Scott Calhoun may seem a bit out of character in his new assignment as lead examiner of Fannie Mae and Freddie Mac.

Mr. Calhoun, 42, earned his stripes as the examiner in charge at Continental Illinois Bank in the late 1980s, when it was just recovering from ruinous oil and gas loans, and then at Chase Manhattan Bank and Citibank during the real estate downturn of the early 1990s.

The adrenalin rush may not be quite the same at the Office of Federal Housing Enterprise Oversight, which oversees Fannie Mae and Freddie Mac. Those government-backed mortgage investors are hugely profitable, and their credit standards serve as a yardstick in the mortgage market.

But Mr. Calhoun has his eyes on a very big picture.

Sitting in his neatly unpacked office last Friday, day four as director for examination and oversight at the agency, Mr. Calhoun spoke of the pressures Fannie and Freddie face to compromise their credit standards, as lenders seek to boost mortgage volumes with high-margin subprime loans that privately owned conduits will buy.

Fannie and Freddie are probably "holding their standards," Mr. Calhoun said.

He said the regulatory challenge is to make sure "that if this becomes a volume game" Fannie and Freddie don't depart from safety and soundness to gain market share.

Faced with slower revenue growth and the need to maintain a high stock price, Fannie and Freddie would seem to want to diversify their business strategies, Mr. Calhoun said. When the mortgage agencies venture into new markets, he said, he will be concerned that they do so "in a prudent way."

If they choose to invest in subprime loans, for example, he said, he would want to ensure that Fannie and Freddie use credit scores tailored to subprime borrowers rather than the prime borrowers they have traditionally served.

Before taking his new job, Mr. Calhoun had been deputy comptroller for risk evaluation and capital markets at the Office of the Comptroller since June 1996. That job, which he was the first to hold, made him responsible for identifying risks to the banking system; it capped a 20-year career at the OCC.

An avid collector-he treasures owls, eggs, and modern art-Mr. Calhoun dresses like a banker and speaks with the measured cadence of a southern gentleman. A New Yorker by birth, he attributes the twang to his college years at Vanderbilt University in Nashville.

Underneath lurks steely determination. He spoke of "a healthy tension" between the regulator and the regulated.

"If it's not there, then something isn't working right," Mr. Calhoun said. "You need to be fair, honest, have integrity, and steer a steady course down the center."

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