Sunday, October 24, 2010

Ginni WHY!!


(I wrote this segment before it was reported by WJLA-TV and the Washington Post, that Clarence Thomas’s ex-girlfriend Lillian McEwen, with whom he once had a romantic relationship, has written a book accusing Thomas of behavior which parallels the sexual harassment charges Anita Hill leveled against Thomas when he was nominated for the US Supreme Court.)

Why would Ginni Thomas, the wife of Supreme Court Justice, Clarence Thomas,
Suddenly telephone Anita Hill, Thomas’s chief protagonist during his Senate confirmation hearings nearly 20 years ago, seeking an apology for her husband?

I can suggest a few answers, but rather than play that game, I’d ask why would Ginnie Thomas resurrect and force attention to that incident and her husband when most people have put it aside and moved on, allowing Thomas to carry on a very undistinguished judicial career on the nation’s highest court.

Thomas rarely questions lawyers who appear before the Court and predictably sticks to his very conservative interpretation of the Constitution or whatever is the latest Right Wing line and has been a perfect GOP judicial “cipher,” whose opinions mirror Judge Scalia and/or Chief Justice Roberts.

But, that is Thomas’s right and it was the first President Bush's (corrected from "Reagan," see "Comments right to appoint Thomas, seemingly getting just the type of justice that he wanted, a man smart enough to keep his mouth shut and not show the world just how little he knows or understands.

Hill won’t recant her allegations that Thomas sexually harassed when they worked together, just like Thomas now will never admit that he did so. There is no need for that except in Ginnie Thomas’s mind.

But, I wonder what came up in the Thomas’ household which made this an issue now? Only Hizzoner and Mrs. Thomas know and I’ll bet they’re not talking about it publicly.

(Of course, now we know that the “what” could have been leaked word of the McEwen book.)

Private GSEs

I’ve noted before that there are few “bad ideas” regarding our future mortgage finance system, even though I may not agree with them.

John Dalton, President of the Financial Service Roundtable and someone for whom I worked, briefly, when 30 years ago he was acting Chairman of the Federal Home Loan Bank Board, recently proposed letting Fannie and Freddie slowly evolve into any number of private “mortgage insurance securitizing companies (MISCs),” which he envisions as securitizing entities, that have the authority to package whole loans into mortgage backed securities and sell them to investors.

Dalton sees these institutions replacing F&F securities MBS activity and goes onto cite all of the virtue of “private institutions,” etc. etc., with the only little bit of federal help these companies would need being some federal “catastrophic insurance,” the premiums for which they would pay to the government. (I guess that makes them “mainly private,” but not quite. There is a "degrees of pregnancy" joke here somewhere.)

They would have a “strong, independent regulator,” (Everyone proposing something new seems to link those words when describing a novel financial regulatory arrangement!).

I welcome John Dalton’s contribution to the debate, but only would point out that some of his large bank members—or other interests his association represents—already have these powers in their bank holding company structure.

The banks can raise the money cheaply and their investment bank subs can securitize and attach their private label guarantees around the mortgage bonds.

The problem that Dalton must confront, but which eludes his rhetoric, is that Wall Street firms and banks did that very thing just a few years ago (see PLS subprime) and they did a horrendously poor job.

The banks and investment banks, which created and pushed PLS subprime mortgage securities across the world cost themselves, their company stock investors, the institutions which invested in their securities, as well as the federal government hundreds of billions of losses, not to mention the societal deficit from the massive failure, layoffs, lost family fortunes, etc.

I guess someone envisions the “strong, independent new regulator” doing a much better job then the Fed, SEC, FDIC and others did three or four years ago on private label securitization and it could.

But, the Financial Services Roundtable shouldn’t sugar coat the potential for losses here, too. You cannot hide the mortgage risk “hot potato.” Someone has to hold it, because mortgages and mortgage securities come with structural risks. At the end of the chain Dalton has the US government holding it.

Dalton called for his “MISCs” being in a “first loss” position as if that’s all that matter.

Fannie and Freddie were in a “first loss” situation—which isn’t unique—but that didn’t stop them from losing roughly $60 billion each in market capitalization, and approximately another $40 Billion and $30 Billion, respectively, in regulatory capital losses. Then the Treasury picked up their corporate red ink, which has added @$140 Billion to those amounts.

If John’s members want to do this and use their new financial execution as the latest remedy to Fannie and Freddie, more power to them, but do it cold turkey, without Uncle Sam’s backing.

I believe that would make those who create and operate MISCs far more responsible then they might be, with Uncle quietly standing behind them, since “federal insurance is federal insurance.”

Mr. and Mrs. Democrat

With the Democrats in power, normally the title above would go to the President and his wife.

Arguably, however, it really belongs to former President Bill and Secretary of State Hillary Clinton because of their national popularity within and outside the party, the gargantuan media appeal of each when they travel, and the professionalism and smoothness of how they interact and communicate with crowds.

Bill Clinton is the single best politician in my lifetime. One of my “grip and grin” pictures with him in right in the center of my office wall. (You see the left side of then President Clinton’s face in that photo and my full face, complete with adoration, but Clinton is “locked in.”)

I never have seen anyone work a room like Clinton or make every single individual he encounters in those four walls feel that eh is connecting exclusively with them and none of the surrounding throng. It’s a high art.

Hillary has much of that, too, and a tough cerebral quality to boot.

Bill Clinton’s strenuously working the nation on behalf of the Democratic Party is the best thing the current Congress and the White House has going for it, leading to the November 2 midterm elections.

Return of Cram Down???

Could the current hugely negative press and confusion being generated by mishandling of mortgage defaults cause a Democrat controlled Congress to consider “cram down legislation” in their lame duck session after the elections?

A bill allowing judges to restructure mortgage debt and reduce principal amounts owed lenders passed the House only to die in the Senate this year. It’s possible that angry Democrats—who lost their seats—or happy Democrats who held on and won re-election might choose to “strike a consumer positive” stance and move the House passed cram down bill, which naturally was opposed by all of the banks (a strong reason to vote for it, if that bank money negatively influenced that Senator’s or Congressman’s race).

Watch But Don’t Bet

--It wouldn’t tonally shock me if New York’s Chuck Schumer managed to win the Senate Majority Leader’s post if the D’s maintain control of the chamber, even if Harry Reid survives his race against the Tea Party’s Sharon Angle.

--It will come down to Schumer versus Dick Durbin (D-Ill), but don’t underestimate the wily Schumer (think Barney Frank-smart but with more friends).

--It can’t be good that Chairman Barney Frank (D-Mass) lent his re-election campaign $200,000. In my view it would be a stunning and disheartening defeat, if Barney didn’t prevail in his race.

Maloni, 10-25-10

1 comment:

Bill Maloni said...

It pays to know your history, obviously I've forgotten some of mine.

President George Bush (the first)
nominated Clarence Thomas to the Supreme Court, not Ronald reagan as I wrote.