WEBVTT - Bill Pulte Talks Fed Subpoena, Housing 0:00:02.560 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.760 --> 0:00:09.840 Turning back to the Federal Reserve, sources telling us our 0:00:09.880 --> 0:00:12.960 colleagues here at Bloomberg that a driving force behind the 0:00:13.080 --> 0:00:16.400 DOJ's decision to subpoena the Central Bank is the Federal 0:00:16.440 --> 0:00:19.960 Housing Finance Agency Director Bill Pulty. Director Pulty has been 0:00:19.960 --> 0:00:22.520 busy over the last week, some purchases of MBS and 0:00:22.600 --> 0:00:25.000 Focus as well. Director Pulty, Welcome to the program, Sir. 0:00:25.280 --> 0:00:27.240 You are cited in our story this morning. Just wanted 0:00:27.280 --> 0:00:29.720 to give the opportunity to respond to it. Bill, What 0:00:29.840 --> 0:00:32.159 was your role in the developments over the weekend. 0:00:33.440 --> 0:00:35.960 The DOJ's outside of my purview. This is out of 0:00:36.000 --> 0:00:38.000 my purview. I don't know anything about it, and I 0:00:38.040 --> 0:00:39.320 would refer you to the DOJ. 0:00:39.840 --> 0:00:41.880 Bill, you haven't been shy of sharing your thoughts on 0:00:41.920 --> 0:00:44.720 the Federal Reserve before, particularly over the last twelve months. 0:00:44.760 --> 0:00:48.680 You thought that the chairman would ultimately resign. He's standing firm. 0:00:48.720 --> 0:00:51.040 Do you think this push against the Federal Reserve is 0:00:51.040 --> 0:00:54.279 actually leading to unintended consequences and leading this fed to 0:00:54.320 --> 0:00:54.720 dig in. 0:00:55.800 --> 0:00:58.920 My main focus, John has been on reducing mortgage rates 0:00:58.960 --> 0:01:01.000 to the extent that we can do it. And increasing 0:01:01.000 --> 0:01:04.720 housing affordability. President Trump announced a huge thing last week 0:01:04.920 --> 0:01:07.560 when he decided that he was going to ban institutions 0:01:07.720 --> 0:01:11.400 from buying homes. Basically, the concept is that people should 0:01:11.400 --> 0:01:13.920 be living in homes, not corporations. You know, we have 0:01:13.959 --> 0:01:16.680 a supply problem in this country, and obviously we're working 0:01:16.760 --> 0:01:19.200 on the demand side of things, because in some cases, 0:01:19.319 --> 0:01:22.080 affordability has gotten so tough that people don't even want 0:01:22.120 --> 0:01:24.039 to buy a home because of what Joe Biden did, 0:01:24.240 --> 0:01:26.840 and so we're reversing that. That's what we're focused on. 0:01:27.000 --> 0:01:28.800 We had a huge one to two punch last week. 0:01:28.840 --> 0:01:32.119 You saw mortgage rates moved twenty five bases points lower 0:01:32.319 --> 0:01:34.520 on the news that Fanny and Freddie have started to 0:01:34.680 --> 0:01:38.920 undergo a two hundred billion dollar mortgage bond buy. And 0:01:39.400 --> 0:01:41.080 I think you're going to see some very exciting things 0:01:41.120 --> 0:01:43.880 come out of Davos with regard to the President on housing. 0:01:44.080 --> 0:01:45.160 In a couple in a week. 0:01:45.160 --> 0:01:47.720 Grector POLDI, you were with the President this weekend, I believe, 0:01:47.760 --> 0:01:50.400 traveling with him on Air Force one from Washington to 0:01:50.520 --> 0:01:52.880 Palm Beach. Did you talk about the Federal Reserve with 0:01:52.920 --> 0:01:53.640 him this weekend? 0:01:54.520 --> 0:01:56.920 Obviously I would never talk about anything that the President 0:01:57.080 --> 0:01:59.120 and I talk about. I would say this that the 0:01:59.160 --> 0:02:03.960 President is late focused on housing affordability and reversing what 0:02:04.000 --> 0:02:05.720 has happened these last four years. 0:02:06.040 --> 0:02:07.760 You look at the average mortgage payment. 