The nations strong housing market has been a Band-Aid for the rest of the U.S. economy despite shocks from the high-tech industrys implosion, the Sept. 11 terrorist attacks, and the corporate and accounting scandals, says a Fannie Mae director who visited Spokane recently.


The director, Molly Bordonaro, says that the solid housing market, along with resilient consumer spending and judicious monetary policy, have helped the economy weather its pounding.


Housing will never suffer that bubble effect of the stock market, Bordonaro says. She says the housing markets strength has enabled Americans to continue to build capital through the equity in their homes despite the economys problems.


The Portland resident is the newest member of the Gallatin Group, a regional public affairs firm. She spoke at the DoubleTree Hotel Spokane/City Center July 10.


Bordonaro, 33, is one of President Bushs five appointees to the 17-member board of directors of Fannie Mae, or the Federal National Mortgage Association, which, through its purchases of mortgages in the secondary market, is the largest source of capital for the U.S. housing market. Two years ago, she ran Bushs Pacific-states campaign. She previously worked as a real estate broker, operated her own public affairs firm, and, in 1998, made an unsuccessful bid in Oregon for Congress.


Bordonaro says every politician should be told about the cushion that housing has provided to Americans in the last year. Now, however, rising energy prices, long-term trouble abroad with Iraq, and a slowdown in consumer spending have created dark spots on the horizon for the U.S. economy, she says. Also, she says, We are now seeing a cyclical high in household debt similar to the mid-80s.


Bordonaro voiced concern about the corporate and accounting scandals that have plagued some of the nations biggest publicly traded companies.


People think, My God, if Martha Stewart is embroiled in some business scandal, everyone out there in business is a little bit suspect, she says. She predicts, We will continue to see more and more companies come forward to restate earnings.


After the Enron scandal broke, Fannie Mae made sure that it would have no future consulting relationships with KPMG, its auditing firm, Bordonaro says. Such relationships produce substantial revenue for accounting firms, but have been criticized as a cause of shoddy auditing.


Fannie Mae, which was privatized in 1968 and is traded on the New York Stock Exchange, discloses on its Web site any trades in its stock by its executives or board members, Bordonaro says. As well, she says, We do not allow the (employee) 401(k) program to be invested in Fannie Mae stock.


At the huge mortgage-buying concern, day-to-day operations, such as bond sales and mortgage purchases, are done on the employee staff levels, and should be, while board members responsibility is to the shareholders, Bordonaro says. Fannie Maes board oversees the corporations management, the auditing of the organization, and its financial practices, she says.


Despite the distrust of business that has resulted from corporate scandals, companies will be rewarded in the long run if theyre responsible and communicate well with employees, their customers, and the public, Bordonaro says.


Unfriendly to business


During the economic downturn, Oregon and Washington have suffered more than the rest of the country because they have made some bad decisions in terms of government regulation and environmental regulation, Bordonaro charges. There is a perception that Oregon and Washington are less friendly to business than other parts of the country, which has hurt the two states in recruiting and retaining businesses, she says.


For example, Columbia Sportswear Co., of Portland, abandoned the idea of moving its headquarters into a building in downtown Portland because a light-rail overlay prevented it from putting in a parking structure for its employees, Bordonaro says.


Columbia spokeswoman Angela Hult says the clothing maker ran into the problem even though the public had voted against an extension of the light-rail system that would have extended a track past Columbias expansion site.


Despite that vote, we were told that light rail could go through there later, and because of that, Columbia couldnt build the parking structure, Hult says. Columbia eventually bought property outside of the city of Portland in unincorporated Washington County.


Bordonaro says cases in which regulation has deterred projects have happened several times in Portland. She calls for an approval process, through which economic triggers would make it possible to waive certain rules so projects could go forward as long as they dont damage the environment.