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COVER STORY Thirty-three staffers from a range of disciplines help the chief economist chart macroeconomic forecasts with research from across the company, connecting the dots between jobs numbers, debt crises, and foreclosures. The reports give Fannie Mae heft in mainstream economics and transform state- ments from Duncan into quasi- fireside chats for a watchful public. The economist credits style over substance. "What business leaders really need to know is what the trend is and what the momentum is behind the trend, there's one way I've tried to make a difference, it's by using language that people can understand, not the jargon of my profession." And where does he think " he says. "If to the $25 billion servicer settle- ment. But don't let first impres- sions fool you. The former North Carolina banking commissioner and onetime FHFA nominee is out to prove people wrong about justice and accountability in the bailout era. Seven months after state and the markets will trend next? According to Duncan, the United States faces a "mild recession," given wrangling by politicians over the fiscal cliff. He assigns high odds to the probability of a "Grexit"—talking-head speak for Greece's departure from the European Union—which would likely fall hard on housing, despite an era of all-time affordability. But you may want to consult his mother first. federal officials unveiled the settlement, Smith remains busy with his Office of Mortgage Settlement Oversight. In June, he selected the primary law firm that will serve as his "eyes and ears" with the five servicers. In August, he added to his still- growing team by picking up five secondary law firms—just to assist the first one. His philosophy about servicer industry needs national stan- dards in the form of new rules, Smith answered yes, "ultimately . . . and we ought to." Asked whether the servicing tive-leaning American Enterprise Institute, Wallison regularly convenes events and lectures to rail against government overreach in the U.S. housing market. He ar- gues that Dodd-Frank makes "Too Big to Fail" even bigger by favor- ing banks over others, dismisses the idea that abolishing govern- ment mortgage guarantees could wreck homeownership rates, and looks forward to a future sans Fannie Mae and Freddie Mac. On occasion, the former And he hasn't stopped since. As a fellow with the conserva- ment monitor means business. Tough if the banks don't like it. And his attitude toward bank compliance will likely change the way law firms and bank regulators see their roles in the financial services world. compliance? "If [banks] violate something, you give the banks the opportunity to make it right," he told us in an earlier interview. "If they can't cure or won't cure, then you need to consider enforcement actions and penalties," he said, adding that he'll seek "plenty of backup from [state attorneys gen- eral]" and "injunctive relief from the courts" when confronted with non-compliance. In a few words: The settle- 5INDUSTRY POWERHOUSE PETER WALLISON about Peter Wallison, ask someone who remembers when legwarmers were in vogue. The former White House general counsel went head-to-head with investigators during the Iran-Contra Affair. Not one to recede into history's pages, he later took up a role as member of the Financial Crisis Inquiry Commission in 2009, writing the lone dissent against majority claims about high-stakes mischief on Wall Street. If you don't know too much White House lawyer even trades barbs with Rep. Barney Frank (D-Massachusetts). Last year their spat landed in the pages of The Atlantic when Frank called Wallison an "extremist," meriting verbal volleys in response. Asked about Frank and his decision to retire, Wallison told us in a recent interview that he felt "very happy" about it. "What he has done recently with the Dodd-Frank Act has been very destructive," Wallison said. "For that reason, I am happy to see that he will bow out." Not that all politicians find fault with the former Reagan administration official. According to Wallison, the Romney cam- paign adopted his dissent to the commission. "All the Republicans have basically accepted my nar- rative," he said. Thought leader, indeed. 4INDUSTRY POWERHOUSE JOSEPH A. SMITH JR. hint of Southern drawl, Joseph A. Smith Jr. offers a grandfather- ly overtone to the compliance process for the five banks party With silvery hair and just a "If [banks] violate something, you give the banks the opportunity to make it right. If they can't cure or won't cure, then you need to consider enforcement actions and penalties." — Joseph A. Smith Jr. THE M REPORT | 25