Thursday, June 28, 2007

June Is National Homeownership Month


(Maloni disclaimer: Ed Yingling and Diane Casey Landry are friends, whom I respect greatly. I’ve known Ed for more than 30 years. He once, even, was known to play in an infamous Friday night poker game. Diane’s a newer acquaintance. I met her first, when she toiled with Ken Guenther at the Independent Community Bankers Association and worked with her later, when she took over the ACB top job.)

The following “dream sequence” was prompted by my thought of what could occur —but likely didn’t--at the American Bankers Association headquarters, when the merged ABA and America’s Community Bankers staffs got together for the first time.

EY: Welcome aboard everyone, especially you Diane.

DCL: Ed, cut out the gentlemanly stuff. We have a problem with the Senate Banking Committee leadership and I have a plan to solve it. I want to put Dodd and Shelby, politically, in a box, squeezing them from back home, and then yank them by the short….

EY: Diane, Diane, the big banks don’t operate that way.

DCL: Yes Ed, I know which is why I think I was brought in. I may not be as diplomatic as you, but I can kick butt, and that’s just what….Hey, what are you doing to my voodoo dolls?

EY: Diane. Can I have a word with you, please, in private?

DCL: Sure Cupcake, in a minute, just as soon as I give our troops the green light on my new plan, which I call “Operation Scash ‘Em.” Ed, why don’t you go into that nice office of yours—mauve, its painted mauve, right--and draft an op-ed, try on a new Armani tie, or something and I’ll come right by, as soon as I am finished. By the way, I like my coffee black.

DCL: Now Floyd, get “Jingleheimer” on the phone, or whatever that guy’s name is over at the MBA, and tell him they have two weeks to merge with us, or they are history in this town. Coming Eddie.

Good luck to the new ABA team and may all of their staff and industry challenges be small manageable ones.


Writing in the Washington Times, this week, OFHEO Director Jim Lockhart, praised President Bush for his housing initiatives (Huh?), which helped drive the national homeownership rate to 70%. (“Karl. I did what??) And then, he went onto use June’s theme as “National Homeownership Month,” to call for the passage of new GSE regulatory legislation.

I can remember a few years ago, when the bad old Fannie Mae went to the Bush White House and suggested some ideas for it and the President to celebrate NHM, which resulted in a big presidential event in Atlanta and lofty new low income housing goals announced, which the two companies helped produce over the next two years.

But, that was a different era.

So, “Two Gun” uses NHM to repeat his “pass a new GSE bill” theme, saying that the House did OK, but he implies that its work was a bit flawed and now it’s up to the Senate to finish the deal and make life worse for Fannie Mae and Freddie Mac.

As I predicted in this space, recently, “Two Gun” sought to resurrect all of the old GSE risk charges, i.e. in trouble, shaky, weak operationally (bizarrely doing so, after affirming that the nation’s secondary mortgage market is “stable” and is part of the reason for the robust homeownership numbers).

“Two Gun” (I think I will just go to “TG,” within quotation marks) is famous for making this same speech, generally citing GSE shortcomings and risks for the need to bowl over the opposition and act “now.”

Talk about straw man. I’m not sure if anyone is opposing a new GSE regulator.

The problems in the Senate have less to do with the substance of the GSE legislation than other pressing Senate Banking Committee matters. But that hasn’t stopped the Director.

I think it must be theme month or theme day, which tickles him or his handlers’ and determines his speech/article writing timing.

He gave essentially the same speech four times last year, at very “special times.” First on “National Push Your Car to Work Day"; then during “National Open a Bank Low Paying Savings Account Month"; he spoke, again, when we all madly were celebrating, “Take Your Gimpy Neighbor to Lunch Day” ; and last, during “National Sump Pump Week,” calling on Congress to hamstring Fannie and Freddie and to grant his agency expanded powers that none of the other federal financial regulators possess.

You have to wonder just at whom he was aiming his message, this time, since he chose to write in the Washington Times. I am reliably informed that the Reverend Moon already supports increased GSE capital.

Whomever “TG’s” audience, it has to include the four conservative Senate Banking Committee “knee jerks,” Senators Hagel, Sununu, Dole, and Martinez. (I’m likely using an extra word in that group description.)

Those Republican senators never saw an event, which didn’t portend bad GSE karma for the nation. “Elizabeth, its John, Chuck and Mel. We‘re calling to tell you that the sun just came up in the east. Elizabeth, we think that’s bad GSE karma for the nation. We need you to join us on a letter declaring as much! Yes, yes, you can the autopen. We do!”

Back to my friend “TG.” Now he didn’t turn too much fresh earth in this week’s op ed, but may have uttered an “untruth” and displayed questionable judgment.

While both GSEs have endorsed a strong independent GSE regulator, I don’t think either one suggested that it should be a “bank like” regulator, as “TG” claims in his article. Since neither is a bank, I suspect that Fannie and Freddie don’t want bank like regulation, preferring a reasonable GSE regulator.

I think bank like is what “TG” thinks he wants, except when he doesn’t.

To wit, in his article, Lockhart says that he absolutely needs to “prior approve” all GSE products. But which bank regulator okays new mortgage loans, commercial loans, or checking/savings accounts, before any bank offers those to its consumers? I think the answer is “none.”

(Never happened, but if it did, Bernanke to Kohn: Don. I just don’t know about this 30 day revolving used car loan that that Fourth Oklahoma bank wants to offer Jed Clampett. My God, it’s pegged to LIBOR and the earned run average of the Pittsburgh Pirates pitching staff. Check into that for me, OK? Make sure that it is safe, for the bank.)

A little overdone, maybe, but closer to reality is this question. How many bank regulators prior approved the “covenant lite” or “equity bridge” loans that banks have been so fond of making to their client private equity firms, trying to buy up companies?

Very few, I suspect.

Bank regulators, generally, visit their regulated institutions once a year, seldom more frequently. OFHEO only has two entities in its domain and has people in their shops, every day of the week. Does “TG” really want the more limited “bank regulatory” approach?

This entire “bank like regulator” charade has been part of OFHEO’s effort demanding treatment akin to the Fed or the OCC. But, wishing doesn’t make it so, and actions speak far louder than words.

Lockhart doesn’t act like a bank regulator, at least not an American one.

I never have seen a bank regulator, even the sainted Alan Greenspan, engage in as much public vitriol and demeaning rhetoric as “TG” has aimed at Fannie Mae and Freddie Mac.

Able and confident financial regulators don’t do that.

When the good ones need to act, they act. They don’t engage in cheap speech making and obfuscating PR pyrotechnics, first, casting aspersions on their regulated institutions, as if to justify their regulatory behavior.

People, including regulators, who engage in that kind of disdainful hyperbole, are generally insecure and unsure of their mandates and themselves. It’s like they have to keep reminding their audiences who they are and why they exist, whether those “who’s and why’s” are viable or not.

But, I forgot, “TG” is a “friend of W’s” and that’s all that many—not all—in this administration need for justification.

Well, then, I just can’t wait until August 14, which as we all know is “National Horse Manure Day,” to see what "TG" and OFHEO next have to say about the GSEs.

Maloni, 6-28-07


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