WASHINGTON - When he was first approached to be chairman of the Federal Housing Finance Board, former Rep. Bruce Morrison knew as much about the obscure agency as most people: next to nothing.
But the Connecticut Democrat had plenty of time to prepare for the job because his nomination was blocked by Republicans for more than a year.
Mr. Morrison, 55, also spent the time reaquainting himself with former colleagues on the House Banking Committee. Those contacts on Capitol Hill have come in handy as Congress prepares to revamp the mission, capital, and membership requirements of the Federal Home Loan Bank System.
"There is a collegiality and a deference that is paid that at least gets you a good hearing," he said.
Mr. Morrison's political savvy played a significant role in knocking down one of the biggest hurdles blocking modernization of the system: how to divvy up the annual $300 million cost of Resolution Funding Corp., or Refcorp, bonds among the 12 district banks.
Mr. Morrison worked closely with Rep. Richard Baker, R-La., and Rep. Paul Kanjorski, D-Pa., to hammer out a compromise that replaced the $300 million figure with a percentage of each bank's net income.
Though this was an important victory, Mr. Morrison now faces a number of other challenges in the debate over how the system should be overhauled. One of the most important issues will be refocusing the banks on their primary goal of providing funding to housing lenders.
Last month, House Banking Committee Chairman Jim Leach, R-Iowa, blasted the banks for trying to boost profits rather than promote housing.
"How is that in the public interest?" the Iowa Republican asked. Rep. Leach accused the Home Loan Bank System of being "in search of a rationalization for its existence."
But Mr. Morrison defends the district banks, saying they have no choice. To raise the $300 million needed to satisfy Refcorp, the banks are investing the money they get from stockholders rather than lending it out.
"Refcorp drives an earnings requirement that cannot be met by the advance business," Mr. Morrison said. "If they didn't make these investments, they wouldn't be able to pay the Refcorp."
Mr. Morrison said Congress must lift the Refcorp burden if it wants the banks to advance more money to mortgage lenders.
While much of the heavy lifting involved with overhauling the system can be accomplished only through legislation, Mr. Morrison hasn't wasted much time taking advantage of the fact that the finance board finally has the power to approve regulations again.
When Mr. Morrison and lobbyist J. Timothy O'Neill were confirmed in May, the finance board had a quorum for the first time since December 1993.
Through regulation, Mr. Morrison is working to farm out much of the system's management to the 12 district banks. For example, the finance board this month gave the banks the power to approve applications for membership from banks and thrifts.
However, there are some changes to the system that Mr. Morrison said he simply doesn't want to see.
One such modification, suggested recently by Alex J. Pollock, president of the Chicago Federal Home Loan Bank, would turn the system into a single private holding company.
"Privatizing the system just doesn't fit with the general framework of the system," Mr. Morrison said. "This is a cooperative institution, owned by its members."
Mergers of home loan banks such as the rumored combination of the Dallas and San Francisco banks doesn't sit well with Mr. Morrison, either.
"If consolidation is a more efficient way to serve the members, then the members would be clamoring for it," Mr. Morrison said. "But no mergers are going to happen in the short run."
Maintaining 12 regional banks allows the system to be more responsive to community lending needs, Mr. Morrison added. Congress should leave consolidation up to market forces and the members of each system bank, he said.
So far, Mr. Morrison's leadership, both in the legislative arena and on the regulatory front, has won admirers among the 12 district bank presidents.
"He's intelligent, articulate, and attacks the substance of the issues in a forthright manner," Chicago's Mr. Pollock said.
Yet some of the changes Mr. Morrison has made at the agency have been criticized.
For example, during the first month after he was sworn in, Mr. Morrison moved the other board members - Mr. O'Neill and Lawrence U. Costiglio - to the vacant sixth floor from the second floor where Mr. Morrison's office are located.
"There was definitely some tension when he banished O'Neill and Costiglio to the sixth floor," said a source close to the finance board who spoke on the condition of anonymity.
Mr. Morrison also fired Patrick Pizzella, the agency's director of administration since 1990, and demoted Beth Climo, the well-regarded general counsel.
However, some simply describe Mr. Morrison as a demanding manager.
"Working with Bruce is a challenge," says Paul Drolet, the new general counsel at the finance board. "He challenges people to perform at their very best."
Mr. Drolet and Mr. Morrison are no strangers to challenges.
The two worked together as legal aid lawyers in the late 1970s, and Mr. Drolet was a staffer for Mr. Morrison when he was a lawmaker. Mr. Drolet also worked closely with Mr. Morrison during his 1982 congressional campaign, which he won by a slim eight-tenths of 1% of the vote.
In his 1984 reelection run, Mr. Morrison won with a 5% margin, even though Republican president-to-be Ronald Reagan took 59% of the vote Mr. Morrison's district.
"He's always been willing to take on rather daunting odds," Mr. Drolet says.
Before Mr. Morrison's quest for public office, he spent 10 years as a legal aid lawyer in Connecticut, working on community development and housing issues. Because of that experience, Mr. Morrison says he was naturally drawn to the House Banking Committee where he served on the housing panel.
However, Mr. Morrison's early goals of public service had more to do with rocketships than with affordable housing or serving in Congress.
Mr. Morrison says the advent of space travel in the late 1950s made becoming a scientist a natural choice for him. He holds a bachelor's degree in chemistry from the Massachusetts Institute of Technology and a master's in organic chemistry from the University of Illinois.
"What the country needed in 1957 was scientists, and I was good at science," Mr. Morrison says. His excelled at MIT, a school that was somewhat insulated from the social upheavals starting to spread across the nation. But when Mr. Morrison arrived at Illinois, he was distracted by the events of the '60s.
"When I had a choice of going to the lab or the demonstration, I'd always go to the demonstration," says Mr. Morrison. "I found out I like organizing people better than molecules."
Mr. Morrison scrapped his pursuit of a PhD in chemistry and settled for a master's degree. Then he headed off to Yale to get a law degree.
"I'm not sorry I got the intellectual grounding I did, but I'm more happy being a political activist than a chemical activist," he says.
Looking to the future, Mr. Morrison says the Federal Home Loan Bank System simply needs a chance to fly without some of the constraints placed upon it by Congress, such as the Refcorp obligation.
"The Home Loan Bank System is in a gilded cage," Mr. Morrison said. "It is assured of its existence because of the $300 million it will bring in for the next 35 years" when the bonds mature.
"But it is not necessarily a good thing to ensure any institution of a perpetual life not sustained by its performance."