Ex-Fannie Mae Boss Speaks - And How!

David Maxwell, the former chairman of the Federal National Mortgage Association, is highly skeptical of the Bush administration's banking reform plan.

In fact, he is skeptical about the Bush administration, period. He accuses the President of ignoring the nation's most pressing problems, especially the shortage of affordable housing.

Mr. Maxwell is so upset that he has converted from Republican to Democrat.

"I haven't changed; the GOP has," Mr. Maxwell said. "I'm really a Rockefeller Republican," a reference to the party's once prominent liberal wing that was epitomized by Nelson A. Rockefeller.

Mr. Maxwell, 59, retired from Fannie Mae last January with plaudits for transforming a shaky government-chartered corporation into a mortgage financing powerhouse.

He also walked away with several million dollars. Fannie Mae said he collected $7.5 million in salary, bonuses, and stock options in 1990 and took a lump-sum retirement distribution of $19.6 million.

When he started with the company, in 1981, its market value was $550 million. When he left, it was worth $10.5 billion, up 1,900%.

Banking Bill Said to Overrate Bankers

Having severed his ties with the secondary-market agency, Mr. Maxwell now feels free for the first time to speak his mind on a host of issues, such as the banking bill. Its shortcoming, he said, is that it overrates bankers' ability to handle new powers.

He thinks President Bush and the Congress are repeating the errors of lawmakers who expanded the powers of savings and loans in the early 1980s.

"If I were in Congress, I'd be on the side of going very slow," Mr. Maxwell said. In his view, bigger banks simply will create bigger problems.

"Look at a franchise like Citicorp. Maybe there's something I don't know about, but it's terrible what [the management has] done to the company.

"I don't see how John Reed can look himself in the mirror in the morning. It's an outrage."

Mr. Reed, Citicorp's chairman, could not be reached for comment.

Mr. Maxwell is "amazed" that leaders in all of corporate America - not just banking - can mess up yet still hang onto their jobs. He thinks we may have something to learn from Japan in this regard.

"I would have resigned if I had messed up at Fannie Mae," he said during the interview, held in an office suite he is renting up the street from Fannie Mae.

Mr. Maxwell is a soft-spoken, well-mannered individual with the easy grace of one born into money. He wasn't.

A Philadelphia native, he attended well-heeled Episcopal Academy on a choir scholarship. His father, a lawyer, worked to acquire the subsequent wealth that helped young Mr. Maxwell attend Yale and then Harvard Law School.

"It's the American story," Mr. Maxwell said.

Having earned substantial wealth, Mr. Maxwell finds that the government is not adequately taxing the rich.

"I would gladly pay more," he said, because he is concerned that the Bush administration is not providing housing for people with moderate incomes and is not spending enough to educate children.

He said Congress ought to reexamine mortgage tax deductions, too, especially for people making over $200,000 a year, though he concedes the political odds are stacked against change in this area.

|Budget Is a Straitjacket'

"David Stockman has triumphed," Mr. Maxwell said. "The budget is a straitjacket. Whether it's the infrastructure of the country which has gone to pieces or real dollars for education, housing, health care - you name it, there's no money."

Mr. Stockman was budget director in the Reagan administration.

Mr. Maxwell does not intend to run for political office. He said he "got murdered" in 1960 when he tried for Congress in Philadelphia.

"But if I were in charge, I'd say: |We have these problems, and the federal government is not the enemy. There are things government can do from a national standpoint that can be useful.'"

Good-Bye to the American Dream

As the deficit has grown, housing programs under Presidents Bush and Reagan have been cut to the point where many ordinary people no longer have a shot at home ownership, Mr. Maxwell pointed out. He said Jack Kemp, the secretary of housing and urban development, is the only one who seems to care.

"I think it's shocking that homeownership fell in the 1980s for the first time since the Depression."

He doesn't understand why there has not been more political fallout.

"The American people are living in dreamland," Mr. Maxwell said. "It's all Arnold Schwarzenegger and sports and Disney World."

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