Tuesday, February 21, 2012

Another Day and Still A Fannie Mae (and Freddie Mac)

Those of you fond of going back to my prediction that no structure changes to Fannie Mae and Freddie Mac will emerge before next year, when there either will be a new GOP Administration or Obama II, can feel confident of a few elements in President Obama’s Budget, unveiled last week.

First the Obama folks see both companies feeding $10.6 Billion dollars to the United States Treasury in the new fiscal year (which begins September 30, 2012), over and above the dividends they are paying Treasury for their previous borrowed funds.

The budget document predicts that both former GSEs will begin producing real profits by the end of this calendar year and the beginning of next.

Now, given the political uncertainties and the fact that nobody yet has come up with a viable alternative to Fannie and Freddie whose sins, while grievous, were contained to voluminous subprime purchases--which no longer can happen under their current oversight, not to mention that their mistakes were identical with those made by every major mortgage investor in the world--in 2013, F&F could find themselves preening in a burnished “hey look me over” mode.

GOP Stuff

In last week’s blog, I boldly predicted that Rick Santorum would be the next GOP president aspirant to drop out of the race, but that mantle could fall on Mitt Romney’s head especially if Santorum trounces him next week in Michigan, of all places, as some pundits predict will happen.

Santorum will have every reason (and more money) to go forward, then, if he stomps Mitt in the state where he were born and where his Dad was a very popular Governor That’s big trouble for Romney, but former Massachusetts Governor has the campaign cash to stay in the contest.

Of course, it didn’t help Romney when he opposed President’s Obama’s support package for the automobile industry (a lot of automobiles still are made in Detroit, Mitt).

Newt Gingrich and Ron Paul seem destined to hang around longer for their own reasons, which must inculcate their ineluctability to the highest office in the land. Newt’s just irascible and angry and Paul wants to build his and the Libertarian Party’s legacy for the future.

Rick Santorum

I think Rick Santorum is a smarmy campaigner, a hypocrite hiding behind his religion while he casts religious and other aspersions on his opponents’ principles and actions.

He’s employing the old Lee Atwater tricks of raising the specter of an issue and then backing away, mock horrified that his words could possibly lead people into thinking his aspersions were much what him say, innocently claiming, “No, hey that’s not what I meant, I merely was trying to point out….!”

In his desperate rush to secure the GOP presidential nomination, it seems Santorum will say and do anything. He’s forgetting that in trashing his Republican opponents and also President Obama, he’s auditioning to be the President of all of the American people and demonstrating habits that for many—not all—are objectionable.

(However, recent reports say that even establishment R’s are frightened that an unhinged, untested, and volatile Santorum could cost them the White House and the Senate, if he’s their candidate. Reportedly, they now are scheming about some outlier swooping into the GOP Convention and winning the nomination. Is that Jeb Bush?)

Most recently, this pious candidate (Rick is Catholic, if he hasn’t made that clear to you yet) suggested that President Obama may not be a Christian, that the President “liked the earth” better than he liked the land, and that Obama’s policies demanded that the American people—unlike the way the “greatest generation” failed to oppose Hitler—stand up and object to this President’s policies.

So the desired takeaway that Santorum’s hopes he’s seeded is for his listeners to believe Barack Obama is a non-Christian ("Hey guys remember the Muslim thing") and a tree hugging environmentalist who is worse than Adolph Hitler. And that’s just two days worth Santorum’s campaign.

I am sure that Ranger Rick, short of using the N-word, will figure out a way to make his audience aware that the President is black, in case they’ve forgotten. But, then again, maybe not.

Living in a Glass House and Throwing Stones

Santorum also is trying to ride the “contraception argument”—based on the Obama Admin’s regulations of last year’s healthcare legislation—into making Obama anti-life, anti-Catholic and anti-Catholic church.

I wonder where Rick is on nearly $3 billion in federal funds the Catholic Church received last year (tax free) and where his cheerleading Catholic Bishops are re raking in US taxpayer dollars as they simultaneously oppose the Administration’s health care regs claiming it’s a matter of their “religious freedom.”

