Wednesday, September 28, 2011

Mitt, Rick, and….?

Could Perry’s Problems Bring New Faces

Rick Perry’s earned his horrendous political performance last week with a series disastrous debate answers—heard round the world and making him look like an empty vessel--a shocking loss in the Florida Republican straw poll, and a similar albeit not as surprising GOP straw poll setback in Mitt Romney’s birth state of Michigan.

It may have slowed down the Perry express, but it is doubtful—yet—whether his self inflicted wounds are terminal. There is a lot of conservative money behind him.

Despite his gaffs, there still appears to be a lot of GOP backing for the former Al Gore for President supporter (when Rick was a Democrat) and moderate Republican Rudy Giuliani for President (after Rick switched parties).

Perry also is the anti-science, anti/pro immigration (depends on day of the week and audience), and anti-abortion Governor who mandated anti-cancer immunization for young Texan girls in case they chose sexual activity over abstinence.

Woo-who cowboys and cowgirls, that’s a lot of stuff for Republicans to accept before you even get to Governor Rick’s history as a poor student; his desire to consider seceding from the union; his efforts to provide youthful illegal aliens with taxpayer supplied college tuition, get rid of social security because he thinks it may be unconstitutional and a “Ponzi scheme.”

That pistol packing, jogging Rick, he’s a hoot!

The good news for the nation, but the bad news for Perry in his failing support, is that a reasonable Republican (actually I believe Mitt Romney fits that description, but because he’s a Mormon, I don’t think a lot of truly conservative Right does) might come out of the woodwork and seek the GOP nod.

The names that come to mind are New Jersey Governor Chris Christie and his Indiana peer Governor Mitch Daniels. Or, how about urging New York’s Mayor Michael Bloomberg to enter the race?

Maybe ex-Governor Sarah Palin will jump in (please God!!). She claims she will make a decision by the end of this week, so let’s hope!!

FHFA Upset at FHFA

A few weeks ago, I wrote that the Federal Housing Finance Agency’s (FHFA) new Inspector General (IG) was shaking up the troops with his internal inquires and questions.

This week he issued a charge that regulatory staff was asleep when Freddie Mac and Fannie Mae reached deals with Bank of America over the loans involved in the BofA
cash settlement with the two companies.

The IG felt that did examine some 300,000 loans which could have been part of the deal and for which it could have sought a greater return from BoA. And because FHFA personnel failed to examine these loans or Freddie’s methodology either, money which F&F could have been claimed was left on the table and the taxpayer suffered.

Here’s hoping that FHFA Director Ed DeMarco uses the IG’s finding to fire some of the people who weren’t up to the job (as many, for years, have claimed).

Jobs and Job Creation

If the federal government can’t do it, what can?

My thinking probably is off here, but try and follow it and let me know if you believe it is flawed.

Both political parties seem to agree that the most and best jobs are created by the private sector, not the federal government, but the GOP ridicules suggestions that anything short of massive tax cuts for business will spur that hiring.

Here’s where I think the R’s get into real “the Emperor isn’t wearing any clothes” trouble.

Big business—while they want even more tax breaks—already seems to enjoy lots tax benefits, isn't that what the GOP is fighting to save from the Select Deficit Committee's budget axe?

But, with the tax bennies they have, are they massively hiring anyone?

If there are 25 million job seekers and the federal government can’t find it’s behind with both hands to find ways to get them jobs, why aren’t all of those conservative businessmen/women stepping up and hiring people?

Well, despite much record and near record quarterly and annual earnings reports, businesses claim there is no market to justify expanding their work forces.

Well, if a few start hiring, won’t that have something of a snowball ripple effect, when those workers spend their pay checks and create some opportunity for others to get hired in different businesses and industries, or is still all the fault of President Obama and the federal government?

All of those anti-federal government public officials and commentators should stop beating up on the Democrats and the federal government and instead, just exhort “the private sector” to step up and take some job creating risks?

The businesses could benefit and unemployment can get knocked down. After all aren’t those enterprises the best generators of good jobs or do they need more federal tax benefits piled on top of what they have, or is that another speech to a different GOP audience?

What a perfect segue into all of that money, all of those cheap deposits or TARP funds, sitting in bank vaults not being lent to businesses or individuals. (I save you that rant since you’ve all heard me use it before.)

If the federal government is useless for everything but making war then it’s useless. But, the next good GOP idea for businesses (not to mention the banks) to step up and independently shoulder some of the burden to quickly get Americans back to work, will be the first since the GOP won the House of Representatives.