0:02:07.600 --> 0:02:10.720 Under Joe Biden, it's skyrocketed compared to what it was 0:02:10.960 --> 0:02:14.000 under President Trump's first term. We are focused on bringing 0:02:14.040 --> 0:02:17.639 down not only the mortgage rates, but also the day 0:02:17.680 --> 0:02:21.040 to day cost in upkeeping homes, which has to do 0:02:21.160 --> 0:02:25.720 with you know, whether it be your ongoing expenses, mortgage insurance, etc. 0:02:26.000 --> 0:02:27.920 There are so many pieces to the cost. 0:02:27.720 --> 0:02:31.079 Puzzle that at the FHFA US Federal Housing we are 0:02:31.200 --> 0:02:34.520 working to reduce the cost bird and that Americans have. 0:02:35.040 --> 0:02:37.079 I know that you've seen the report from our colleagues. 0:02:37.120 --> 0:02:40.480 I've also got calls last night about the subpoena handed 0:02:40.520 --> 0:02:43.120 to the FED and was told that you were part 0:02:43.120 --> 0:02:45.400 of it, pulling together a report that then went to 0:02:45.440 --> 0:02:48.240 the DOJ. I just wanted to go since from you. 0:02:49.000 --> 0:02:50.760 Did the President know this was coming? 0:02:51.040 --> 0:02:53.440 The Treasury Secretary know this was coming? Have you had 0:02:53.480 --> 0:02:56.440 any of these conversations again. 0:02:56.200 --> 0:02:58.840 On that matter, I'd refer you to the Department of Justice. 0:02:59.000 --> 0:03:01.240 Okay, well, we'll wait to your the Department of Justice. 0:03:01.320 --> 0:03:03.400 When it goes back to the mortgage backed securities that 0:03:03.440 --> 0:03:07.440 you have been talking about, you already been purchasing about 0:03:07.560 --> 0:03:10.040 north of two hundred and thirty billion dollars of them 0:03:10.120 --> 0:03:13.120 last year. There is a cap. Do you expect to 0:03:13.160 --> 0:03:14.480 reach that cap this year? 0:03:15.360 --> 0:03:16.800 I think all options are on the table. 0:03:16.840 --> 0:03:19.280 President Trump is a president who keeps all options on 0:03:19.320 --> 0:03:22.400 the table. We announced this historic two hundred billion dollars 0:03:22.400 --> 0:03:26.360 buyback of mortgage bonds. This is a huge deal, and 0:03:26.520 --> 0:03:28.359 you know, we'll keep all options on the table. Look, 0:03:28.360 --> 0:03:30.760 we're doing our part of Fanny and Freddy. Most presidents 0:03:30.760 --> 0:03:33.760 didn't even know Fanny and Freddie existed. Obviously, your community 0:03:33.760 --> 0:03:35.680 in Bloomberg and all of us in the private sector 0:03:35.880 --> 0:03:37.920 we know the importance of Fanny and Freddy. But for 0:03:37.960 --> 0:03:41.600 the average day American, they don't understand because the presidents. 0:03:41.080 --> 0:03:42.680 Haven't made it a priority. 0:03:42.960 --> 0:03:46.760 Average Americans haven't understood that presidents had this authority until 0:03:46.760 --> 0:03:50.800 President Trump found this authority, which is basically to utilize 0:03:50.800 --> 0:03:53.800 these companies to be companies. Imagine that get people to 0:03:53.840 --> 0:03:55.760 show up back to work. You know, we had sixteen 0:03:55.800 --> 0:03:58.880 thousand people. We have sixteen thousand people at the two companies. 0:03:59.000 --> 0:04:01.240 When I showed up on the scene and President Trump 0:04:01.240 --> 0:04:03.760 came into office, they were all working from home. We'd 0:04:03.800 --> 0:04:07.200 go to these big buildings, air conditioning, spewing everywhere, spending 0:04:07.200 --> 0:04:09.000 fifty million dollars a year on leases. 0:04:09.160 --> 0:04:11.560 Nobody was in these buildings. So we have turned around 0:04:11.600 --> 0:04:12.320 Fanny and Freddy. 0:04:12.840 --> 0:04:14.960 They try to get President Trump to sell the companies, 0:04:14.960 --> 0:04:18.040 for the two companies together for one hundred billion dollars. 0:04:18.279 --> 0:04:20.560 I think the valuation of the companies is anywhere between 0:04:20.600 --> 0:04:24.039 five hundred billion and some say up to a trillion dollars. 