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When Craig S. Phillips, a seasoned Mortgage Trader on Wall Street, agreed in 2017 to join the Treasury Department as Senior Assistant to Secretary Steven Mnuchin, his mandate was to review how real estate loans Americans are guaranteed and negotiated by the federal government. .
More than two years later, while this ambitious program is far from complete, Mr. Phillips returns to the private sector.
Phillips told Treasury Department employees Thursday that he planned to leave the government next month, according to a person close to the conversation who would not have been allowed to speak in public. He informed his colleagues that he was planning to return to Wall Street but that he had not yet aligned work.
A spokesman for the Ministry of Finance has no immediate comment.
During his two and a half years at the Treasury, Phillips helped develop a plan to ease the financial regulations imposed after the 2008 financial crisis.
His departure adds uncertainty to the fate of Fannie Mae and Freddie Mac, the two major mortgage finance companies that have been under government control since the crisis. Companies offer collateral on the majority of home loans in the United States, which allows banks to offer mortgage customers at affordable interest rates much easier and safer.
"It's of utmost importance," said David Stevens, former managing director of the Mortgage Bankers Association. "He knows these things from top to bottom and he is in a strong position."
Prominent investors had bet that Phillips, who had spent 12 years at Morgan Stanley and led the investment bank's mortgage trading desk ahead of the 2008 financial crisis, would fortify Fannie and Freddie with money from taxpayers, before handing them to private investors fundamental changes in corporate structures.
Investors took the shares of Fannie and Freddie by anticipation. One of the big bettors was the Pershing Square Capital Management hedge fund, led by William A. Ackman, who had taken a position on equities in 2013. The fund held 116 million Fannie shares at the end of the month March, according to the securities filing documents compiled. by FactSet, a data provider. This position would currently represent more than $ 300 million.
The shares of Fannie and Freddie have more than doubled this year, even though they are still well below their pre-crisis levels.
But the redesign of Fannie and Freddie turned out to be a complicated and politically thorny business. The Obama administration has tried and failed. Congress is deeply divided on this issue, which could affect the lives and finances of tens of millions of Americans.
Trump administration officials have attempted this year to revive restructuring efforts, but with limited results.
Mr. Phillips and other Treasury officials met with the largest US banks to determine the best way to raise capital for Fannie and Freddie – a precondition for the release of government control – as well as the restructuring of the government. housing finance system two people who attended the meetings.
Mark Calabria, the recently confirmed head of the Federal Housing Finance Agency, who oversees Fannie and Freddie, said in a speech this week that he had the power to free private sector companies. But, he added, Congress should take action to make such a plan viable by empowering the agency to better regulate privatized businesses.
Mr. Phillips is not the only confidant of Mr. Mnuchin on his release. Deputy Secretary of the Treasury International Markets, Heath Tarbert, has been appointed chairman of the Commodity Futures Trading Commission and will step down assuming he is confirmed by the Senate. And Eli Miller, who was Mr. Mnuchin's chief of staff, left in April to join private equity firm Blackstone.
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