Before ignoring this suggestion you might want to read the Time magazine story on why banks still don’t work, linked below, especially the part how three quarters of all small businesses report they are starved for credit.,9171,2093317,00.html

Bank profits up and bank lending down, who would be surprised by that??

Maybe I shouldn’t give all of these ideas to the Republicans. If business suddenly did become the forge for millions of new jobs, because of GOP prodding, the Party of Lincoln wouldn’t have to sweat beating Barack Obama next year.

The GOP’s biggest problems would be finding committee assignments and subcommittee chairmanships for their huge congressional majorities, come January 2013.

Maloni, 9-28-2011

Thursday, September 22, 2011

Tim Geithner, a Tool of the Big Banks?

So Ron Suskind, former Wall Street Journal reporter, Pulitzer prize winner, New York Times best selling author is out with a new book, Confidence Men: Wall Street, Washington and the Education of a President, among other things claiming that Treasury Tim Geithner has been a quisling (my word) in the Obama Administration, shilling for the big banks and slow walking presidential financial reforms?

Well, since I am not part of the Obama Administration and the Prez doesn’t check in with me to discuss his personal feelings, I only can assume that Suskind doesn’t read my blog, where I’ve been saying the same thing for many months, only in a much kinder way.

The Treasury Secretary came from the industry he is supposed to monitor and, occasionally lean on, but what he's done is more like cuddling and providing succor to the big banks and their investment banking subs.

I’m sure, when Geithner’s time in DC is over, he’ll find a comfy well paying niche in the financial services industry.

Suskind’s also book seems to expose former Obama economic advisor Larry Summers for the loose lips, sour grapes guy most think he is when he doesn’t (or didn’t) get his way..

It seems clear that Summers--who was dumped by the White House not long after he was named--appears to be the disgruntled source for a lot of the negative descriptions of the President and his advisors in Suskind’s book.

No political jobs for Larry.

Sign on the Times?

I was walking my dog this morning past one of the many banks on upper Connecticut Avenue in the District of Columbia, when I came across a large sandwich board sign saying “M&T Bank Is Lending!”

I guess that sign’s statement could be interpreted many ways, but the most likely is that the bank management’s doesn’t believe that most consumers think that banks in general are lending their money to individuals and businesses and M&T needs to get the word out that it is (or may be, since the devil is in the details).

What next sky-writing small planes, “Citicorp is…..!”

Could it Happen in the United States?

Which GOP presidential candidate—if he doesn’t change his tune--is most likely to generate civilian strife, bordering on civil war, if elected President?

IMO. Rick Perry hands down.

The most dangerous characteristic of GOP front runner Rick Perry isn’t his opposition to abortion; gun totting; rejection of evolution; wanting to charge the Fed Chairman with treason; disliking Gays; calling Social Security a “Ponzi scheme” and unconstitutional: believing that all non-Christians are headed for purgatory; wanting to blur church/state divisions; leading prayer services for rain in parched Texas (and failing); and thinking the federal government is useless and woeful except when it wages war?

While I have problems with most of those politically conservative manifestations, it is Perry’s constant flaunting of his Christian faith which worries me the most because I think it could lead to a real old fashioned blood letting conflict in the United States, pitting economic, racial, and religious mobs against one another.

By design it sets up another, but more visceral, “us and them” schism.

Think about it, a Perry primary win could set up more of his spiritual pandering and agitation which has thrust him to the top of the GOP political food chain.

Scary Rick Perry

What kind of future can most low income and minority families, let alone Jews, Muslims, and other non-Christian minorities, believe they’ll have under President Rick Perry—likely buttressed by fresh and larger GOP majorities in both houses of Congress—if he proposes to undo the federal support networks for education, jobs, healthcare, and nutrition, occupational and financial safety, while keeping in place the federal programs enjoyed by the wealthy and big business?

Could mobs of citizens who feel totally jilted by Perry take to the streets with mayhem in mind and battle the authorities and their fellow citizens?

My answer is “yes,” if continually goaded and excluded. There are many elements in our nation who might turn their neighborhoods into battlegrounds as they take out their anger, and political and economic isolation on perceived detractors.

This possibility grows when the “have nots,” already reeling from repeated economic blows, including high unemployment rates, lower incomes, and poor neighborhood schools, perceive themselves religiously ostracized.

I worry that if candidate Rick Perry continues to tub thump his personal relationship with God and wins—giving his God credit for prevailing over someone else’s God--Perry will have crossed a religious Rubicon from which he may not be able to swim back.

Can Perry, who has used this brickbat of faith to batter the heads of his opponents and build support among Evangelicals and other Christian zealots, stop when the opposition is a Democrat?

Take Your Right Foot Off the Gas, Rick!