I’d feel more supportive of the Bishops separation of church and state arguments if they also would reject the federal money.

Rick, in turn, will have to prove that his silly comments against women in military combat situations, their emotional and hormonal states, and his opposition to prenatal testing aren’t reflecting a very deep seated anti-feminism that his own church has displayed for centuries.

In my mind they do and he does.

“Barefoot, pregnant, and in the kitchen” seems to register well with Santorum. There are a lot of women voters out there—even GOP women--who enjoy the last 30 years of progress that Santorum seems to damn.

Having grown up in Pittsburgh, Pennsylvania, I have a few things in common with the Senator and more so, with his wife Karen Garver Santorum.

Mrs. Santorum and I, attending college in different eras (I’m a few years older), got our undergraduate degrees from the same university. I was born at Pittsburgh’s Magee (Women’s) Hospital, the same facility, where her lover for six years--before she ever met Rick Santorum--was a prominent obstetrician and abortion provider. He was/is 40 years older than she.

The 92 year old doctor—whose identity is well know in Western Pennsylvania, as is their story--remains an outspoken crusader for reproductive rights and liberal ideals; he has known Mrs. Santorum her entire life, having delivered her in 1960.
Am I the only one who thinks that fact adds meaning to a “lifetime of medical service?”

Glass Houses

After her romantic interlude with the doctor, Karen did go onto to earn a law degree, interned in her future husband’s law offices, and then married Rick Santorum. She and the Senator are of parents of six children, with a seventh passing away shortly after birth.

(And while I am here, staring at the Senator’s glass house, in 1996 Mrs. Santorum required a second trimester abortion, a medical procedure which would have been outlawed by legislation her husband championed on the Senate floor that same year.)

I think it is character telling that Senator Santorum—who easily condemns the actions of others--was pushing legislation to limit court awards to $250,000, at the same time his wife was suing a Western Pennsylvania doctor for $500,000 because of her back distress.

Hey what’s principle when money is involved?

Those events are spelled out in the Daily Beast article link below.


Sorry, I can't pass up sharing this parody of the birth control fight done by Comedy Central’s Steven Colbert.


Maloni, 2-21-2012

Sunday, February 12, 2012

Listen to Ralph, Listen to Ralph, Please Listen to…

Ralph “Get 'Em While They’re Hot” Nader

Even before Ralph Nader’s huge ego impacted his brain in 2000 and told him to run an independent presidential race as the “Green Party” candidate, which likely cost Democrat Al Gore a victory in 2000 and brought the nation 8 years of George W. Bush--with his unwanted wars and extreme deficits--I had little use for Ralph who despite all of his anti-establishment bravado quietly became a millionaire.

Ralph may resurrect himself in my eyes, if he can convince Newt Gingrich, who likely is angry enough to listen, to run as a third party candidate (as Ralph now has done five times).

Nader never will admit and indeed continues to brag about his role in dragging votes away from Gore, but no amount of car safety issues or consumer protection benefits, will balance his perfidious delivery of the White House to George W. Bush, twelve years ago.

Every time I think of “Florida” or “Chad,” I think of Ralph Nader.

Nader’s advice to Newt is in the following link.


GOP Fingerprints on GSE Low Income Lending

Let me be truth teller, again.

I’ve familiar with all of the right wing attacks on Fannie (and Freddie) and the GSEs affordable housing efforts.

It’s perfectly acceptable to assail Fannie and Freddie for their unwarranted subprime purchases in the past decade; I have done so often myself.

What upsets me is that today’s attacks are shotgun assaults aimed, not just at the ill-advised and flawed subprime buys of 2004 and forward, but at the Fannie (and Freddie) of 20 years ago, when the companies worked under fresh federal statute to provide homeownership opportunities to a broad range of low and moderate income families, including minorities and those living in central cities and other underserved areas.

