Monday, March 30, 2009

How I would Remake Federal Financial Regulation

(Disclaimer: After working on the Hill for 11 years, I joined the Carter Administration, in 1980, as Director of Congressional Liaison at the savings and loans regulatory agency, the Federal Home Loan Bank Board. I took a similar job with the Board of Governors of the Federal Reserve System, in 1981, when Paul Volcker was Chairman. After toiling at the Fed for 30 months, I moved to Fannie Mae, from which I retired in 2004, after 21 years of lobbying. The Fed was and still is a powerful place, with many thoughtful/capable employees. When I worked there, the Fed showed--and still may carry the vestiges of--a disdain for the mortgage finance industry. Home loans were not big banking business, then. They are today. But expanding the Fed's regulatory role is a better alternative than perpetuating federal regulatory competition.)

Time for a Major Change!

The Obama Administration and Congress need to substantively refurbish the federal financial regulatory network, which failed us as a nation during the Bush years and continues to provide more questions than answers.

Rhetoric to the side, federal policy makers have an opportunity today to drive a significant restructuring or just could wimp out and merely change the coverlet on the financial regulatory bed, introducing some pretty new colors, but leaving in place soiled blankets and sheets underneath.

The early Obama/Geithner plans look more like the latter than the former. The President needs to be bolder.

I would take this historic opportunity, which combines national problems, international financial challenges, the American public’s desire for some serious new approaches to governing, and the popularity of President Obama to truly produce a whole new regulatory fabric.

I would not create a new federal financial regulator to oversee “systemic risk,” or just those companies which on their own could bring down serious segments of our economy or the whole ball of wax, if they faltered or failed.

I would not expand the powers of the SEC, giving it more control over hedge funds, equity funds, insurance companies, and other larger than life institutions.

The Fed, The Fed, The Fed

What I would do is take those disparate powers and authorities and give them to all the Federal Reserve System, right now. Don’t stop there. Give the Fed control over all state banking and insurance regulation, too. Get the states out of those two businesses.

The first one to say “no” will be the Fed, but it should be ignored for the time being. It will say it doesn't want “all” of that power (disingenuous, at best, since It has a great deal of it, already).

Face it; the Treasury already is powerful because it is the President’s political voice on financial and economic matters. The Board of Governors of the Federal Reserve System is all powerful because it is the nation’s central bank, manages our national monetary policy, and regulates several dozen bank holding companies, which means the Fed already control lots of control over the banked assets, the payments system and the banks' far flung holding company empires.

The SEC wants its hand made bigger and the Administration starts much of this with the Geithner demand for a wholly new “systemic risk agency,” which can control all of those hedge funds, private equity firms, and everything else “Too Big to Fail (TBTF),” already not tied down by one of the existing financial regulators.

If the Congress goes this route, they merely are recreating a more competitive version of the confusing mess we now have, but this time with four weighty regulatory principals able to bring things to a halt or worse give a green light--either actively or because they misread the threat--to some financial miscreant, no matter what the other regulatory agencies think. (See SEC and credit fault swaps and…well, you remember.)

Don’t Just Create Competitors, Reduce Confusion, Build Strength

The overlapping and sometimes conflicting existing federal financial regulators (FDIC, SEC, CFTC, OTS FHFA, CoC, NCUA, etc.)—plus the fact that the insurance industry, mortgage brokers, private mortgage insurance companions, title insurance companies, etc, as well as the fact that 8000 banks are regulated by 50 different states—has helped produce the ineffective system we have.

End that morass. Off with their institutional heads!

Mr. Obama, if you are going to fix healthcare, the environment, and create a true national energy policy, then go right along and fix financial services regulation as a logical part of your economic initiatives.

It’s just a different pew in the same church!

Failing to give significant new authority to the Fed over all financial institutions, while doing away with the rest of the regulators, just will create a new set of Washington financial turf rivalries like we already have.

The Fed will tell you that it can’t do what I suggest and that it needs to concentrate on its monetary policy mission, and it does. But it already oversees the nation’s bank holding companies, which means it already has regulatory authority over a major section of the nation’s assets, payments system and principals. Its debt ratio regs also cover the hedge funds.