Do you think Perry understands, “Run right in the Primary but run Center in the general?”

Rather than low-keying religious preference Perry wears it on his sleeves and keeps company with some of the most reactionary Christian pastors in the nation, racial bigots and anti-Semites.

This brings me to my core question. Do Rick Perry and his supporters truly appreciate how much misery throughout history has been produced by religious extremists, arguing over who God likes better or who is closer to his/her God?

Christians and Muslims, Jews and Arabs, Sunnis and Shiites, Protestants and Catholics, Hindus and Muslims, Hutu and Tutsi, Serbs and Croats—all occupying the same geography--have produced continuous clashes over the years leaving millions dead, devastation and destruction in the wake and almost no lasting peaceful resolutions to what started as religious disagreements.

Why do some Americans assume that kind of warfare can’t or won’t break out in the United States following an ugly and hate filled election?

There are too many short tempers and easy to reach guns in this nation for those seeking public office not to consider how incendiary their religious pandering can be. Turning it on and then off—depending on your audience--doesn’t work in today’s 24 hour total access to every uttered word.

I prefer the days when John F. Kennedy, seeking the Democratic presidential nomination in 1960, brushed aside a question about his deep Catholic faith and said “the United States had too many other dire problems” than to worry about his personal religion.

Maybe if Rick Perry quickly takes a lesson from John Kennedy, we won’t have to fear a US Armageddon following next year’s elections.

Preferably, it won’t come to that and Perry gets rebuffed by the Republican Party and sent back to Texas. But, right now, it doesn’t look that way.

(Anyone interested in this Perry blog segment will find valuable Christopher Hitchen’s Slate article.)

Maloni, 9-22-11

Saturday, September 10, 2011

The President’s Jobs Speech

I liked his speech. I thought it was concise, logical, understandable and even bold. President Obama spoke to the fears and concerns of millions of unemployed and underemployed Americans, not to mention his own political frustrations.

It certainly called for enough spending to generate attention and make an impact. But, he will get little Republican support for what he wants to do.

I haven’t seen anything in the earlier GOP responses to the Obama proposals which indicates they will go along and “pass this bill,” as the President frequently exhorted.

Through the weekend, I am sure that we will hear more from the GOP about less regulation and more tax cuts for business and the wealthy, the standard Republican mantra. But nothing resembling any jobs plans.

The Select Committee

The wild card in all of this may be the “Select Committee,” currently working on deficit reduction proposals, complete with preemptive legislative power, if they choose to use it.

The world is just waking up to the fact that this super committee’s mandate seems limitless—with only a seventh vote—stopping it from offering major spending and tax change proposals in its final report to the Congress. That package then needs only a majority vote in each chamber to pass and be sent to the President.

Only time and repeated polling will tell if President Obama succeeded at his second speech goal, i.e. trying to aim the American people and their collective opinions at the recalcitrant congressional Republicans, costing the GOP massive support in 2012 if the “party of Lincoln” refuses to back off its opposition to most any proposal Obama recommends or supports.

The Select Committee might be the fastest legislative vehicle in getting real bipartisan policy changes.

Hey, I can wish and hope can’t I??

FHFA’s Tough Task, Standing in the Middle

Let me give everyone involved in the future of Fannie Mae and Freddie Mac the benefit of the doubt. That’s tough in this town where most of the GSE influence peddlers are high end schemers and promoters.

The simple reason for that is the money involved.

Even in their confused and weakened state, Fannie and Freddie still represent “big casino,” because of their size, business volumes and potential future revenues. That attracts people who have their eyes on that revenue for their own pet plans or other selfish reasons.

But, again, for the time being let’s assume none of that exists.

I started thinking along these lines when examining some recent actions of Director Ed DeMarco and the Federal Housing Finance Agency (FHFA), which he heads. Is it possible that DeMarco might not be the anti-GSE ogre many people believed?

Is DeMarco “Horatio,” standing in between those who would fatten the two before cannibalizing them or is he maintaining/sustaining them because they work and still are needed?

I don’t know Ed DeMarco. Although he and I both have been around these mortgage finance structural and political issues for many years, I can't remember meeting him. So, nothing I say is based on any first hand knowledge of him or his priorities. I’m just giving him the “benefit of the doubt.”

He is in the awkward position of being the financial regulator of the two companies which were put into federal conservatorship by the Bush Administration, three years ago, and kept there by the Obama Administration.But, the mortgage firms are working and quite successfully.

As such, he has to try and conserve the companies’ resources offering them some hope for future economic activity.

Still There Under the Democrats

Despite DeMarco’s Republican history, he has not been replaced—yet--by the Obama Democrats.

