It’s In the Details!!
The Congress now has passed the Dodd-Frank financial reform bill and congratulations are due those gentlemen and their staffs for their success. It’s never been harder to get Congress to approve controversial omnibus legislation, but they did.
It’s not as strong a bill as I would have liked and it still depends a great deal on the quality, energy, creativity, and objectivity of the current federal financial regulators.
As I learned early on in my Washington professional career, the “Devil is in the details” and the details are in the hundreds of regulations, studies and reports, which the new bill calls on official Washington to produce.
Good lobbyists know that what was lost on the Hill often can get captured at the agency level where implementing regulations are drafted, especially if the agency involved wasn’t warm toward the particular provision. While the statute can’t be ignored, it can be studied and slow-walked to death, so that advocates lose interest or office holders lose elections. The effect becomes the same.
The mobs that worked the Hill now will descend on the White House, the Fed, the Treasury, the FDIC, Comptroller’s office, SEC, etc. and see if they can cajole those folks into doing something that the lobbyists couldn’t totally sell on the Hill. The reverse happens, too, but not as often, when an agency didn’t get all that it wanted in a provision, and writes regs a tad more vigorously (viciously?) than the legislative history might suggest.
The bottom line in all of this is that a ton of work remains to implement what the Hill produced and that process just begins with the President’s signature.
Delisting Fannie and Freddie
I was asked the other day what I thought about the delisting of Fannie Mae and Freddie Mac, i.e. removing them from the stock exchange under the permissible rules, and relegating them to the pink sheets and the penny stock arenas.
I have no “inside” financial information about either company. What follows merely is my speculation on the speed with which the companies lost their lifetime space on the New York Stock Exchange and the possible reason for that alacritous action from an agency not known for such.
In the next few quarters, Freddie or Fannie—if not both—actually might show black ink or serious signs of financial recovery. (Yes, they still owe the Treasury billions, but those debts can be paid at a reasonable rate and over a reasonable time frame, if the Administration wills it.)
The folks who are foes of the two companies, including officials at FHFA and some in the Obama Administration, might find it more difficult to “abolish” Fannie and Freddie—a wish House Banking Committee Chairman Barney Frank (D-Mass.) and others have—if the two started to earn money and continued to undergird the entire conventional mortgage market, albeit not efficiently, as they have since Hank Paulson torpedoed them.
It helps enemies of the former GSEs to have them as flat on their back and looking as negative as possible, ergo the haste to “delist.”
While the delisting cost both companies much of their remaining “market value,” that fact may not ultimately matter if they roar back into financial health.
One additional thought about the “future” and Fannie and Freddie.
If the GOP succeeds in flipping the House in November and “abolishing Fannie and Freddie” becomes the GOP majority’s battle cry, many D’s will find themselves opposing that just because the Republicans want it. Now, where the Administration winds up on these matters--if those undesirable but possible developments unfold--is anybody’s guess.
But, it might be that that the Wall Street Journal, Forbes, and their ilk still might have Fannie and Freddie to kick around, long after they would like to have them.
Hey Rahm, why is Ed Demarco still holding the FHFA job?? There must be some thoughtful Democrat who would like to run that agency and could.
I wrote some weeks ago that one didn’t have to delve too far into the Tea Party’s agenda and activities before you discovered racism, sexism, and anti-Semitism and that’s before you even get to Sarah Palin.
Now—in response to complaints from the NAACP over radical and ugly Tea Party behavior—factions within the conservative group are battling over who can tell who to leave their “small tent,” while they warn non-believers “not to gloat” as they conduct internecine warfare.
Why shouldn’t people gloat? It fun seeing those guys beat the hell out of each other. I suspect that some folks hope they keep it up for two more years.
In fact, maybe the country club GOP wing, the extreme Christian Right, and Tea Party members of every stripe, should meet somewhere in the great Midwest, shout out a bunch of Black, Hispanic, Gay, and Jewish jokes, sing the “Horst Wessel,” start the brawl and then go medieval on one another until a winner prevails.
Just think of the material that will give Glenn Beck and Fox News.
I’ve been very impressed with the work of the “Troubled Assets Relief Program Oversight Commission,” headed by Elizabeth Warren.
Its work, to date, has been comprehensive and very readable, without pulling too many punches similar to the reputation of Dr. Warren.
Dr. Warren, whom I believe would be an excellent head for the new consumer agency, created in the Dodd-Frank legislation, seems to be butting heads with the White House’s “old boys’ network,” as well as the GOP and the big banks, who are conducting a “not her” campaign against the former Harvard law school professor.
Nobody is owning up the whose hand is on the knife trying to plunge it in Warren’s back, but look closely at who claims it’s not them, i.e., the Treasury crowd including Tim Geithner and Larry Summers, and you’ll likely find the culprit!
The Administration’s bank apologists—and the GOP establishment—should back off and let President Obama appoint someone who has shown that she understands what consumers want from Washington.
President Obama, should ignore the hacks and make what he knows is a solid appointment and one that would satisfy the American public, certainly those who voted for Obama.
Elizabeth Warren would win Senate approval and beat a possible GOP filibuster, initiated because Wall Street and the banks don’t seem to like Dr. Warren. More reason to support her for the job.