Congress should make de jure what is de facto. Give total power to one already powerful Federal Reserve System, including the regulation of the insurance industry and end the abuses of McCarran-Ferguson, i.e. the 1945 federal law which perpetuates state regulation of insurers.

Do we want the U.S. to have brave new financial regulatory world—where banks, other depositories, insurance companies, investment banks, hedge funds, equity firms, and others, all play by the same rules (including Fannie and Freddie, and the Home Loan Bank System, assuming they survive)--or do you just want to change the surface colors in the guest bedroom?

Yes, at the margin, the Congress greatly would enhance Fed power, but more importantly it also will reduce duplication, waste, inefficiency, and unnecessary bureaucracy.

Regulate the Unregulated

Under my all-powerful Fed approach, investment banks, hedge funds, private equity funds, etc, which will get far more regulation or a new regulatory regime will howl--as they already have begun --assuring you that they are for “systemic risk regulation,” but need their little industrial niche carved out because they really don’t have to play by the same rules.

Don’t buy the defensive arguments about how they are “unique and different.

They all borrow money (from someone) at one price and try and invest it at a higher one, living off the spread. After that, it just a matter of sorting out the different names.

Use the Obama audacity and Tim Geithner’s funky freshness (if you can’t use Paul Volcker’s skill and reputation) and do something structurally and dramatically dynamic and seismic.

The affected industries will complain and the GOP, I am sure, will say you are seeking “Kremlin like powers” over the financial services industry or “Soviet-style fianncial regulation.” Many in Congress will bitch, too, because they like to have their own “pet” regulatory agency to throttle or from which to generate institutional obsequiousness. (“We thank you, Mr. Chairman for agreeing with our agency and for your foresight and keen intellectual….gag, yak, spew.”), not to mention industry financial contributions.

Listen politely to those arguments, but let them go in one ear and out the other.

Because it is the nation’s central bank and does conduct monetary policy, the Federal Reserve Board always will be the most prominent regulatory agency in the Capital. There’s nothing wrong with that. I’m just saying make it even tougher.

The Fed and its Chairman now get the lion’s share of Congress’ attention. In part because of the mystery which surrounds its work, it garners the media’s focus and it gets grudging bows from the other banking agencies.

Congress should acknowledge that truth and expand on it. Don’t create dilutive Fed competitors.

We already have the existing residual political power in the U.S. Treasury, and now, possibly, some new concentrated power in a brand new “Systemic Risk” unit, while expanding/maintaining the SEC and leaving in place other agencies which policy makers won’t have the political will to atomize.

What in this structure guarantees the cooperation, complementary behavior, coordination and early discussion which didn’t exist for much of the past eight years (and equally for many years under the Democrats, who did not face these serious external economic challenges)? In other words, the model wasn’t really good when times were good.

A gradual enhancement of regulatory authorityand a new "systemic risk agency" is neither much progress nor much “change.”

Put all of the authority in one institution, under one person--the Fed Chairman--and let the Federal Reserve sort out the regulatory pieces over banks, thrifts, insurance companies. investment banks, holding companies, hedge funds. The Fed can have “managing directors” and oversight units for those each industries all reporting to the Board of Governors or a Board governor for each of them, with his/her own jurisdiction. But, all financial services actions get coordinated by that Board.

The Fed will figure it out a lot faster than the Hill and likely do a better job than a new model with watered down regulatory powers for several agencies.

We’ll survive as a nation, if President Obama breaks all of the old regulatory china. So will all of those financial companies and groups who call for regulating everyone but themselves!

Maloni 3-30-2009

Tuesday, March 24, 2009

When the Going Gets Tough....

Hard Times

As hard as these times are, I hope everyone can dig deep and contribute to the “Campaign to Keep Andrew Cuomo in New York” fund. Your pennies will go a long way.