DeMarco also wears a Fannie/Freddie safety and soundness hat trying to insure that their past troublesome misadventures—notably buying tons of Wall Street created subprime securities in the middle of the last decade--remain in the past and never occurs again.

He may have come to appreciate that what happened to Fannie and Freddie was an aberration, desperate managements in both companies taking disastrous steps—buying billions in private label securities to retain market share and grow revenue—which failed and cost their shareholders and the taxpayers billions.

It also was an aberration which didn’t have to happen had his predecessors done a better job.

He might also realize that F&F merely did what virtually every other large financial institution in the world did buying those poorly underwritten and likely fraudulent mortgage securities.

Other federal housing programs, notably HUD’s Federal Housing Administration (FHA) mortgage guarantee efforts, have risen up to insure almost all of those credits that would have gone subprime in the past.

Better regulation and the absence of major subprime lending activity make those mistakes unlikely future events.

Most important, DeMarco—despite the conservatorship status—now might envision Fannie and Freddie as vitally important, still adding value as the chosen investor for more than one in two US conventional mortgage loans. In other words, their business model still makes systemic sense.

That’s because the “private sector” (mostly the large commercial banks and their investment banking subsidiaries) has not stepped up to provide an alternative to Fannie and Freddie and likely cannot or will not.

Future GSE risks look way down and the higher quality loans which both companies have put on their books in the past three years will begin reaping profits and erase much of the red ink still imbedded in bad PLS on their books.

Also in this mix--and weighing against doing away with Fannie’s and Freddie’s federal function as primary mortgage investors—is my belief that some of the companies’ major business opponents don’t want to see the GSEs demolished. Many big lenders don’t want to lose two entities to which the banks frequently transfer their mortgage lending business risks.

That investor role continues to be a major, major plus for bank lenders chary about carrying fixed rate mortgage assets on their books.

DeMarco has to navigate these waters, as the Obama Administration seeks to use Fannie and Freddie more—see the President’s jobs speech—and as the GOP rhetoric and efforts seek to use the GSEs post 2004 business activities as political weapons against the presumed 2012 Democrat presidential candidate.

Links and Things

To close this blog, let me offer links to two recent articles, one related and the other not quite but very chilling in itself.

The first—which discusses facts I didn’t know and speaks well of DeMarco—notes that the FHFA’s PLS lender lawsuits name dozens and dozens of lender officials as responsible for hiding the true nature of the bad loans sold to Fannie and Freddie. The story appeared in the Columbia Journalism Review last week.

While the lawsuits are appropriately aggressive, going after the people who worked at these companies and were responsible for selling the garbage, contrasts sharply with other federal financial regulators who seem happy to sue the institutions, but not their senior employees.

The second link (unrelated) is an absolutely superb and scary analysis, written by Mike Lofgren, a senior Republican Senate/House Budget Committee staffer, who just retired from the Hill when he became convinced that the GOP’s objectives were misguided and destructive. Lofgren’s article also ladles out plenty of blame for Democratic cowardice in the face of the bizarre GOP agenda, intensified by the latter’s Tea Party membership.

In Our Hearts and Minds

I hope we never allow mortgage finance matters nor political fanaticism to get in the way of our 9/11 obligations and memories, honoring the innocent victims of that national tragedy.

God bless and protect all of the 9/11/2001 first responders, all of our countrymen and women killed or injured on that fateful day, as well their grieving family members and loved ones. I hope their fates unite us stronger as a nation and make us a bastion against extremism wherever it exists.

Maloni, 9-10-2011

Sunday, September 4, 2011

Happy Labor Day, Bring on the Jobs Speech!

Already, I’m embarrassed for you, President Obama. I am shaking my head in anger and outrage--as I am sure are many hopeful Democrats and “independents”—over how poorly you played your jobs speech timing and how often you seem to shoot yourself in the butt.

You are giving the other side too many chortling opportunities.

The American president should not be the “Wuss and Chief.”

Why pick a fight over the date of a speech, which you hope will capture some the public’s imagination for your plans to get people back to work, chose a date which you know will antagonize the opposition—which in itself is not bad—and then immediately back down when the GOP House Speaker denies your requested venue?

That is chicken crap all over you and it’s self administered.

Please understand that the R’s never are going to respect, embrace, or help you do anything that’s positive, because you are different in more ways than the obvious? (Somewhere down there is some real GOP fear of you, but I am not that good a psychologist to isolate and identify it for you.)

Congressional and other Republicans have made their Obama animus crystal clear.

They don’t like you. They want to humiliate you and the Democratic Party and then defeat you in 2012, so they can introduce the ersatz theocracy espoused by so many of their presidential candidates.

