Preston Martin, Helped Start Freddie Mac, Passes

SAN FRANCISCO – Preston Martin, the former Fed Vice Chair and S&L regulator who created Freddie Mac, died last week at 83. It was Martin, the former California S&L regulator under then-Gov. Ronald Reagon, who oversaw the creation of Freddie Mac in 1970 after he went to Washington to head the Federal Home Loan Bank Board, then the S&L regulator. As state regulator during the 1970's and 1980's in California, the vanguard of the S&L industry, Martin foresaw the eventual fatal squeeze on many S&Ls by interest-rate compression. Martin left the S&L regulator years before the S&L crisis and founded PMI Mortgage Insurance, now the largest private sector private mortgage insurer. He was called back to Washington by to serve as a Governor on the Federal Reserve Board. As Reagan's first appointment to the Fed and its vice chairman from 1982 to 1986, he led a challenge to then-Chairman Paul Volcker's tight-money policy -- intended to prevent a return to the inflationary late '70s but which often ran counter to the Reagan administration's efforts to spur economic growth. Those clashes contributed to Mr. Martin's resignation as vice chairman -- ushering in the Alan Greenspan era as Fed chairman when Mr. Volcker decided not to seek another term as chairman in 1987.