Obama's Turn at Bat
I can’t improve on the millions of words which have been written about the historic presidency which began on Tuesday, with Barack Obama's swearing in. I merely will add my wish for a very successful and strong Obama presidency and the hope that, shortly, a large majority of the nation—reflecting all income levels, partisan leanings, races and religions--feels our new President has taken on and vanquished the problems they feel beset America.
I didn’t plan on waiting this long, since last year's “New Year’s wishes” blog, to write again. I could cite some minor health matters, but closer to the fact is that for a few weeks--caught up in all that was happening with the holidays and the coming Inauguration—my pen just went cold.
Muse, Muse, where have you gone? Hopefully Muse, you’ve been too busy to visit me while you have been watching the Pittsburgh Steelers fight their way into the Feb. 1 "Super Bowl."
That was Step 1.
Step 2 is for the Steelers to beat the upstart Arizona Cardinals—with more Pittsburgh links on the team than is easily countable--and bring a sixth and unmatched Super Bowl trophy to Pittsburgh.
How can I lead with my creative problems and talk sports when the nation and world just have watched the historic inspiring inauguration of Barack Obama?
Easy, there is a connection. Everyone knows that the new President is a Chicago Bears fan (and all of the other Chicago sports teams), but he also roots for my Steelers. The Steelers ownership, embodied by Dan Rooney and his family, campaigned heavily for Obama in western Pennsylvania and Ohio. The evening before the inaugural events, Mr. Rooney presented Mr. Obama with a game ball from the Steelers brutally hard fought conference championship victory over Baltimore, allowing Pittsburgh to represent the American Football Conference (AFC) against the National Football Conference (NFC) champion Cardinals in the “big game.”
The football gods should never consider upsetting the new President by permitting anything but a Pittsburgh win.
Gaza and Beyond
I agree--as someone cleverer than I put it--“If Hamas disarms, there will be peace in the Middle East. But, if Israel disarms, there will be no Israel.”
The large financial institutions—which seem to gravitate around the Financial Services Roundtable—should be ashamed of themselves for begging with both hands for more “free” government money and at the same time opposing anything that appears to provide relief for debtor/consumers. Now, they are opposing the suggestion to let bankruptcy courts re-write mortgage details. The big guys, once again, thinking only of themselves, say that would be a mistake.
Why? I always thought that investors wanted to keep mortgagors in their homes and “paying” on their debt, so that the house didn’t sit empty, bringing down itxs value and the surrounding properties (where the bank likely has other mortgage investments),adding to the general community decay.
Greed is a terrible thing!!
When “author” David Smick joins me in calling on the large commercial banks to begin lending and to help thaw the credit freeze, especially since they have been the recipients of so much recent federal support, I guess I better watch the company I am keeping. But, there was Smick, in a Washington Post op-ed a few weeks ago, calling on the incoming Obama Administration to get tough with the commercial banks and scare/threaten them into lending to family and business borrowers to help jumpstart our economy.
Smick and one time reporting partner (they still may work together?), former congressional staffer Richard Medley, used to play “whack-a-mole” regularly on GSEs. The big banks used to pay big subscription fees and suck up the S/M rhetoric with the same gusto they now are reaching for TARP funds.
I hope the banks enjoy the new meal Smick ladled up. I have a feeling that if they don't change their act and tone, they soon will become very unhappy financial services campers. There are a few new sheriffs in town!
Speaking of Mistakes…..
That link should lead readers to a very interesting report (Jan. 9, 2009) by the two economists from the Paris-based Organization for Economic Cooperation and Development (OECD), Adrian Blundell-Wignall and Paul Atkinson, who identify at least two prominent Bush Administration initiatives—involving Fannie Mae and Freddie Mac—which the authors argue led to the massive subprime lending and other developments which largely facilitated the financial and economic meltdown and now crises, which the world faces.
Numbers one and two on their list of top five reasons why commercial banks started to accelerate off balance sheet securitization—which are major villains in their review, when added to lax US regulation of financial services companies—were the 2004 Bush Administration decisions to lean on Fannie and Freddie to make zero equity mortgage loans, plus OFHEO’s (the then-GSE regulator) insistence on greater Fannie and Freddie capital as well as portfolio controls. The latter two encouraged and incented banks to move in on the GSEs traditional business.
Blundell-Wignall and Atkinson have much more to say and interested readers should review it.
The one question I’ve been asked more than any other in the past month is, “What do you think is going to happen to Fannie Mae” (and sometimes they add Freddie Mac)?
My straight answer is, “I have no idea.”
I’ve noted that the former GSEs would need a huge boost from the Obama Administration.
With current mortgage market needs and the absence of any viable successor “dedicated mortgage investor,” save the US Treasury with regard to government loans, some Fannie/Freddie role or even their functional replacement is needed in the larger and heretofore more popular conventional market.
For Fannie and or Freddie (despite the rumors of merger, with Fannie surviving) to get even marginally resurrected (as part of Hank Paulson’s “regulated utility”??), a number of Democrats on Capitol Hill who made it possible for Paulson to nationalize the two companies--prematurely in Fannie’s case--will have to eat crow, a staple not found on most politician’s diets.
But, to even consider using the second half of the TARP funds to acquire toxic mortgage bonds and not use Fannie and or Freddie to help the government in that task, especially since they are owned by the Treasury, is a waste of resources and expertise.
Those actions came easily to an ideologically driven Bush Administration, which invested so much in demonizing the two companies. I would hope a much more pragmatic Obama Administration and an aware Congress won’t continue those same mistakes.
After seeing Brad Pitt and most especially Cate Blanchett, in the “Benjamin Button” movie, I now agree that Cate should have graced the cover of February’s Vanity Fair, rather than someone from the GSE world, calling attention to Bethany McLean’s superbly researched and well written Fannie Mae/Freddie Mac story in that same issue.
To the cynics and GSE critics who continue to pretend that the Paulson’s “GSE Sunday Smashdown” was necessary and deny that the action was the pre-meditated culmination of a 25 year conservative imperative to do away with the GSEs, I call your attention to one observer quoted in the McLean’s article who noted, “My view is (the Bush Administration) said we’ve got four months to remove this thorn in our side,” meaning destroy Fannie and Freddie.