You should ignore them whenever it makes sense, like last week when they balked at your chosen presentation details.

Very few Americans care from where the President speaks when he offers plans to help them. And if anyone in the White House thinks the gilded House chamber adds to your message substance, those individuals likely are part of your political problems.

Give the speech on a street corner, from your own office, or the national mall. The people and the media will watch discuss and what you say.

The substance is the message, not the room’s furniture nor the predictable smiling and frowning D and R wall paper.

People who want to watch the GOP presidential candidates invoke the Almighty, damn Franklin Roosevelt and all things associated with the federal government--save its war fighting ability—could still have seen, watched or heard all that, without you making it easier for them.

Many of those folks likely don’t or won’t care what you have to say.

Take off the velvet gloves Mr. President, this isn’t Marquis of Queensbury rules. It’s a knife fight in an alley.

When you address the Congress and the nation on Thursday, please don’t compound the recent political missteps with a “jobs pabulum recitation,” filled with airy fairy rhetoric and little content.

Calling for $200 billion or more in fresh federal spending for ”shovel ready” public works projects will get people’s attention, especially if the money can be dispensed quickly to municipalities and state and local governments.

Put your best lawyers to work, deficit fund the initiative, and use some presidential emergency authority to implement it.

Training and education, while nice, don’t put unemployed Americans to work, now, or quickly inject fresh wages into the national economy.

Keep your message simple and filled with solid proposals which the average Jane or Joe can understand.

You bobbled the ball last week, don’t do it twice by throwing out lukewarm employment aphorisms.

If the GOP wants to balk at spending for jobs and oppose you, as it will, watch the American public/electorate—which supports infrastructure and other job creating spending--turn on them.

The Banks Can Help

Lastly, let me point out, again, that America’s large commercial banks have huge deposits, which despite all of their rhetoric the banks aren’t lending.

Until the recession ebbs, have financial regulators develop a mandatory new bank lending program to small and large businesses. Use as a target investment amount the TARP money the taxpayers gave obligation-free to these same banks three years ago.

That could pump an additional several hundred billion dollars into the business and economic stream, aimed at those very waiting and willing employers the GOP claims provide the best and most jobs.

Let the banks step up and help you and the Congress whittle away at those 9% unemployment numbers.

If the banks argue they don’t have the customers for that volume of lending, remind them that when Fannie and Freddie were given major new tasks---lending to low, moderate and middle income families in central cities and other underserved areas—the two reached out and met with legions of lenders, black and Hispanic Realtors, huddled with numerous consumer groups, printed easy to understand information brochures in 12 different languages aimed at families likely to want to buy a house, sponsored housing fairs in major markets, set up toll free contact numbers, did targeted television advertising and much more, to find the necessary business.

And before anyone says “and looks at the mess that produced,” read the Fed study (link follows) about why that type of lending did not result in the 2008 financial mess.

Banks could be part of the solution this time, if they would get off their collected derrieres and hunt for good business, rather than just wait for pristine credits to come to them.

Contrary to what many banks might say and/or believe, this could help them boost their revenues, since they are in business to lend money.

As I’ve suggested before, let whatever deficit dollars needed to prime this jobs creation pump become the responsibility of the new Select Deficit Committee, which then will need to subsume this necessary expenditure to their ongoing responsibilities.

Bold, bold bold, President Obama, not wuss, wuss, wuss.

Lawsuits on Behalf of Fannie and Freddie?

Fannie’s and Freddie’s regulator, the Federal Housing Finance Agency (FHFA) is suing a gaggle of large banks, claiming the financial institutions sold the two companies—now in federal conservatorship--poorly underwritten mortgages and mortgage securities, intentionally misleading the GSEs about the mortgages’ quality (fraud?).

The figure $200 Billion is mentioned as the recovery goal.

FHFA and the Justice Department never will get that kind of money back from the lenders. But, there will be settlements, concessions, and other agreements that will bring cash into the government coffers negating taxpayer’s losses.

The only comment I’ll make is to share an exchange I had some weeks ago—before this news hit the press—with a senior official at one of the companies (not the one at which I worked).

I was damning—with great negativity--some of the FHFA senior staff, the veteran GSE-haters who had been there for years and like foraging termites had burrowed for life into the civil service protection system.

My friend disagreed, then correcting me (and I am paraphrasing) said, “That doesn’t apply to (FHFA Director) Ed DeMarco. I am not sure how it happened but he seems to have come around, sees great value in the Fannie/Freddie investor role and appears to be trying to protect that capacity.”

If that is true, then good for Mr. D!

Maloni, 9-3-2011