Federal Housing Finance Agency Director James Lockhart suggested the creation of a government backstop to assist mortgage insurers Wednesday, and he defended retention payments to employees of the government-sponsored enterprises.
Lockhart said private mortgage insurers, which back losses on certain Fannie Mae and Freddie Mac holdings, could pay premiums to a public entity that in turn would provide reinsurance.
"At the end of the day, my view is that there may be needed in the government some sort of catastrophic mortgage insurer," as there is "in the property and casualty world," he said in a speech.
In light of disclosures that employees at the GSEs received large bonuses, Lockhart defended a retention plan his agency imposed on the firms after they were put under conservatorship.
