Kai Ryssdal and Bridget Bodnar:
Look, I have no doubt that private capital ought to play the primary role of backing the housing finance system —
Ryssdal: Say that again. Here’s a guy who runs Fannie Mae saying private capital ought to be doing it.
Mayopoulos: Private capital ought to be the primary source of funding for the housing markets in the United States. And in fact, the innovations that we’ve been a big part of since conservatorship was imposed nine years ago have contributed to that. So if you think historically, Fannie Mae has this enormous balance sheet, we’re making all these loans, we have 18 million mortgage loans on our balance sheet. Historically, we would have held all of that credit risk for the life of those assets. Today we don’t do that. We now transfer a very significant part of that credit risk to private capital. In other words, we’re essentially getting reinsurance on what we have. So people have the impression that Fannie and Freddie are continuing to take all this risk. We still take some risk, but we are transferring a very very big part of that risk to private capital.