As someone who admits he's "one of those people who runs toward fires," Tim Mayopoulos '80 didn't think twice when Fannie Mae offered him the post as its chief legal counsel in 2009, even though the government-sponsored company had just been placed in conservatorship during the financial crisis.
"I see challenge as an opportunity, so I thought it would be a great place to be," said Mayopoulos, Fannie Mae's president and CEO, during a recent visit to campus. "It was a bit daunting in the beginning, as we were losing money hand over fist and, in the end, required a big injection of capital from the government, but we turned that around and have now returned more in dividends than we took."
Mayopoulos was in Ithaca Feb. 9 as part of the Baker Program in Real Estate's distinguished speaker series. He met with students and faculty from the Center for the Study of Inequality, spoke at a real estate seminar class and attended a reception and meetings.
Mayopoulos entered Cornell with an interest in English (he ended up majoring in it), mainly because of his dad, a union organizer and United Auto Workers union member who had a great interest in literature but never finished college.
"Some of my most prized possessions are my father's English literature anthologies from college," Mayopoulos said.
"I came from a family of modest means: my mother worked part-time at the local Sears store to send me here," he said. "But as a result of very generous financial aid, I graduated from Cornell with only $2,000 worth of debt and the opportunity to do things with my life that I wouldn't have had otherwise.
"I feel a very deep debt of gratitude to the university."
During his senior year, a class in constitutional law caught his eye and soon he was captivated by the Supreme Court cases he was studying.
"What prepares you to be an effective law student and lawyer, and even business executive, is the development of critical thinking and communication skills, your ability to see all of the different perspectives people bring to an issue and be an effective influencer of what other people think and feel," he said. "I'm discouraged by the attitude of many young people who are very focused on acquiring specific vocational skills. I think that's a real loss of the opportunity of being at Cornell."
His work study and summer job while an undergrad was with a 4-H afterschool and weekend program for kids in downtown Ithaca. As a Vista volunteer after graduation, he worked in Binghamton for Broome County Legal Services, managing civil cases for low-income people; he entered law school at New York University with a very strong interest in public-interest law.
But circumstances led him in a different direction and he ended up clerking for a U.S. District Court judge after graduation, then working at a Wall Street firm, where almost all of his clients were financial institutions. "I found that I enjoyed the business aspects as much as I enjoyed the legal aspects," he said.
He took a break for nearly two years beginning in 1994 to work on the federal government's Whitewater investigation, returned to Donaldson, Lufkin & Jenrette and became general counsel at Bank of America Corp. before leaving to join Fannie Mae.
Along with its post-recession financial turnaround, Mayopoulos said Fannie Mae has undertaken a series of changes in the past eight years to stabilize the housing market and make credit more widely available to credit-worthy borrowers. They include:
- New technology that allows Fannie Mae to secure data from original sources about borrowers' employment status, income and assets to ensure the loans they are purchasing from mortgage originators conform to standards;
- Transferring some of Fannie Mae's credit risk to private capital;
- A stronger effort to ensure that the mortgages financed are sustainable for those who get them;
- Allowing extended-family households to count income from family members that previously would have been excluded, expanding access to credit; and
- Creative financing of public workforce housing projects to keep them affordable.
As a result, Mayopoulos said the fundamentals of the housing market remain strong.
"We believe that households will form at a greater clip over the next five to 10 years than during the last five years, with much of that growth coming from millennials, as well as communities of color and immigrants," he said. "All of our studies show that millennials have the same aspirations for homeownership as previous generations; it's just a little delayed."
Looking back, Mayopoulos sees some of his college interests and passions have come full circle.
"The work I did as a camp counselor, together with my work as a Vista volunteer somehow has morphed through my 35-year [career] into the work that I'm doing now," he said. "Applying all of the skills I've learned as a business executive and lawyer to what I do now, I get to have an impact on many of the same things I cared about when I was 18, 19, 20 years old."
This story also appeared in Ezra Update.