Timmy Geithner

The best news for Treasury Secretary Tim Geithner, next to today’s market reaction to the “new” (read “detailed”) toxic mortgage acquisition plan is that some people are calling it the “Geithner Plan.”

Of course, “what makes me strong also makes me weak.” The fact that people already have attached his name to the effort makes its success all the more crucial to his ability to succeed in his job.

For the nation’s sake (and indeed the world’s financial markets), I hope TG is a smash hit with the new inititaive.

The interesting thing here is this was what had been the original Paulson scheme, although after spending about $300 billion pumping up individual financial services institutions, Hank Paulson and President Bush did a turnabout and changed their minds.
That uncertainty has been costly, but is also a reflection of the reality that nobody has a fool proof plan to fix the economy and do so quickly. The policy makers think they finally have it right and the various “cash/credit” infusion plans should bring our markets back moving toward real growth that will lift employments and revenues.

But righteous and some not so righteous opposition was heard immediately. “Dr. No,” Republican Congressman Eric Cantor, already has come out against the Geithner Plan, so there must be something good to it.
Paul A.Volcker

I confess I am not a Treasury Secretary Tim Geithner fan. He just doesn’t have the feel of being ready for prime time, Monday’s performance not withstanding.

I am not a Larry Summers guy either, although I think he moves a little easier in Washington power circles than Geithner. But Summers’ Harvard history and even his work in the Clinton Administration probably suggests he stay behind the scenes, not upfront making policy.

Paul Volcker has the temperament, the experience, the gravitas, the worldwide respect and—I hope—the will to make the tough decisions that this Treasury needs to make. As I closed with last week, I hope that President Obama eventually finds a way to name Paul Volcker his Secretary of the Treasury, assuming the big man is up to the pace of the demanding responsibilities.

He certainly was in 1983, when as Fed Chairman he—alone—led the fight against inflation, all the while managing an angry Congress, which secretly rooted for him to win, but bashed him constantly and viciously.

Working at the Fed for Volcker back then was an insightful education. I remember a visit we made to one Freshman MoC, who was on the House Banking Committee (as it was called then). In some hearing, the Congressman asked Volcker for a meeting. When we arrived at his office, the Member was so overcome with excitement that Volcker could have asked the freshman to polish his shoes, bring him a cigar and coffee and the Congressman, unquestionably, would have agreed.

Instead, Volcker suggested that the Member have a staffer take a picture of the two of them, with the MoC shaking his finger in the Fed Chairman’s face, so the guy could report back home that he was representing his constituents against the Fed’s high prices campaign.

It was a small thing, but the judgment of a wise man, which made an ally for life with his photo suggestion.

Geithner and Summers have strengths, but not as many as Volcker.

Keeping Volcker handy also will be a plus in a few years when the inflation inevitably returns, caused by the massive increase in credit that has been necessary to break out of the years of laisez faire inattention under recent administrations as well as what is shaping up as heavy Obama spending.

Howling Mob and the Bonuses?

It’s not quite at the mob level—and I sense a cooling off and some more level headed thinking--but the reaction to AIG bonuses was scary. It drove near instant legislation last week in the House, while the Senate works this week on its own version.

I read the response of one United States Senator (a Democrat) and it was chilling in its language and vituperation. Another solon, Sen. Chuck Grassley (R-Iowa) suggested ritual suicide for AIG’s bonus keepers.

Frankly, I hope for better answers and behavior from both parties.

When I was working, I never chose to defer compensation. Instead, I took what I made and used it at the time for whatever family needs we had.

Many people I knew, however, used deferred comp as a way to enforce savings and assure themselves that when they retired, those financial sacrifices—to which they contributed while working—would be there for them.

The House bill, approved last week, in response to the AIG bonuses, wrongly threatened deferred compensation payments (employee savings), which Fannie Mae allowed their workers to take in January 2009, rather on whatever date they initially chose when they started in the program.

I hope the Senate can straighten out this confusion. The Senate should make whatever judgment they might on “retention bonuses,” but ‘clawing back” employee savings plans is not what the Congress should be doing.


Rob Levin and Ken Bacon, two friends and former Fannie colleagues, lost their fathers last week.

