Sunday, October 10, 2010
My Aunt Goldie and Other Things on My Mind
Afghanistan, Pakistan, and India for Dummies!
If you sometimes get confused as I am about what is going in Pakistan, Afghanistan and the region—and why—Helene Cooper writing in Sunday’s New York Times establishes some helpful easy to understand facts, relationships, and history. (With or without intent, she begs the question, “Why are we still in Afghanistan?”)
I’d Spruce Up My Resume, But ….
A few weeks ago, I wrte that former Fannie Mae General Council and EVP Tom Donilon was a candidate to be President Obama’s White House Chief of Staff. Not anymore.
Last week, Donilon was named the President's top National Security Advisor, after Donilon’s incumbent boss, Gen. Jim Jones, chose to leave that post.
At the same time I wrote about Donilon, it was announced that Tom Nides, another former Fannie colleague of mine, late of Morgan Stanley’s senior management, was joining Secretary Hillary Clinton to be her #2 at the State Department.
Good for both of these men.
I hope these appointments are an indication--in most senior parts of this Administration—that Fannie Mae service or affiliation is not the “career killer” it once seemed.
If that is the case, now that President Obama has tabbed Donilon and Nides, the “star pupils,” what is stopping him from bringing onboard their mentor, James A. Johnson, who is more than 10 years gone from Fannie Mae?
I mean if you are going to tap two “little Fannies,” why not go for the biggest Fannie of them all, figuratively speaking, Jim Johnson. (Sorry Jim, couldn’t resist that line!)
Jim has long been a positive and helpful factor in the professional careers of many individuals, including both “Toms.” Although few like to think of themselves as “protégés,” Donilon and Nides will admit that each has benefited greatly from their personal relationship with Jim Johnson.
Nides came out of Johnson’s native Minnesota and worked in the Carter/Mondale campaigns and later Mondale’s presidential bid.. Donilon was a White House intern during Carter/Mondale, when Jim Johnson was Mondale’s CoS. Both “Toms” went on to play significant roles in the Party, the Congress (Nides), Clinton Administration and the State Department (Donilon), before working at Fannie Mae.
After Fannie, Nides went to Wall Street and Donilon back to his old law firm O’Melveny and Myers, where he was working before he joined Fannie. Donilon and his wife Kathy also are friends and trusted allies of the Vice President and Mrs. Biden. (KD is Mrs. B’s CoS.)
As the Vice Chairman of Perseus LLC, a private investment banking firm, Johnson may be perfectly content where he is right now. But at one point he was mentioned as a possible Chief of Staff candidate for President Obama (although Peter Rouse has now succeeded Rahm Emanuel in that post) and easily has the ability to be Obama’s next Secretary of Treasury, if Tim “Too Close to the Big Banks” Geithner decides to return to NYC. (Unrelated to Johnson, I hope and wish for that departure.)
Jim Johnson has many talents and has enjoyed multiple successes (business, leadership, head of the Kennedy Center and Brookings Institute, prominent corporate board memberships), but the keenest of his positives is Johnson’s political instinct.
At Fannie, he was creative and energetic on the mortgage finance side, as well as external affairs and politically. He worked very successfully with House and Senate Democrats but also the minority Republicans. He was welcomed by the Black and Hispanic Caucuses into their councils, and his Minnesota roots-- not to mention his long time political work in Illinois, the Dakotas, and Iowa--keeps him in regular contact with those states' congressional and government leaders (Tim Johnson, Kent Conrad, Jim Oberstar, and Earl Pomeroy. Tom Harkin, Iowa Governor Chet Culver, the Daley family, et al.).
President Obama—if he truly is over fear of the “Fannie stigma”--as well as the nation-- could benefit from Jim Johnson manning a senior White House or Cabinet post.
A Senate approval would generate angry Fannie Mae questions, but few that Johnson couldn’t answer, since he was long gone when Dan Mudd--his successor once removed--invested in the subprime and Alt A mortgages which failed, costing the company billions.
Why is Fox News Scaring My Aunt Goldie?
My 88 year old aunt, Goldie Weinstein—my late mother’s sister--is the last surviving member of her nuclear family, which had 8 sisters (one of whom died at birth) and one brother.
