Dean and Professor Gregory Hess
Featured on Bloomberg Radio

Gregory Hess, vice president for academic affairs, dean of the faculty, and the James G. Boswell Professor of Economics and George R. Roberts Fellow at CMC, was featured in a live interview on Wednesday, Feb. 3 on Bloomberg Radio's The Hays Advantage, hosted by Kathleen Hays.
Hess was invited to respond to a segment on the housing market and Fannie Mae/Freddie Mac, as the Federal National Mortgage Association prepares to end its purchase of the securities from these Government Sponsored Enterprises (GSE's).
Hess'observations on Tuesday's broadcast included his thoughts that:
The Current political impasse is like closing your eyes and hoping the problem goes away which is exactly how we got into this problem in the first place;
In placing Fannie Mae and Freddie Mac into conservatorship, the U.S. government, in effect, nationalized these GSE's. As such, the government should include the balance sheets of Fannie and Freddie into the unified federal budget, and raise the deficit amount in accordance with the Congressional Budget Office's (CBO's) recommendations in their August Budget Update (approximately $400 billion over 10 years);
The Federal Reserve's policy of purchasing GSE securities has co-mingled credit policy and monetary policy in such a way as to harm the Federal Reserve's institutional independence;
It also has created one of the largest historical asset risk shifts, from the private sector to the central bank's balance sheet.
The Federal Reserve should request that the U.S. government exchange its GSE holdings for Treasury securities. This would allow the Fed to avoid credit risk management in its exit policy; it would also allow the Fed to conduct its new interest on reserves policy with fewer complications.