0:04:24.480 --> 0:04:25.960 A lot of people are hoping that there is some 0:04:25.960 --> 0:04:28.720 sort of initial public offering o those companies. Are you 0:04:28.760 --> 0:04:31.080 preparing them for that at some point later this year 0:04:31.160 --> 0:04:31.719 or next year. 0:04:32.520 --> 0:04:34.760 We are fully prepared to do whatever the President would 0:04:34.760 --> 0:04:35.880 like us to do on that matter. 0:04:36.400 --> 0:04:37.760 We have been getting prepared. 0:04:37.800 --> 0:04:40.520 We are prepared, just like we are with the institutional 0:04:40.520 --> 0:04:43.279 home buying ban, just like we are with home builders. 0:04:43.560 --> 0:04:45.800 We have a full set of things to do, and 0:04:45.839 --> 0:04:48.000 once the President decides what to do, we go about 0:04:48.040 --> 0:04:48.800 executing them. 0:04:48.880 --> 0:04:50.920 Director Pulti, a lot of people on Wall Street, we're 0:04:50.920 --> 0:04:54.200 pretty excited actually about your purchases of MBS some mortgage 0:04:54.240 --> 0:04:56.479 backed securities and saying that this shoulds like it should 0:04:56.520 --> 0:04:59.560 be something that would bring down spreads. They were less 0:04:59.560 --> 0:05:02.080 excited about the idea of preventing institutions from buying single 0:05:02.120 --> 0:05:06.039 family homes, saying that it really do wasn't based in economics, 0:05:06.080 --> 0:05:09.440 considering that in certain regions in the country there's actually 0:05:09.480 --> 0:05:12.320 a glut of houses that this is not because of 0:05:12.400 --> 0:05:16.400 institutions that account for a relatively small portion of overall buyers. 0:05:16.760 --> 0:05:18.000 What do you say back. 0:05:17.880 --> 0:05:21.279 About the economic fundamentals behind this type of proposal and 0:05:21.320 --> 0:05:23.200 why it would bring down fordability and. 0:05:23.800 --> 0:05:25.920 Increase the supply of houses. 0:05:25.520 --> 0:05:27.359 Which is the ultimate issue that a lot of people. 0:05:27.240 --> 0:05:30.360 Say, Well, it just makes economic sense. You talk about supply, 0:05:30.480 --> 0:05:31.920 I mean, you kind of gave me a narrative there, 0:05:31.920 --> 0:05:33.839 But if you look at the economic supply of things, 0:05:34.080 --> 0:05:37.120 the fact is you have you know, big corporations buying 0:05:37.240 --> 0:05:40.279 using long term paper, using their balance sheets to scoop 0:05:40.400 --> 0:05:43.040 up homes in a supply shortage as we call it, 0:05:43.440 --> 0:05:46.040 and they're in some cases buying these homes for twenty 0:05:46.120 --> 0:05:49.800 thirty forty percent less than Americans are doing it. You know, 0:05:49.839 --> 0:05:53.000 President Trump was elected with a very very popular mandate. 0:05:53.240 --> 0:05:55.000 You know, sometimes people don't remember because it was a 0:05:55.040 --> 0:05:57.279 year ago, but it was a landslide victory, and he 0:05:57.360 --> 0:05:59.840 was given a mandate to reverse these last four years 0:05:59.839 --> 0:06:03.240 of crazy inflation that happened under Joe Biden. And so 0:06:03.560 --> 0:06:05.760 I think it's very appropriate that we're doing everything that 0:06:05.800 --> 0:06:08.000 we can to reduce housing costs, and we're going to 0:06:08.040 --> 0:06:10.400 keep doing it, whether it's the institutional ban on buying, 0:06:10.640 --> 0:06:13.120 looking at all of the things that go into a 0:06:13.120 --> 0:06:16.080 home and owning a home. Americans need to own homes 0:06:16.080 --> 0:06:18.279 in this country, and we're committed to restoring that. 0:06:18.600 --> 0:06:20.800 Director Poulty, did you study this in terms of this 0:06:20.880 --> 0:06:24.960 apply demand dynamic and whether it actually would reduce the 0:06:25.000 --> 0:06:28.440 cost of houses for individuals? Should there be a ban 0:06:28.640 --> 0:06:32.599 on single family housing, on institutions buying single family homes? 0:06:32.600 --> 0:06:34.599 Because a lot of people in the markets who have 0:06:34.720 --> 0:06:37.760 supported President Trump's policies and thinking of Neil data in particular, 0:06:37.839 --> 0:06:40.039 came out and said this is faulty economics. 