She never married and lived most of her life with another sister, my Aunt Honey, who also never married and who passed away from cancer a few years ago. Thanks to Honey--who worked in a bank and managed their financial matters--the two lived within their means, always rented, and made some prudent investments with their spare change.
Today, Goldie doesn’t have to worry about her heat or electricity being turned off or not having enough money for food or the occasional dinner out. She gets her hair done weekly and contributes to charities she believes are really helping people.
Right Wing Network Generated Fear
But rather than enjoying these years in relative comfort, she is bedeviled by all sorts of ideas and individuals being represented to her as personal threats.
Age not withstanding, Goldie is a current events marvel. She devours books and newspapers and listens to talk radio, but—unfortunately—is fascinated by Fox News.
We have grand debates and discussions. During the BP Gulf of Mexico disaster I remember her being critical of the “Jones Act,” which I told her meant nothing to me. She was right, this post World War I statute--which prohibits the number of foreign owned vessels traveling in US waters--created a problem for BP and others when foreign ships, which could have helped in the clean up effort, figuratively ran afoul of our laws.
Afraid of Soros and Stern?
The other night, in a telephone conversation, she said to me, “Now Bill, no BS, tell me, as an American citizen should I be fearful of George Soros and Andrew Stern?”
Whoa, where did that come from? It didn’t long to find out. It was Fox News, which regularly has been demonizing those men and a host of others who have some connection to the current Administration.
I tried to dismiss her concerns, noting that Stern reportedly is under FBI and DOJ scrutiny for some of his union activities and that Soros is just another international tycoon trying to use some leverage with the Obama Administration to further his financial interests.
None of that satisfied her.
When she started in about “Bill Ayers and the Weather Underground,” I said that I would do some research and get back to her.
I tried to be helpful and review some of the issues and people she mentioned, all the while wondering why she never worried about the Saudi princes and oil officials who surrounded the two Presidents Bush? (I guess because Fox thought those Muslims were pro-American.)
The conservative network does a great job playing on elderly worries and certainly lots of others.
Checking into her “fears” and I came across Dana Milbank’s excellent article from the Washington Post about Fox’s Glen Beck and how he seeks to incite his audiences scaring some of them in the process.
I don’t know if reading Milbank’s article will get my Aunt Goldie over her “ghosts in the attic” concerns, but it’s an excellent story. (Link below.)
“W” Screwed the Small Banks; Obama Should Fix It
The Washington Post last week editorially blamed Barney Frank (D-Mass) and Maxine Waters (D-Cal) for forcing the Treasury to send TARP money to United First Bank (UFB), a small minority owned institution in California, where Waters’ husband held a board position.
The Post conveniently pointed out that the bank had invested heavily in “Fannie and Freddie stock,” obviously hoping that fact would further soil the bank’s tawdry reputation and maybe even those of the bank’s congressional supporters.
What the Post failed to explain was that UFB--and hundreds of other small financial institutions, most of which were “majority-owned”--obligingly invested in that Fannie and Freddie “preferred stock” for the exact same reason. The Bush Treasury Department strongly steered them into those purchases, saying it was a safe investment, enjoyed an excellent yield, and would eligible for treatment as bank capital.
Paulson Cast them Overboard
Even without the heavy Henry Paulson steering, that “win-win-win” review generated a logical $20 Billion investment for small banks, with the Treasury all along assuring them of the preferred stock’s utility and value.
But when Treasury Secretary Paulson, in 2008, pushed Fannie and Freddie into “conservatorship,” he reduced the worth of that preferred stock to near and turned billions of small bank book capital into instant losses, in the process “punking” the small banks.”
The Bush Administration saw to it—and their successor insured—that the big banks were TARP rich. But, the little guys got hind nipple.
If “big now is bad” and “small now is good”--just based on how the behemoth financial institutions are playing their political cards--the Obama Treasury needs balance those scales and revalue the GSE preferred stock.
It can’t be repeated enough that the small guys bought (and still own), because the Bush Treasury “Pied Pipered” them into buying it and then coldly changed the rules and. beggared the small financial institution.
Creating value in these dead securities won’t make F&F’s situation any less daunting, but it would give those community banks additional capital with which to make loans, a good move for the economy, right now.
Through no fault of their own, the small guys were lied to by Paulson et al and—with the artificial takedown of the GSEs--became financial collateral damage.
The Democrats should right that Bush/Paulson wrong!