Bill Maloni 3-24-2009

Tuesday, March 17, 2009

Tit for Tat, Not Necessary nor Desirable

To the Obama Administration, Robert Gibbs, and other D spokespeople give the overcharged rhetoric a rest.

Just as I advised the GOP to zip their lips on the Democrats’ Rush Limbaugh challenges, so too should you guys not respond to every single GOP slight. You are the winners, they lost, and lost big time.

The Republicans are taunting and agitating, because you have the political power which they want and they have no true alternative policy options.

Democratic rejoinders to every snort by Cheney, Rush, Michael Steele, Eric Cantor, Mitch McConnell, and the rest of the GOP, is both unnecessary and merely perpetuates the poisoned political atmosphere you claim you want to stop—and which many Americans want to see end.

The GOP is out of power and losing lots of support and is resorting to name calling and taunting. The party is desperate.

Show some resolve and confidence Democrats and skip, say, at least every other opportunity to strike back.

You’ll lessen the angry rhetoric and save the nation another day of political caterwauling.

Dick Cheney

Having said all of the previous, even I am aghast at Dick Cheney’s outrageous and hypocritical behavior.

He’s out there humping for “Scooter Libby,” his chief of staff, whose lying under oath protected Cheney and resulted in Libby in being charged and found guilty by a grand jury of obstruction and perjury.

Libby has stayed silent about his boss’ role in outing Joe Wilson’s wife, the then CIA official Valerie Plume, and I guess Cheney wants to insure that Libby never reveals those truths, with his vigorous defense of the man Cheney believes “W” hung out to dry.

Go away, quietly, Mr. Cheney. You, personally, did more damage to the Constitution than any of the Obama economic efforts about which you are railing.

Plus, most of America saw your nose getting longer, as you distorted history in your John King NBC interview.

I am a Republican, Hear Me Roar!

Jim Lockhart, the boss of Fannie and Freddie, obviously still was wearing his GOP/political hat the other day, when he decided to speak against the legislation which would allow bankruptcy judges to restructure mortgage loans on primary residences, lowering principle and interest costs for bankruptcy victims (as can be done on second homes and vacation residents).

Lockhart, as Vicar of Fannie and Freddie, decided that this new legislation would be bad for the former private companies, and therefore should be narrowed or defeated, which is the position of many Senate Republicans.

That’s funny. I thought the Obama Administration was employing Fannie and Freddie (and Lockhart) to modify and restructure hundreds of thousands of their own loans.

Now, tell me Mr. Lockhart, why would similar loans re-structured by bankruptcy judges be so horrendous, if Fannie and Freddie are striving to do similar things?

Maloni to Obama Administration: Time for Mr. Lockhart to go.


Are the Homebuilders really having problems with their “big guys,” the high production members? Someone told me that the large NAHB members--unhappy over certain personalities and the quality of Washington representation—might just want to go their own way in DC, creating a trade group exclusively pursuing their interests.

Hmm? Edgy/sand paper personalities at the NAHB, I can’t imagine who that might describe.

Scariest Conversations of the Week

There actually were at least two separate reported discussions which earn that label. They were conducted by completely different folks, but they relate to the same chilling possibility, i.e., civilian unrest growing out of continued economic retrenchment and job losses.

The topic of one official meeting was estimating how many police and military personnel would be needed to protect “Washington and the Capitol,” should unhappy citizens begin marching on the nation’s capital.

Now, maybe, those talks go on in security circles all of the time and I shouldn’t be so concerned. But……

The second was a bit of advice, which could have come straight out of the 1950’s, if it hadn’t occurred just in the past few days. A solon of sorts was advising people to, “Keep a year’s supply of food in your house and use your money to buy two things, gold and guns!”

A lot of wild and crazy talk in wild and crazy times, but, as noted, there is a relationship between smoke and fire.

Irony: We Are Systemic Risk!

AIG was one of the founding members of FM Watch, the industry group which formed to attack Fannie and Freddie, when their principals were worried that the then-GSEs were going to move into mortgage insurance, primary lending, or other business areas represented by the organizing members. (None of which were true, but why kill a good idea?)