0:06:40.880 --> 0:06:42.720 Well, of course I've studied it. I've studied it my 0:06:42.760 --> 0:06:44.799 whole life. I mean, I grew up in the housing business. 0:06:45.120 --> 0:06:46.560 I grew up in the building business. I was on 0:06:46.600 --> 0:06:49.080 the board of Poulty homes for four years. I understand 0:06:49.080 --> 0:06:52.080 what institutional buying does. It's very powerful. I understand why 0:06:52.160 --> 0:06:54.240 Wall Street might not like it. But we serve the 0:06:54.240 --> 0:06:56.880 American people. We don't serve Wall Street. And President Trump 0:06:56.920 --> 0:06:59.159 is laser focused on doing the right thing, no matter 0:06:59.160 --> 0:07:01.920 who it affects in terms of their pocketbooks. At the 0:07:01.960 --> 0:07:05.760 Wall Street level, he has focused, laser focused on action, 0:07:05.960 --> 0:07:08.440 not talk like so many of these Democrats, like Elizabeth Warren. 0:07:08.600 --> 0:07:11.360 You know, for years she would talk about all institutional buying. 0:07:11.400 --> 0:07:13.760 She didn't do anything. Joe Biden didn't do anything about it. 0:07:13.920 --> 0:07:15.720 President Trump is doing something about it. 0:07:16.080 --> 0:07:19.360 Elizabeth Warren wanted to see an effort like this. Do 0:07:19.400 --> 0:07:21.640 you think the President is taking cues from some of 0:07:21.680 --> 0:07:25.680 the more populist wings of the Democratic Party. 0:07:26.480 --> 0:07:28.080 No, I think Elizabeth Warren is going to have to 0:07:28.120 --> 0:07:30.280 take cues from us or she's going to continue to 0:07:30.320 --> 0:07:32.640 look like a fraud because she says all these things 0:07:32.640 --> 0:07:33.880 and then she does nothing about it. 0:07:33.960 --> 0:07:36.120 You know, President Trump, he gets things done. 0:07:36.240 --> 0:07:38.880 He said, look, we're going to ban institutional buying, and 0:07:38.880 --> 0:07:41.520 then we're going about both on an executive action front 0:07:41.680 --> 0:07:44.080 as well as codifying it in legislation. I mean the 0:07:44.120 --> 0:07:46.400 amount of momentum that we've had at the legislative level 0:07:46.440 --> 0:07:49.360 from you know, different Congress people. I was at the 0:07:49.360 --> 0:07:51.120 Financial Services Committee the other night. 0:07:51.240 --> 0:07:52.560 People were ecstatic about this. 0:07:52.920 --> 0:07:55.720 I also talked with multiple US Senators, many who are 0:07:55.800 --> 0:07:59.400 vying to sponsor the legislation. So this is a very 0:07:59.400 --> 0:08:01.560 big deal and I think it's going to happen. 0:08:01.840 --> 0:08:04.440 Is the President going to declare a housing emergency in 0:08:04.480 --> 0:08:05.320 the United States. 0:08:06.200 --> 0:08:08.520 That's entirely up to the President. I can tell you this. 0:08:08.600 --> 0:08:11.240 He is treating it with great urgency. He understands real 0:08:11.320 --> 0:08:13.960 estate very well. He understands the importance of keeping home 0:08:14.040 --> 0:08:16.800 prices up. He understands this issue very well. And we're 0:08:16.800 --> 0:08:20.840 working very well together, Secretary Turner, Secretary Bessett, Secretary Lutnik, 0:08:21.080 --> 0:08:24.440 the Vice President, Susie Wiles. This is an all hands effort, 0:08:24.640 --> 0:08:26.280 James Blair in the White House. I mean, this is 0:08:26.320 --> 0:08:29.160 an all hands effort to reduce the cost of home 0:08:29.200 --> 0:08:33.000 ownership and get people, not corporations, back in homes. 0:08:33.160 --> 0:08:34.880 We look forward to saying what comes in that effort. 0:08:34.920 --> 0:08:36.800 I right to Poty, we appreciate your time this morning, 0:08:36.840 --> 0:08:39.080 said thank you very much. The Federal Housing time right 0:08:39.160 --> 0:08:42.720 to Bill POLTI are the federals kind of, but much 0:08:42.720 --> 0:08:45.240 more on what's going to happen with housing in this country.