This week in New York two of my partners, Joe Murin and Brian Montgomery, gave a presentation to a room full of hedge fund managers, private equity portfolio managers and other financial services professionals at a luncheon hosted by Sunrise Securities Corp.

The topic:  The Role of the Private Equity Market in Restoring the U.S.  housing finance industry. 
The U.S. housing finance industry is like a stool with three legs. One leg is the FHA and Ginnie Mae; the second is Fannie Mae and Freddie Mac – both of which are severely hampered by the circumstances and demands of the current crisis. As a result of their current condition, neither Fannie, Freddie nor FHA or Ginnie Mae likely will be able to demonstrate meaningful leadership as we seek to emerge from the crisis.  The third leg is the private label securities market. Today, the PL market is virtually non-existent. Despite that fact – and the undeniable role played by the PL market in the current crisis - this is precisely the moment in time when leaders in the private capital  markets should work to  demonstrate genuine thought leadership as the nation works to rebuild its housing finance industry.
This was a point made by both Joe and Brian in their presentations.   They each repeatedly emphasized the critical importance of the active involvement by privately owned financial services firms and private equity investment firms in the legislative and regulatory activities currently underway in Washington, D.C.  Understandably, this challenge was met by many in the audience with some skepticism – first, that any firms other than the largest would be able to obtain an audience with the key stakeholders in the reformation process and second, that in this era where all financial firms have been widely vilified as the demons responsible for the current housing crisis, that their insights, views and recommendations on how best to engineer a sustainable recovery of the U.S. housing finance industry would be valued.
And just as Joe and Brian’s prodding was met with skepticism and reluctance, a great example of the thought leadership they were promoting was taking place with the testimony of Ms. Laurie Goodman before a hearing of the U.S. House Financial Services Committee. In her testimony, Ms. Goodman did two things of particular note: first, she demonstrated courage and conviction in challenging the current federally sanctioned loan modification programs making a compelling argument as to why their failure is likely; second, and  most notable of all, she offered an alternative … a different roadmap … whose intended outcome is greater success.
In many respects, whether her proposal is correct or the roadmap she offered is the right one is of little matter.  What matters is that she lent her voice to a debate – a process underway today here in Washington – that can only benefit from increased information, dialog, and constructive  debate. There is no playbook for rebuilding the U.S. housing industry. And as a result, more creative ideas – indeed, more leadership – can only improve the outcome of the important work now underway. So kudos to you, Ms. Goodwin!  And shame on those who sit silently while our industry is being rebuilt by others.