Tuesday, February 17, 2009

Elephant Tears!

Boo Hoo

I wish I was in the “tissue business.” Based on comments they’ve made in the past few days, the Republicans in Congress are going to go through boxes and boxes of it in coming years, just wiping away their tears.

GOP Senators Lindsey Graham (R-SC) and John McCain (R-Ariz), the most recent “criers,” complained about the lack of Obama bipartisanship and the fact that Republicans were being ignored and were not allowed to shape the President’s “stimulus” bill.

This was about the same time as the House Republicans voted in bloc against the Obama legislation. Every single one of them! Hello?

Again, for Republicans in Congress, let’s keep it simple.

We have an economic failure affecting the nation and the world. Virtually all experts and many non-experts agree that some massive mix of new federal spending and tax cuts are needed to boost the economy and create jobs. Our commercial banks need to begin lending again, which also is part of the deal.

The Obama Administration—working with the Congress--cobbled together a “package,” which likely satisfied no D, totally, but which had all of the requisite macro elements. It initially passed the House with zero GOP support, no Republican votes.

So much for bipartisanship coming from right to left.

Three cooperating moderate GOP Senators--in return for cutting the bill’s overall cost and removing from the House-passed bill some “less job generating" elements, i.e. the R’s definition of “political pork”--produced a politically acceptable package.

President Obama urged passage and stated his wish/hopes/prayers that this huge spending bill helps jumpstart our economy. In getting out front, he aggressively led cheers, held hands, encouraged and coddled, and spanked a few butts.

He’ll sign the bill into law today.

Hooray Mr. President! You provided the leadership, herded cats and pulled it off in three weeks. Is it the final answer?? Nobody knows for sure. More work may be necessary. But it’s a helluva start and your political DNA is all over it.

Meanwhile the congressional Republicans moan and complain bewailing because they claim the Democrats/President didn’t allow them the opportunity to put their biases into statute.

Senator McCain and his fellows need to face it. Their party lost last year. They get a bite at the apple, but not the entire piece of fruit.

The American people didn’t vote for you or for a "Republicrat" last November. They elected Barack Obama, a Democrat, to shake some things up in Washington and make changes. They gave him Democratic majorities in both chambers to aid the effort. Three major bills became in his first three weeks—including the mammoth stimulus package--and he was not reluctant to seek Republican help or use his political capital to secure his priorities.

That strategy should produce even more goodwill for Obama, when the GOP wakes up to 2009’s economic and political realities.

What Now?

The President seems to be trying to engage the GOP.

I have no idea whether Obama was offering the right mix of bipartisanship. The overall Republican reaction to the stimulus bill, minus the Senate moderates’ behavior, suggests why it is difficult to change behaviors in Washington.

But, I think President Obama will keep trying and, ironically, try and save the GOP from its own worst self-destructive instincts.

Congressional Republicans have put themselves in a position where many of them hope President Obama just fails and his initiatives crumble. That is a very tough platform to sell the American public in 2010 and 2012, by which time the “stimulus” should have born fruit, let alone other coming Obama efforts on health care, global warming, a national energy policy, and foreign policy initiatives..

I would hope that some R’s, beyond Senators Specter (R-Pa) Snowe (R-Maine), and Susan Collins (R-Maine), want to be part of the national solution, not its ongoing problem.

The GOP soon will have other opportunities to show that they can work with Democrats, not just against them.

Don’t Look Now, But…..

Virtually every federal financial regulatory agency has some new responsibilities (real or self-aggrandized) dealing with “toxic mortgage assets,” which either they have acquired or which burden the balance sheets of their regulated institutions.

Reportedly, there is active hiring of new staff and loading up on “mortgage experts” to help them figure out what to do with the whole mortgage loans and mortgage backed securities which they now possess or soon will.

Here’s hoping someone in the Obama Administration discourages this duplication and reminds the bureaucrats that they have access to several thousand existing employees--sitting in the offices of Fannie Mae and Freddie Mac--who do and have done this very job and who could help each of those agencies, without the latter hiring scads of new employees.

Save money and contract or otherwise use the thoroughly underutilized former GSE employees!

How long? How long?

John Reich has announced his early departure from the Office of Thrift Supervision (OTS).

When will Jim Lockhart get the word that his presence is no longer desired? Rumors of a successor to Lockhart’s FHFA job turned up last week; a certain former Delaware state official was identified as a possible candidate.

Will Lockhart vent and fire some/one of his senior staff before he leaves, as has been rumored for weeks?

If any of you FHFA execs are on the outs with Mr. Lockhart, I wouldn’t stay away from your desk too long. You could return and find it and you gone.

If bad things do happen, I heard that FDIC is hiring lots of mortgage types. That’s the good news, the bad is that Ms. Bair might insist that you know something about the mortgage business!

Fannie and Freddie

Reportedly, Freddie Mac has borrowed $13 Billion from the US Treasury, already, and recently has asked for about $35 billion more. Fannie Mae has now asked for its first $10 billion in Treasury financial assistance.

Who knows how much money they will require from the reportedly $100 billion that Hank Paulson’s Treasury “set aside” for each of them. But the “vig” alone on the announced needs--at 10% per annum which was the negotiated term--is a billion dollars in 2009 for Fannie and up to $5 billion for Freddie, without any reduction in principal??!!

Where do the former GSEs go to get some debt relief/restructuring, China’s central bank?

Maloni 2-17-2009

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