Thursday, March 31, 2011

Happy April Fool’s Day, Play a Joke on Someone!!

An April Fool's Day Interview with a GOP Member of the House Financial Services Committee.

Congressman, you’ve introduced 8 bills designed to reduce Fannie’s and Freddie’s role in the nation’s mortgage finance system and to scale back the federal gCovernment’s stake in the same operation.

Yes, that is correct. We think disassembling the old GSEs piece meal is better than trying to abolish them all at once.

Before we get into the substance of these bills, following the introduction, did you hear Committee Chairman Spencer Bachus (R-Ala) say, “The measures are intended ‘to create a well-functioning, private, competitive secondary mortgage market to price mortgages according to risk, be more innovative and efficient, and operate with less political interference?’ ”

Yes I was and truer words were never spoken.

Sir, do you think the Chairman intentionally ignored how much campaign money the banking industry—after abandoning the Democrats--spent mainly on the GOP to produce the bankers’ legislative and regulatory agenda? It’s been rather well documented how massive was the bank lobbying effort both to mash Fannie and Freddie and then last year to get Congress to pass weak legislative changes, memorialized in the Dodd-Frank Act. Now the same actors are doing the same level of lobbying now with every federal financial regulator, trying to water down new regs. Has Chairman Bachus missed all that and how can he hope people will view him as credible or believe him?

Also, a quick follow up, after making that statement, did the Chairman turn to stone or have his proboscis grow significantly larger?

Look, where you stand is where you sit and I believe that’s just corporate America—God love them--exercising its First Amendment rights, just as our, I mean the, Supreme Court said they could.

OK, back to your proposals. If you succeed with these legislative approaches, what institutions will provide mortgage finance and act as the nation’s secondary mortgage market?

Well Silly, our big banks of course, excuse me, I mean the nation’s large diversified fully integrated bank holding companies and other large depositories.

And why would you—in effect—cede the nation’s entire national mortgage market to large financial institutions, which have a spotty record on mortgage lending? The banks were pioneers in “redlining,” prefer to lend adjustable rate loans rather than fixed rate and seem to oppose every pro-consumer finance proposal or appointment made in Washington. In addition, they abandoned some markets in tough times and never have presided over a national secondary mortgage market. Yet, in your legislative scheme, the banks face no natural competition?

Not an issue, we also are going to have “covered bonds” and the “Danish system,” although I don’t know why pastries help with mortgage lending. And, as soon as the Financial Services Roundtable tells me what a covered bond is and what they do, I’ll have a better answer for you. At first, I thought this was a punch line to a “blonds” joke, but now I know they were saying “bonds,” not blonds.

But, we need to get the federal government out of the mortgage finance business and the best way is to give everything to be banks money, so that we have private money instead of tax payers money used for mortgage loans..

Obviously Congressman you are aware that those major regional and national banks rely on a variety of federally offered and supported initiatives for their working capital, which is a neat way of saying they are federally subsidized? The biggest banks, likely, all are “Too Big to Fail,” meaning the federal government would bail them out, if they ran into difficulty, which sounds more like the Fannie/Freddie story than not. Your approach just may be getting the federal government deeper into the mix than they are right now, not to mention creating a not-consumer friendly United States mortgage market.

Note that your proposals, state explicitly, that the GOP wants Fannie and Freddie—while they still are around--to charge consumers more for their mortgage loans to make it easier for these banks to compete. How does that help anyone but the banks?

Nonsense, I don’t know about “your” banks, but these banks--our banks, as I like to call them--are private and need help. Let me spell that for you “P-R-I-V-I-T, private." They’re all good local businessmen, entrepreneurs and--unlike Foo and Fat-- don’t use the federal government for much of anything. Nobody in the private sector does. That's why the banks call themselves


So, don’t try and confuse us. Did I mention the banks are going to employ “covered bonds” and great coffee cakes and whatever other goodies those Danes bake and what generous contributors these guys are? I mean all we have to do is mention a number and “boom,” we get it from them. It’s like having our bank-provided Republican ATM machine, but—of course—with no swipe fees for us.


Even Haley Barbour supports us. You remember when Haley worked in town, his old lobbying firm (Barbour, Griffith, and Rogers) was part of the successful effort to wound Fannie and Freddie and that was before we all even heard the word “subprime.” No we just have to finish the job that old Haley started.

"Colorblind Haley”—as he wants us to call him—was a Fannie killer, before most of us even came to Congress. So how much more evidence do you need that we are doing right by the banks, I mean the American people?

Congressman, who is going to buy all of these covered bonds and can they finance a trillion dollar US mortgage market?

I don’t know. I told you I needed to speak with the boys at the Roundtable. I am sure that they have answers to that question, especially since I don’t.

I am sorry sir, please tell me again why you want to get rid of Fannie and Freddie?

Simple, they caused the entire 2008 financial meltdown, with their efforts to make poor people homeowners. Damndest idea I ever heard, telling poor people—who didn’t know if they were going to have a paycheck from one month to the other—that they could afford buying a home. That was the problem.

You must be referring to the subprime debacle, on which your committee held days of hearings?

Yes sir, that and more, Frannie and Feddie or Frankie and Johnny were the cause of all of that, too.

Sir, Mr. Congressman, didn’t the President’s Financial Crisis Inquiry Commission, as well as many others, point out that it was Wall Street, in concert with large banks and the rating agencies—not the former GSEs-- which introduced subprime lending, told their paid-by-the-contract mortgage brokers to ignore all underwriting standards and just send all of the signed paper they could to New York?

These same banks and investment banks created, packaged, guaranteed, and sold the poisonous mortgage backed securities all over the world, causing dozens of lenders to fail or lose huge sums of money--and international financial chaos to set in--as thousands of borrowers quickly ran out of money to make their monthly mortgage payments. Didn't that dishonesty and treacherous behavior cause the huge mess in late 2007 and 2008, from which we just now are digging out, albeit slowly?

Pure bull pucky! Our guys on that Commission had the facts they needed--before the hearuings--and made their case well. Who cares if nobody else on the Commission agreed with them?

They also got out in front of those Democrats and put out our own report early, making it clear that Fannie and Freddie were the sole culprits.

Our guys wouldn’t say that if it wasn’t true, would they? Based on what our Commission members wrote and later said, I am not even sure if "Wall Street" investment banks were involved, since that name never appears in their findings.

What other evidence do you need that you are wrong and we are right, er Right?

Congressman, isn’t there the possibility that all of this power concentrated in the big banks--with no natural competitors and their opposition to serious regulation--scares you and makes you wonder if you are taking the correct action, especially given the big boys proven ability to manipulate the Congress?

Let me answer your question this way. Did I mention their campaign contributions?

Well sir, thank you for your time and um, good luck.

We don’t need any luck, son, we have the votes and lots of campaign money? Damn did you notice that Spencer now is using handkerchiefs that are two feet by two feet? I guess you got to have those when your nose grows so big, so fast.

Maloni, 4-1-11

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