FMW and their shock troops gave life to the suggestion that Fannie and Freddie were “systemic risks,” long before the companies obliged them by loading up on crap loans.

Initially, Fannie and Freddie fought the charge vigorously that somehow they represented a threat to the broader national economy.

Naturally, the purveyors of the anti-GSE allegations felt that none of their businesses represented such risks. That is, until last week, when AIG begging for more financial support from the Treasury alleged that its failure could bring down huge segments of the economy, domestically as well as overseas, and that it represented a systemic risk. (“We’ll admit to anything to get that federal cash!”)

And the Bush Administration, with help from Congress, nationalized Fannie and Freddie and continue to nurse these blood suckers?


When I heard some of Ben Bernanke’s comments last week about possible shortcomings the Financial Accounting Standars Board's (FASB) “mark to market” accounting requirements, I thought I was in a Fannie Mae confab five or six years ago, when the company was saying basically the same thing as the Fed Chairman about one aspect of the then proposed “FAS 133.”

In its Fannie comment letters, Fannie argued then that marking to market their purchased interest rate options, but not the underlying mortgage securities that they were “protecting,” presented a distortion of the company’s true value, especially when the options were being held to the same maturities as the mortgages they were purchased to hedge.

Here’s rooting for Bernanke’s comments to force a much needed accounting change.

Secretary Tim Geithner

It wouldn’t surprise me much, if TG was the first of the Obama Cabinet to decide that he “needed to spend more time with his family” and bag his new job.

I have not been overly impressed with his actions to date and despite the presence of some very intelligent and able people, i.e. Volcker, Summers, Gene Sperling, et al, I have been under whelmed with the pace and creativity that this Administration has put forward, especially on the housing cleanup/fix up front.

Make headway here and you begin to knit together consumer confidence, the banking system, and our economic fabric.

Paul Volcker would be a great next Secretary of the Treasury.

Maloni 3-17-2009

Tuesday, March 10, 2009

Mrs. Bush (This One Unrelated to the Presidential Family)!

The Water at the New York Fed?

Maybe it’s the New York Fed’s drinking water which makes their presidents say and do weird things (even when they move on and become Secretary of the Treasury)?

In his very first official speech as NY Federal Reserve Bank President, William Dudley--who succeeded Tim Geithner--groaned about “banks and government sponsored enterprises, for the past 18 months, telling regulators that it wasn’t a good time to raise capital,” because—he analyzed—that they didn’t want to dilute shareholders values.

Um, uh, Mr. Dudley, Fannie Mae raised over $7 Billion in fresh capital in May of 2008—which was less than 12 months ago--and still got trucked by Henry Paulson and the Bush Administration.

At least get your facts straight, Mr. Dudley, if you are going to pontificate and lead the Fed’s paramount bank. Or are you auditioning for a bigger Washington job?

Disparate Memories

I remember my homeroom teacher in high school, Mrs. Elizabeth Bush. She was about 92 (honest!) and taught girls’ sewing, which was appropriate when I graduated in the 1960’s, since the Pittsburgh public school curriculum was designed in the 1930’s/1940’s.

I arrived in her class room only in the morning, to kibitz with friends, and then went through my seven daily academic classes. That limited intercation didn’t stop Mrs. Bush from writing on this indifferent student’s final 12th grade report card “1966?” Meaning what will happen to you in four years, you poor uneducated dolt, when all of your friends are graduating from college?

If she only knew, that little wig she wore would be spinning on her head. I definitely am going to look Mrs. Bush up, when I get to heaven!

What happened to me (very nice things) isn’t important, but I thought about this dire question/forecast when I was thinking about Fannie Mae and Freddie Mac last week, just after David Moffett walked away from Freddie Mac’s top job, for which the outgoing Bush Administration chose him late last year.

Moffett offered the predictable complaints about ineffective federal government bureaucracy and decisions, which took weeks and months when the business needed answers in minutes or hours. But many observers still were forced to ask if Moffett was up to the job?

