By Colin Barr
August 12, 2010

Bond manager Bill Gross and two top bank execs will advise Treasury on the shape of a new housing policy.

The administration has scheduled its Future of Housing Finance conference Tuesday morning at the Treasury Department in Washington. It aims to solicit comments on how to fix a mess that sits unaddressed at the center of the struggling economy — the nation’s broken system of housing finance.

The linchpins of the current system are big tax breaks for mortgage debt and taxpayer-backed financing through the mortgage investors Fannie Mae

and Freddie Mac

. But the financial crisis exposed the system as unstable, and taxpayers are now propping up Fannie and Freddie to the tune of $150 billion, and counting.

Though everyone agrees the current system is unworkable, finding a fix is no simple thing. Almost all mortgages now are financed through the government, and the banking system remains exposed to massive losses should another sharp decline in house prices materialize.

“This conference is an opportunity for us to broaden our perspectives on a number of key issues in a transparent way to make certain that all of the best ideas are on the table,” Treasury said.

Other panelists will include Barbara Desoer, who runs the mortgage unit at Bank of America

, including the former Countrywide, and Mike Heid, co-president of Wells Fargo’s

mortgage business.

The announcement comes on the day that Gross (right), who runs the giant Pimco Total Return fund, told the Financial Times that he won’t buy mortgage-backed bonds without a government guarantee.

“Without a government guarantee, as a private investor, I’d require borrowers to put at least 30 per cent down, and most first-time homebuyers can’t afford that,” Gross said.

The need to keep the government in the business of guaranteeing mortgage debt could complicate the business of dealing with Fannie and Freddie. Officials have indicated they would like to create a market that doesn’t depend on the companies in their current form, but they haven’t said how they might accomplish that.

Other luminaries include bond market guru Lewis Ranieri, former Office of Thrift Supervision director Ellen Seidman and Moody’s economist Mark Zandi.

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