Sunday, September 12, 2010

“Gimme Shelter!”




Rahm is Going, Going, G….?


Reports are that White House Chief of Staff (COS), Rahm Emmanuel will return to his beloved Chicago and run for Mayor, now that the current Hizzoner Richie Daley has decided to retire and not seek re-election. More power to Mr. Emmanuel, whose hardnosed approach to politics and his Democratic colleagues is bracing and—in my view—totally necessary and desirable.


According to carefully designed White House media leaks, the early successor candidates are Valerie Jarrett, long time Obama Chicago ally, Democratic operative, close family friend, and a White House senior advisor to President Obama. The other two candidates are Tom Donilon, a White House senior national security adviser, and Ron Klain, Joe Biden’s Chief of Staff and Al Gore’s former Chief of Staff..

Klain has performed many things well in his long career as a Democrat operative, but wrongly—in my view-- allowed Kevin Spacey to play him in the HBO movie “Recount,” the story of Al Gore’s 2000 presidential campaign, when the Supreme Court elected, I mean ruled in favor of George W. Bush in the controversial Florida ballots case.

Both Donilon and Klain—as Jarrett is—are very capable officials with the skill set to be “COS for POTUS.”

Yet each guy also worked for Fannie Mae, Tom for several years as General Counsel and Ron as a consultant.

Unless Jarrett worked for the Chicago candy company, the other “Fannie May,” she doesn’t have a “Fannie Mae problem.”

I thought GSE service all but ruled out Democrats wanting to toil for President Obama in high profile positions? Maybe I am missing something, unless Donilon’s and Klain’s names were thrown out there to be lightning rods for Jarrett, who some insiders believe is a lock for that tough job.

BTW. Ron Klain’s “Spacey mistake” was letting Spacey portray him.

While Spacey is a superb actor and did a fabulous job in the movie, Ron is “Hollywood photogenic” and so much better looking than Spacey. I don’t know why Klain didn’t insist on playing himself!

I’ve often counseled Ron, “Never permit a less handsome individual to play you in the movies!”

I have an ironclad understanding with two authors—writing books on a subject where I was a minor player—that if their books are made into movies and my actions make it into the script, I insist that Antonio Banderas play me. Of course, AB’s English is better than mine, but we are--or were--near look-alikes! I also expect Banderas to introduce me to Selma Hayak??

(For those who are slow on the uptake, the last four paragraphs are facetious and a spoof.)


Who Needs Federal Support for Home Ownership??



Fair weather sports fans always want to change their local heroes when the latter has a bad game or bad season.

“Trade the bum; get rid of him, who needs him, etc. etc.”

We’ve all heard variations of these cries or equivalent in sports, our businesses, our political lives and even our family squabbles.

But, for the first time in my lifetime and memory, we hear that now from doubters questioning desirability of the federal government helping those who need support to become home owners.

Home ownership suddenly is bad or undesirable??’

“Some people—hint, hint--shouldn’t own a home; as a nation we are over housed; federal support only goes to minorities; ‘Sweden’ (or pick your favorite foreign country) doesn’t have government support for homeownership and they do just fine; who needs the federal government, we have plenty of US banks that can do the job; the ‘American dream’ is just a sales pitch for Homebuilders!”

Really? Everyone one of those anti-housing rants is wrong or misapplied.

Yes, some people should rent and not own and others prefer to rent and not own, even those who can afford to buy a house.

But, there is so much more to owning a home then shortening some builder’s inventory.

Are we so faint hearted as a nation that the recent financial debacle and its dilution of housing values will cause us to jettison a rampart of our national character and economy for well over a century?


Home Ownership Isn’t Just About Houses


It’s an old story but requires re-telling. Home ownership and all of the goods and services which go with it, like furniture, appliances, electrical installations and technology, rugs, carpeting, painting, driveway and sidewalk contractions, asphalting roads, repairs of the sesame, etc. etc, etc produce around 25% of our nation’s gross domestic product.

Where else is there a $3 or $4 Trillion slug of domestic business activity and all the jobs that go with it, waiting to insert itself into our economic mix, if the “too much housing” crowds have its way?

Most houses are part of a neighborhood, which is part of a community, which is part of a town or city. Those demarcations in turn support vast municipal enterprises, libraries, hospitals, schools, teachers, police and firemen and others.

And while hoary, it is true that home owners impact the quality of life and traditionally have been more active in their communities and PTAs, as volunteers and voters, in all probability related to the stake they have where they chose to live.

Some moan about lower property values, but there still is a wealth effect in owning and slowly appreciating property, which is not going to disappear completely because houses today are less valuable than they were three years ago.

Yes, there certainly is a major role necessary for the federal government to support home ownership, especially when that “private money”—which the GOP loves to say will make up the difference—won’t or can’t.

Remember, Mr. Hensearling, Mr. Bachus, Senator Shelby, and others, you can’t beat something with nothing!


“Whores on Seventh Avenue”

When Simon and Garfunckel sang about the “whores on Seventh Avenue,” they weren’t thinking of the industry whores in Washington, like those who inhabit the headquarters of the Mortgage Bankers Association of America.

This special interest last week called for the federal government to get rid of Fannie Mae and Freddie Mac, reducing them to rubble and memories. Forget that the GSEs carried those companies for years, even as most of them were gobbled up by big banks.

Does this new position suddenly reflect altruism from a group known for its selflessness?

Hardly, even the association is misnamed, since not one of them is a real "commercial banker,” which takes deposits from savers and lends money to individuals and businesses.

The MBA is just a group of “mortgage companies,” which do nothing but originate mortgage loans and sell every one to some investor, traditionally Fannie Mae and Freddie Mac or the FHA and Ginnie Mae, the true government equivalents of Fannie and Freddie.

Et Tu Brute?

In the past, after thriving on GSE benefits, MBA companies turned against Fannie and Freddie because the latter--thank heavens for the consumer—made the mortgage application process more efficient and cheaper, squeezing fat out of it, meaning the MBA members couldn’t earn as much, slow walking consumers through the unnecessarily prolonged application period.

That worked for the nation’s borrowers because if the MBA member didn’t make a loan (largely on Fannie and Freddie’s underwriting terms and prices), the consumer would walk across the street to another lender which would.

Ok, so the MBA wants to do away with Fannie and Freddie. Oh and they also don’t want any successor institution to make loans to low income families. Hmm, sounds very elistist and right wing conservative to me.

But does the association want the government out of the market and all mortgage lending done by those cash filled big banks and Wall Street?

Um, not quite. The MBA wants the federal government to continue to provide guarantees on all federal insured mortgages—through the FHA and Ginnie Mae--and add to that support new federal guarantees on all conventional mortgages, which historically have been made with “private money” (and loans that Fannie and Freddie bought in the past without federal support).

In testimony before Congress this spring, the MBA witness had the brass to insist on only private funding for secondary market operations, but then—in his next sentence—he called for a brand new federal guarantee all for mortgage securities created there.


Can you hear those oinkers at the trough? Looks to me like a win-win for lenders, with Uncle still holding the bag.

And which lenders would originate the mortgage loans that the MBA wants Uncle Sam to fully insure, guarantee and ultimately pay off if they go bad? Surprise. It’s MBA’s members.

Save me from such hypocritical posturing.

As I’ve said, often, the MBA—which ran itself onto hard times with questionable internal business decisions--should just close its association doors and let the American Bankers Association (ABA) represent its members' interests. It would be a lot cheaper and more efficient for that “industry.”

Maloni, 9-13-2010

Note: I soon will be changing my email account from AOL(billmaloni@aol.com) to Gmail (billmaloni@gmail.com; look for a special message from me.

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