Thursday, October 4, 2007

Please Keep Saying No, Lockie!


Can anyone who attended last week’s Brookings Institute panel discussion, featuring former and current Treasury officials Bob Rubin, Larry Summers, Robert Steel, tell me if Treasury Undersecretary Steel’s nose got longer, when he claimed that all Administration GSE policy is based on substance, not politics?

Where has Steel been and what was he watching for the past 6 years, or did he miss it all?

While I may have fallen from a hay wagon, it certainly wasn’t last night. When was the last time that ANY major policy issue was decided in Washington, without employing politics? Try “C,” meaning “never.” (Those multiple choice answers always are “C,” right?)

Any banks looking to sell their Florida subprime REO might want to contact Pinochi……, er Undersecretary Steel, at 202-622-2000. With that mindset, be could be a heavy investor.

Poor “Steelie,” a true Bush loyalist. He does a Brookings panel discussion with former Clinton Treasury officials and he gets ripped by Bob Novak for being a "closet Democrat."

(Think Lou Reed and “Walk on the Wild Side.)

“And the Treasury Undersecretary says politics never comes into play when the Bushies make GSE policy, doot, todoot, todoot, todootie, doot…”

“Hear Me Roar”

Every time OFHEO Director Jim Lockhart plays his tough guy part and says “no” to Senators Chris Dodd (D-Ct.) and Chuck Schumer (D-NY), and Rep. Barney Frank (D Mass.), he makes my day. Now he’s taking on Majority Leader Harry Reid and Speaker Nancy Pelosi.

That could put him on Whoopi Goldberg’s hit list? (See "The View" interview with the Speaker.)

Lockhart’s intransigence, belligerence, and political posturing have the effect, like nothing else, of driving the Democrats to insist on GSE policy changes that work for the mortgage market and consumers. He won’t be able to bully those officials or filibuster them out of their objectives.

As rumors grow of the Senate Banking Committee leadership working on GSE reform legislation, Lockie produced a timely Market News International interview, reminding the world of the Bush anti-GSE agenda and the same-old, same-old “the GSEs are still weak” story line. (It’s amazing how “available” these guys are when they want to spew negatives about Fannie and Freddie.)

In the interview, Lockhart did his best “Don Quixote” tilting at a threatening windmill and wailing and lamenting the language knocked out of the House-passed GSE regulatory restructuring bill—by a huge bipartisan majority, 383-36—which would have allowed a future regulator to use “non-GSE systemic risk” or other issues NOT related to Fannie Mae and Freddie Mac operations as a justification to thump the companies.

(Think Lou Reed and “Walk on the Wild Side.)

“And the Treasury Undersecretary says politics never comes into play when the Bushies make GSE policy, doot, todoot, todoot, todootie, doot…”

Many think that OFHEO seems to have plenty of clout to ride herd over Fannie and Freddie, even without that draconian authority in their regulatory closet. Lockie even brags about his ability to do that. Once again, the GSEs quietly have exceeded their quarterly capital requirements, as per OFHEO, and, oh yes, exceed their annual housing goals, as per HUD. But, Lockie never mentioned either of those two facts in his talk with the reporter.

I keep trying to think of an analogy which might make it easier for Lockie and his crew to understand why 383 House Democrats and Republican’s—that’s roughly nine tenths-- joined on the floor to knock out the White House’s overreaching language from the Committee bill.

Quarterpounder and Hershey Chocolates

Is it analogous if the D‘s decided that the FDA should have the authority to end all federal support to the cattle industry, if the agency didn’t like the price of McDonald’s Quarterpounder? Is it analogous if Agriculture Department could trash all sugar subsidies, because Hershey’s Christmas packaging offended the Secretary?

Are those out of kilter examples of causes and effects clear enough to help OFHEO understand the regulatory overkill which the Bush Administration wants to give OFHEO and why the Democrats will not give it to them?

What reason does the GOP see for giving OFHEO this death ray regulatory weapon other than to hope the agency does greater operational damage to the GSEs than they’ve attempted so far?

