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Already roiled by the disclosure of Freddie Mac’s massive accounting errors, the government-sponsored home loan banking system was further destabilized by the resignation of the chairman of the Federal Housing Finance Board (FHFB) on March 19. John Korsmo is being investigated by the Justice Department on suspicion of covering up a campaign finance violation. In 2002, he was listed as “special guest” on an invitation sent to the presidents of the 12 home-loan banks he regulated, asking them to attend a fundraiser for a Republican House candidate. The White House will select a new chairman of the FHFB, which was established to ensure that the federal loan banks, created in 1932, fulfill their primary mission of financing housing and community development projects nationwide. [3/29/04]

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