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Wall Street insider Craig Phillips leaves Treasury without Fannie, Freddie reform

Phillips was “one of the few senior folks at Treasury with clout” to negotiate on GSEs

Craig Phillips, Department of the Treasury Secretary Steven Mnuchin’s top housing advisor and the Trump administration’s point person on reform of Fannie Mae and Freddie Mac, has left his position before achieving any major changes at the mortgage giants. 

His LinkedIn profile lists “June 2019” as the end of his Treasury job, without providing a specific date. Bloomberg wrote last week about Phillips’ departure. 

Phillips’ LinkedIn profile now says: “He supported Secretary Mnuchin in the development of policy for comprehensive housing finance reform.” 

What it doesn't say: Oversaw the privatization of Fannie Mae and Freddie Mac. 

Phillips, the ultimate Wall Street insider, was seen by some as the great hope for reforming and releasing the government-sponsored enterprises, or GSEs, from government conservatorship. In a New York Times story last month saying he planned to leave, Phillips said he would return to Wall Street but didn’t have a job lined up yet. His LinkedIn profile doesn’t list a current position.

Federal Housing Finance Agency Director Mark Calabria said earlier this month that he hoped Treasury’s plan to release Fannie Mae and Freddie Mac would come by the end of June. The White House is reviewing a draft of the proposal, Bloomberg reported last week, citing people familiar with the matter. The two mortgage giants guarantee more than half of the outstanding residential mortgages in the U.S., according to Federal Reserve data.

The departure of Phillips “matters” to the prospects of getting Fannie and Freddie back to anything resembling the footing they had before the housing crisis a decade ago, Jaret Seiberg, Managing Director at Cowen Group, said in a note to clients on Friday. 

“Phillips was one of the few senior folks at Treasury with the clout to negotiate on GSE reform,” Seiberg wrote in the note.  “While we believe he finished the Treasury white paper on GSE reform before he left, his departure means that Phillips cannot push the National Economic Council to approve the document. More broadly, Mnuchin has few other senior advisers and he devotes much of his time to trade disputes. The argument is that Mnuchin simply lacks the time and energy needed to advance a housing finance reform plan given the controversy that will surround any plan to recap and release Fannie and Freddie.”

After more than three decades at Wall Street firms, some of it spent as a mortgage trader, Phillips joined the Trump administration in 2017. He left a position as managing director at BlackRock to become Mnuchin’s top housing advisor. Prior to BlackRock, he held managing director positions at both Morgan Stanley and Credit Suisse, according to LinkedIn.

Last year, Phillips said in a speech at the Mortgage Bankers Association’s annual conference in Washington D.C. that the Trump administration wants to end the government takeover of Fannie and Freddie that began in July 2008 during the financial crisis.

“The administration advocates ending the conservatorship of Fannie Mae and Freddie Mac and returning them to private ownership,” Phillips said. “Their charters should be removed from statute and their operations should be overseen by the primary regulator that has the authority to approve additional guarantors to introduce competition into the secondary mortgage market.”

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