Conversation with the Commissioner

I had the opportunity to visit with Glenn Wilson last month and talk about his responsibilities as Minnesota’s Commissioner of Commerce. Here is a portion of that conversation:

You were president and CEO of Knutson Mortgage for 10 years and left a job at U.S. Bank Mortgage to become Minnesota’s Commissioner of Commerce. What draws you to the public sector?

I’m at the end of my career. I had announced my retirement -- for the second time! It was some of my friends who told the governor I was now available. I was not involved in his election campaign in 2002. I never met him, but after talking with him and seeing his commitment, I thought: “Here’s a guy who intends to do the things that I always thought ought to be looked at.”

You have made a lot of changes at the Commerce Department since taking over on Dec. 17, 2002. You cut costs, including reducing the phone system to 70 lines from 450. How do you get people to change? It’s harder to get people to change than changing the phone system.

It’s an on-going task. And it doesn’t matter whether it’s business or government. Things are changing dramatically and more quickly than they used to. To keep up, it is incumbent upon management to constantly be looking at where we need to be -- five years, 10 years, 15 years down the line -- particularly in a regulatory environment. We’ve got to be a strong regulator, but at the same time we don’t want to impede the businesses in our own state, or they become disadvantaged quickly. A few years back, the banks and insurance companies we regulated were state-wide. Today, many of them are national, and a good number of them are global. So to maintain the investment in our state, to maintain the employment base, it’s a challenge to balance the line between regulating them but not restricting them. It is important that we get this right because those companies have lots of opportunity to invest elsewhere.

How do you effectively balance good regulation with the interests of the consumer?

That’s part of the challenge. But I believe everyday that’s doable. Most businesses want to retain customers. They want a referral. They know the only way to do that is by treating the customer with respect -- give them the benefit of the bargain. As a business guy, I always did, and the people I dealt with always did. But there are always some scoundrels. People that get on the edge. They skate on the edge so long, that eventually they fall over the edge and we have to dig up the consumer protection but, by and large, I think we do a good job with that balance.

Where to you see the Commerce Department fitting in with Gov. Tim Pawlenty’s overall vision for the state?

We’re in a slightly different position than most of the other departments in as much as we are a regulator. We have to vigorously follow the laws and regulation of the state. But I do think it is part of our responsibility to the businesses in the state to be current, to stay fair, to do the right thing. A good deal has to be fair to everybody. I was a Rotarian for a lot of years; if a deal is not fair to everyone then it’s not a good deal. And ultimately there has to be a balance. That’s what we try to strike every day. And I think the culture of our department understands that.

In the mid 1980s, you headed up Ginnie Mae, one of the three Government Sponsored Enterprises that provides a secondary market for mortgages. Any comments on the role of GSEs?

Ginnie Mae has the direct full faith and credit of the U.S. Government. The other GSEs don’t, but they take advantage of the fact that they are sponsored by the government and they are so huge that most investors think they are more regulated than they are. So, they get a disproportionate advantage, in my view. Fannie [Mae] and Freddie [Mac] can get cheaper money, making it harder for the private sector to compete, and so the market share of the secondary market has been going more and more to the large GSEs than I think is good and healthy. They are strangling the private sector. I don’t particularly think that is a good idea.

Any thoughts on interest rates you’d be willing to pass on?

Being an old man, having been in business a long time, I will say things cycle. Almost everything cycles. This particular low-interest rate cycle and the housing boom cycle has been longer than any in my entire business career. So when it ends, I don’t think you can say there was a bubble in that sector, but I do think there’s going to be a dry spell for housing. No market can stand to be at a record high pace year after year without ultimately fulfilling demand. Even if rates stayed low, at some point you have to believe the housing market is reaching saturation, or at least a leveling out of demand. I think we are well into that phase.