and Freddie, and we have 750 lenders participating,” notes Pollock.
Pollock, who holds master’s degrees from the University of Chicago in philosophy and from Princeton in international relations, calls himself an “on-the-job-trained” economist. “I like to remind people that Adam Smith and David Hume were philosophers,” says the 61-year-old. “Now I see myself in more of a Platonic role, doing work that’s good for the republic.”
