Federal Housing Finance Board Chairman Bruce Morrison's decision to resign raises many questions about the agency's direction and initiatives he has championed.

Mr. Morrison said Tuesday that he would resign next month to become vice chairman of GPC/O'Neill, a public relations and governmental consulting firm. Given all the rules hanging fire at the Finance Board, observers were surprised that Mr. Morrison would leave the agency he has led for five years. "I don't understand the timing," said Kenneth A. Guenther, executive vice president of the Independent Community Bankers of America. "It is a very crucial time. There are crucial rules being written."

"With such an aggressive agenda, we expected him to stay to see the end of the rule-making," said Diane Casey, president of America's Community Bankers.

Mr. Morrison's departure would leave only two members on the board, which has seats for five. Two nominees, Douglas L. Miller and Franz S. Leichter, have yet to be confirmed by the Senate.

However, in an interview Tuesday, Mr. Morrison said he had finished laying the groundwork for ambitious changes in the Federal Home Loan Bank System. Risk-based capital rules have been proposed and will be in place by Nov. 12, a deadline set by Congress last year.

Two other proposals - one that defines "core mission assets" for the Home Loan banks and another that deals with collateral requirements - are to be considered by the board when it meets June 23 and 28, Mr. Morrison said. He will attend both meetings.

The core-mission-assets proposal has been a particularly controversial one. Critics have said Mr. Morrison overstepped his authority by trying to decide what the Home Loan banks should and should not invest in.

The proposal said mortgage-backed securities - a favorite investment - are not core assets related to the mission of the Home Loan banks, though it does not expressly prohibit buying them.

Mr. Morrison's departure is "really quite an enormous surprise and a considerable loss," Mr. Guenther said. Indeed, Mr. Morrison is credited with helping to modernize the Home Loan system on many fronts.

One of his most innovative - and controversial - initiatives was the Mortgage Partnership Finance program, which gives the district banks' members an alternative secondary-market outlet to Fannie Mae, Freddie Mac, and Ginnie Mae.

"There are only three sources for secondary market liquidity. He came up with a fourth one," said Tom Jacob, chief executive of Chase Manhattan Mortgage in Edison, N.J. "That is an enormous contribution on his part because more competition" benefits the consumer.

Unlike traditional secondary-market arrangements, in which a mortgage bank sells a loan to a government-sponsored enterprise and retains none of the risk, the Mortgage Partnership Finance program is structured so that the risks inherent in loans are shared between depositories and the enterprise, in this case the Home Loan banks.

Mr. Morrison, a former congressman, was nominated by President Clinton in August 1994, but not confirmed by Congress until almost a year later. Mr. Morrison has been called a demanding manager. He has made bold changes since the beginning of his term, including firing Patrick Pizzella, who had been the agency's director of administration since 1990. He has taken sides against privatization of the Home Loan system and merging of the Home Loan banks.

John von Seggern, who represents 10 of the 12 Home Loan banks, said he does not expect a new chairman to take office before next year. That's because the Republican-controlled Senate is unlikely to confirm a replacement before the presidential election in November and the new president will not take office until late January.

Mr. Von Seggern, president of the Council of Federal Home Loan Banks, said his group is not concerned about how the agency will operate in the interim. There is little love lost between Mr. Morrison and the council, which has objected to many of the chairman's efforts.

"It's fair to say it's a mismatch in vision," a system source said. "Bruce falls more heavily on the side of public mission and the system falls more heavily on the side of the marketplace."

In a speech to system executives Tuesday, this source quoted Mr. Morrison as saying, "The ideal GSE doesn't have a bigger balance sheet than necessary to perform its functions for its constituents."

That rubs some Home Loan Bank presidents, who are itching to grow, the wrong way. Still, he has admirers.

"He has been a lightning rod, but he has brought the system to a new level," Ms. Casey said. "He has brought a greater understanding of the importance of the system."

"He's controversial but talented," said Mr. Guenther. "As far as we're concerned, his fingers were on all the right buttons."

A successor has not yet been named, but President Clinton could make a recess appointment when Congress takes a break. If that does not occur, William C. Apgar, the federal housing commissioner who represents the Department of Housing and Urban Development on the board, could become acting chairman.

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