Michael Williams is primarily under pressure at Fannie Mae for his compensation. But after the collapse of the housing market in Q4 2007 through today, it is a stressful job to explain to Congress and taxpayers how all that money was lost (even if it wasn't his fault).

But the real pressure is coming from the administration (even if through Ed DeMarco at FHFA) to perform loan modifications that make little economic sense, but are politically appealing.

That is the overarching problem facing Fannie Mae (and Freddie Mac): they are convenient cookies jars for the administration and Congress to dip into to fund payroll tax deductions and accelerate mortgage refinancing.

Fannie Mae plays a big role in the housing finance industry primarily because it has the government guarantee. It is very good at what it does in terms of securitization and its loan underwriting and purchase programs, but it is the guarantee that gives Fannie Mae (and Freddie Mac) their edge.

Frankly, other than selling its REO inventory into the market as rental properties, there is nothing that Fannie Mae can do. Loan modifications are great kabuki theatre, but they don't help the housing market. Principal write downs suffer from the same problem.

The best thing that can be done moving forward is for Congress and the administration to facilitate an environment of economic growth and reduced unemployment.

Finally, several pundits like to point the finger at Fannie Mae and Freddie Mac as the cause of the housing and mortgage crisis. I would say that the Clinton administration put into motion a drive for homeownership and Fannie Mae and Freddie Mac were incentivized to deliver--perhaps too well--but if the government hadn't juiced homeownership (along with the Federal Reserve’s low interest rate policies), the housing market probably wouldn't be where it is today.

Of course, it wasn't just the Clinton administration’s fault. Cheap mortgages with low down payments (mostly from FHA policies) were a winning political message for both parties. Once Clinton unleashed the monster, it was too difficult to control.