If some home room teacher wrote on Fannie’s and Freddie’s current report card, “2013?” What might that answer look like?

Fannie and Freddie

Too many people say “Fannie and Freddie,” as if the two were identical twins. They are not, never were run that way, had different corporate strategies, almost contrasting cultures, operating systems, and differing volumes and qualities of crummy assets.

Freddie seems to produce continued negative surprises, making me wonder just how bad things are in McLean. Not that Fannie’s red ink is a day at Rehoboth, either.

However, there still is some form of twisted “parity” at work inside the Beltway, which could cause Congress or the Obama Administration treat them alike.

(So, who is spreading all of those Fannie/Freddie “merger” rumors out there?)

Last week, I offered to wager a friend that, “In the next three years, Fannie Mae will be engaged in a variety of business activities which are market sensitive.” That’s as far as I would go.

For a couple of reasons, I believe that Fannie could enjoy a revival which could return it into some semblance of its former self, i.e. shareholder owned, albeit not with the full range of investment powers they once enjoyed.

I believe this because the Obama Administration slowly seems to be awakening to the reality that it owns two companies with copious talent and resources, which can be employed to help the federal government get through it’s latest “new assignment,” i.e. to acquire, manage, and then sell hundred of billions of dollars of whole mortgage loans and mortgage backed securities of varying qualities and values.

Use Them and Use them Hard!

Creative and heavy use of Fannie and Freddie to help the Treasury and other federal agencies carry out that responsibility will save our government billions and also keep more families in their homes and paying down affordable mortgages. Some borrowers still might default, but that won’t happen as rapidly as it might have, once their mortgages are restructured by Fannie and Freddie and the government.

And if Fannie and Freddie are not overburdened by the Feds, their employees know how to do the job efficiently and effectively. Chalk one up for the Obama folks and for minimal interference.

Another reason to hope for Fannie (and Freddie), to get resurrected as “regulated utilities,” is because their function is missing from the residential mortgage market and hasn't been replaced. It’s needed and it’s vital.

The nation’s mortgage finance system has become reliant on the long term fixed rate mortgage loans and commercial banks just can’t hold them on their books. We need a private dedicated mortgage market investor, with the capacity to fund and manage those longer maturity mortgages.

The alternative is a commercial bank based system with only will offer adjustable rate mortgage loans or fixed rate loans with huge pricing premiums.

Nothing has yet stepped up to replace Fannie and Freddie and if the government chooses to create something, why ignore and waste that which you have?

Holman Jenkins and The Wall Street Journal

Now—and this is just me—another reason to think optimistically about Fannie and Freddie burst from a most unusual source last week.

Holman Jenkins, long time columnist and editorial writer for the Wall Street Journal--the most ideologically nasty of the anti-Fannie/Freddie publications--wrote that it was a mistake for the government to nationalize the GSEs. He said that it sent a horrible signal to the market and took the life out of lots of financial institutions companies, including the WSJ’s darling big banks. (My thanks to my friend/colleague Gwenn Hibbs, for alerting me to the Jenkins column.)

Where were you last year, Mr. Jenkins, besides cheering on Mr. Paulson??

Not that Jenkins’ piece, suddenly, will cause the world to say “mea culpa” to Fannie and Freddie. It won't, nor are they due it.

Both companies put hundreds of billions in Alt A and PLA subprime crap on their books in 2008 and 2007 (like those other companies which have been plowed under or are being kept alive on Treasury/Fed life support) and that, not their structure or affordable housing mission brought them down.

However, the candid comments from Jenkins will breed similar reviews, and reconsideration from others, which could soften the terrain for federal policy makers and make it easier to identify the national market role that Fannie (and Freddie) still can play.

So, Mrs. Bush, my old homeroom teacher and likely celestial resident, that’s why I think the future is looking up for Fannie (and maybe even Freddie).

Maloni 3-10-2009

Monday, March 2, 2009

It Was the Best of Times, It Was the.....

GOP Self-Flagellation?