C’mon Two Gun admit it, the R’s have been trying for 25 years to knock the GSEs out of the batters box by whatever means possible. Now you are upset because D’s and R’s in the House wouldn’t let you cite the sun, stars, the rain, and the number Texas criminal executions as possible reasons to curtail Fannie’s and Freddie’s mortgage operations or jack up their already excessive capital?

Think Lou Reed and “Walk on the Wild Side.”

“And the Treasury Undersecretary says politics never comes into play when the Bushies make GSE policy, doot, todoot, todoot, todootie, doot…”

Lockie, who pretends to have no influence over GSE daily business operations, takes interview credit for keeping the GSEs out of trouble in the subprime mess, ignoring the fact that most of that product didn’t fit even the most diluted conditions under which either Fannie or Freddie would finance those mortgages.

Star Trek

Let’s see Mr. Director, did you employ your “Vulcan mind meld” to get that job done or are you taking credit for something the companies, wisely, did on their own?

The Director repeats the canard that the GSEs still are operationally weak and may need until next March before he might consider relaxing the politically motivated portfolio caps/limits, pushing that carrot out front a little further. In doing so, he totally ignores the fact that, by next March, he might not be in a position to help. He well could be spending his days greeting customer at the new WalMart bathroom fixtures store in Bugtussle, Oklahoma.

Go-o-o-o-d morning WalMart shoppers. Howdy. Hot out there, ain’t it. KnowwhatImean?

“Lookie, lookie here. I know you folks want to talk about other things, but first I got to ask you if you be the first ones in your neighborhood to own this hot new product, just come into the store? Hee-hee, KnowwhatImean? We call it our” stomp, wash-and-blowamatic,” a genuine Ginzu shower stall—just like you seen on TV-- complete with a kettle drum, three spritzers, a gentle air blaster, plus an optional bar of soap for you traditionalists.”

Now, thank you for visiting our newest store in Bugtussle. Don’t forget to spend a bunch.

As an aside, I wanted to answer your many questions about my time in DC and the guv’mint job my good friend “W” got me. Now you heard that I told some interviewer gal that Fannie Mae and Freddie Mac were a risk to this nation because of their “sheer size.” That’s right, they’s bigguns.

Now there are some other big ol financial boys out there, in fact bigger than Fannie and Freddie. Some are a lot bigger. We called those “fat bigguns.” But, heck, we didn’t worry nothing about them. They’s ours and we don't know if they are risky or not, since nobody ain’t never asked for one of them to get a sandpaper forensic accounting exams. Shoot, I spect that most of the fat biggun financial service companies don’t never get checked out, let alone have their innards flip flopped by hundreds of accountants and auditors, like ol Fan and Fred.

Some people, mostly them Capitol Hill Dummicrats, think if we ever did the same kind of work up on our fat bigguns, like we did Fan and Fred, we would come up with a whole mess—ooops, excuse me—a whole lot of problems that need fixing. But why ever would we do that? They’s usn’s, while we know that Fan and Fred belong to those D-boys over there. Nope, that ain’t never goin to happen. KnowhatImean?

(Think Lou Reed and “Walk on the Wild Side.)

“And the Treasury Undersecretary says politics never comes into play when the Bushies make GSE policy, doot, todoot, todoot, todootie, doot…”

Maloni 10-04-2007


Bill Maloni said...

Early blog viewers saw it posted "twice," as I managed to copy it from the original to the blog format, two times, before realizing my mistake.

Hope those readers enjoyed the double portion!

Bill Maloni said...

At least two readers, correctly so in my opinion, suggested I used too broad a brush in saying that the "R's have been trying for 25 years to knock the GSEs out of the batter's bax."

It would have been mroe accurate to say that Republican Administrations, starting with Ronald Reagan and including the two cycles by current President Bush, sought to curtail the GSEs with policy changes and regualtory initiatives.

While congressional Democrats, largely, have stood against those efforts, over the years there have been GOP "housing heroes," too, who opposed these anti-GSE White House overtures. Most recently, House members Gary Miller (R-Cal.) and Randy Neuguebauer (R-Tex.), along with Senator Robert Bennett (R-Utah)come to mind for their pro-housing actions.