With a vote likely to come up in the House this week to allow bankruptcy judges to rewrite mortgage terms on a family’s residence, are the House Republicans really going to “whip against it” (technical term when the House regional “Whips” call on their political brethren to oppose legislation), once again throwing their chips on the moneyed interests and against consumers?

After voting en masse to oppose the Obama stimulus legislation, it’s not beyond belief that the Boehner-led lemmings might keep heading for that cliff by supporting the banks and mortgage lenders and opposing judicial relief for financially hurting individuals and families.

Obama, Last Week

How many politicians, in a serious way, get a chance to actually put forward many of the planks on which they camapaigned?

In his address to Congress, Obama laid out his plans for the future of the United States and--in his executive actions, pronouncements, and now his first federal budget--is aggressively trying to make good on those very issues on which he successfully ran.

A fickle public--which seems to adore President Obama now--could turn on him, if positive results don’t flow soon from his stimulus initiatives and the nation doesn’t get relief from what has been an avalanche of bad economic news.

But once that turns—and it will turn—Obama could reap the kind of national support that will allow him to turn those “campaign ideas,” into major changes in the way our nation conducts its domestic and international lives.

I wasn’t around for the “Great Depression,” but heard a lot about it from my parents and relatives. I never can appreciate what President Franklin Roosevelt meant for battered everyday Americans. But I have to believe that we are starting to see some of that hope for a better tomorrow manifested among our citizens, when they hear President Obama discuss his policy vision for the United States.

The President is not backing off anything and, in Saturday remarks, challenged Washington special interests and lobbyists to join him or get run over defending the status quo.

Interesting approach, Mr. President!

When you get the kids their hypoallergenic Labradoodle or Portuguese water dog, you might want to get a gaggle of pit bulls for yourself, just to guard your back.

Give me an “N,” Give me an “A”

Nationalization by any other name is….”nationalization.” I don’t care what the Administration’s policy makers chooses to call it, when they start putting money into the big banks and taking pieces of the bank’s future action, Uncle Sam owns them. You can dance around the terminology, and people will, but at least let's be honest about the policies.

There may be nothing wrong with federal control over some of these institutions, especially since, recently, they didn’t do the best job under “private control.”

But, I sure wouldn’t want to dance on the difference between “nationalization” and what actually is happening to those large financial institutions, when the Treasury or Fed pumps even more money into them.

Shoot Me, Before I Lobby Again!

Just what is the purpose of Freddie Mac “investigating itself” for grievous lobbying errors, using its long time pet law firm Covington and Burling?

C&B is being asked to look at Freddie political/lobbying behavior in 2005, which presumably Covington saw first hand--but uttered no stop warnings--when Freddie engaged in the campaign against the GSE reform bill. Is the law firm now supposed to say, “We and Freddie were wrong back then and they should have not done it and we shouldn’t not have ignored what they did?”

Just what did Freddie Government Relations VP Hollis McLaughlin reportedly do, when he oversaw an outside consulting firm’s work to influence congressional legislation affecting Freddie?
The media reports have him conducting a “stealth” congressional lobbying campaign, because—presumably--nobody was aware that Freddie was behind it. (I have some great land in Florida and some almost good mortgages to sell you, if you believe that one.)

Wasn’t that what McLaughlin was paid to do and, at the time when the purported questionable activity occurred, the GSE didn’t face any ban on lobbying, like the current one imposed by its regulator. So, what was the sin?

Well, the apparent sin—among others—appears to be that Hollis might have been a bigger player in the Freddie decision-making world than he and others let on.

He reportedly wasn’t a good boss and ran roughshod over those people who reported to him and—somehow--survived the lobbyist purge when Freddie senior officials (with Hollis as an accomplice?) fired many of their veteran professionals who had worked in the legislative/lobbying/industry outreach trenches for the company. He supposedly hogged up “event tickets” for his family's use, which Freddie had purchased for lobbying purposes. And, he did not treat kindly his direct reports who survived the “putsch.”

Those chickens are coming home to roost and some of the some current Freddies and a few former employees are putting Hollis’ business “in the street,” or more directly dishing with the media about the man’s true record, management shortcomings and lack of loyalty.

And where’s “Inspector Renault” (FHFA Director James Lockhart), when all of this questionable lobbying action was going on, including Freddie now spending money to close a long emptied barn door?

How was McLaughlin allowed to stay, since OFHEO/FHFA (Lockhart) hasn’t been reluctant to name other people it wanted gone from the former GSEs? Were the two buddies from the Bush days? Do they belong to the same fraternity or the same golf club?

But, the bigger question is why the self investigation, now, and who is it meant to snare or satisfy?

McLaughlin recently even has been recruiting candidates to do congressional relations for Freddie!

Yes, I know OFHEO/FHFA has banned them from lobbying, but they still get calls from the Hill for information and market explanations. Fannie has two people handling those matters and Freddie has…..well, several more, with another being sought! (But, I am sure that Lockhart is all over that disparity.)

If Hollis can expand his universe, when FHFA has battened down the lobbying part of Freddie’s world, then he has the post-nuclear survival skills of a cockroach, which I observe in the most positive way.

(Bulletin: Freddie’s new top guy, David Moffett, has resigned this morning. “But, we hardly….!” I knew something was up when “insiders” started referring to him as “Muppet.”)

Conservative Leadership Choices for President

Whatever happened to that once full GOP political larder, which seemed to have several “presidential-candidates-in-waiting?

Well, the truth is that they still do, but very few of them seem worth a cup of coffee. Last year’s GOP primary knocked off a few.

Mitt Romney, Bobby Jindal, Sarah Palin, Mike Huckabee, and Charlie Crist were some of the top names that conservatives--meeting at the Conservative Political Action Committee (CPAC) annual meeting--ruminated over this weekend, before they voted that Romney had the best chance to lead the party in the 2012 elections and retake the White House.

Not very likely in my book.

Mitt, with all of his good looks and cash, couldn’t beat a shaky John McCain last year and the world is unlikely to demystify the Mormon Church in the next four years, his membership in which seemed to hurt his GOP Primary efforts among the “Christian Right.”

Let me go out on a limb here and say that nothing in the next four years will make Sarah Palin an acceptable national candidate, after her self inflicted wounds during the 2008 campaign. Even if she agrees to more of those wickedly funny “Jerry Sub Shop” radio commercials, which have a Palin “sound-alike,” saying--after she promotes a steak and cheese sandwich special-- “Ya know Jer, I can see the United States from my front porch.”

That will not revive whatever political viability Palin once had, although it might enlarge her pocketbook...

Bobby Jindal, unfortunately, will need a long time to come back from his disastrous televised response to President Obama’s ‘state of the nation” speech, which had more Republicans quick to complain than Democrats. An otherwise bright young public official whose handlers made him look rigid, backward looking, and doctrinaire conservative, Jindal had the opportunity to look and sound so much better. But, he allowed himself to be captive to the traditional GOP mantra, “We need more business tax relief and small government.” The first of which didn’t help a broad swath of Americans and the second totally eluded them, when they controlled both ends of Pennsylvania Avenue for six of the eight Bush years from 2000-2008.

I like Huckabee, probably because he sounds the most upbeat, charming, and humorous of the GOP bigwigs, while Crist is the executive of a major state and seems to have some gravitas and sensitivity mixed in with his Republican credentials. Assuming neither gets caught up in some type of political mess, or in Crist’s case run for the Senate in 2010, they could be an attractive GOP ticket in 2012.

Rush and Annie??

What do you have when Rush Limbaugh and Ann Coulter speak to the same audience?

Two decent sized people, if he could give her about 50 of his extra pounds.

CPAC crowds were entertained by this duo, which wowed them by saying outrageous things about the Democrats, President Obama, and the media. All of which are fair game for the Right.

But, IMO, speeches by these two agitator-extremists just drive support to the Democrats. I wish the conservatives and their GOP friends would book Rush and Annie at every primo event and venue.

Maloni 3-2-2009