Draw Distinctions
The eras easily can and should be divided by serious reviewers—hint: pre-subprime Fannie, good; post subprime Fannie, bad--especially those divining some type of successor national mortgage investors, to insure fairness, standardization, and 30 year financing for future borrowers.

GOP critics also need reminding that the 1992 seminal housing goals legislation, signed into law by President George H. W. Bush, was a bipartisan effort—again with Republicans in the White House and congressional Democrats—designed to insure that all banks, mortgage banks, and savings institutions, which were Fannie and Freddie customers, would originate loans to those desired demographic groups, if the lenders wanted to do business in the burgeoning secondary mortgage market.

Senior Bush Made It Law, “W” Jacked Up the Goals

With the DNA of both parties on the provision, the bipartisan statute used Fannie and Freddie as both measurement tools and engines to shape the primary mortgage market--which dealt directly with consumers—to do a job which it had been reluctant to perform.

Before 1992, both GSEs had their own regulatory affordable housing standards, implemented by the Department of Housing and Urban Development, which both Fannie and Freddie met.

The new law hardwired the goals into statute and allowed them to be increased by the Administration in power (first Bill Clinton and later George W. Bush).

In permitting escalation of housing goals, the Congress and White House used Fannie and Freddie as the hammer and the goals as the anvil to produce both more mortgage financing as well as a fairer system relative to low income borrowers.

When Republicans bleat about “housing goals” and the former GSEs actions, I hope they will pause and remember the pivotal role that President H.W Bush, played as well as that of his son George W, who leaned on the former GSEs to meet robust low-mod goals of over 50% of their annual business.

Different Church, Same Pinto

Ed Pinto once worked at Fannie Mae, as he proudly will proclaim.

What he seldom notes is that, after a short stint, the company suggested that he get on with his life’s work…somewhere else.

Ed emerged on the Washington political scene a few years ago, working for the American Enterprise Institute (AEI) as a staunch critic of Fannie Mae and Freddie Mac.

He debuted after both GSEs had ruined much of their stellar reputations after buying billions of Alt A and private label subprime mortgage securities, which produced so much red ink that the Bush Administration chose to put both Fannie and Freddie into conservatorship.

Pinto Started With a Distortion

Ed’s maiden performance, thanks to the AEI’s press operation and the Right Wing’s hunger for anti-Fannie/Freddie raw meat, was his claim—based on his own research-- that in the 1990’s Fannie Mae acquired untold billion of dollars in shoddy loans, which he labeled subprime.

His opinions were celebrated, especially by his AEI colleague Peter Wallison, congressional Republicans and other conservatives.

But, the response hardly was universal.

Ed and his report met solid opposition, was called inaccurate, and rejected by prominent sources including Nobel prize winners, national columnists (Joseph Stiglitz, Joe Nocera), the Federal Reserve Board and the President’s Financial Crisis Commission.

But, Ed kept flogging his shaky thesis, because the Right gave him regular applause.

Just last week, Ed was pipe dreaming, again.

“Horatio at the…,” I Mean “Ed at the Bridge”

In an email to his peeps, Ed claims that as early as 1986 he positioned himself against the formidable National People’s Action (NPA) low income advocacy group---headed by Chicagoan Gale Cincotta--which was demanding that Fannie Mae and Freddie Mac lower their underwriting standards to make it easier for lower income families to qualify for GSE financing.

Ed quotes himself warning the group it would be a financial disaster for the poor and the nation if Nap’s efforts succeeded and notes ruefully that the NPA and others stated that same position before the Congress in 1991.

If NPA and other congressional witnesses--in 1991--asked Congress to make it easier for those with lesser incomes to get financing, it had little to do with the F&F private label subprime purchases a decade and a half into the future, a nexus Ed tries to draw.

That demanding crowd wanted action then and in a sense succeeded, when Fannie and Freddie made underwriting adjustment to accommodate more low income lending, as they contemplated the 1992 goals legislation noted previously.

But those 1990’s loans the GSEs made were neither shoddy nor a precursor to F&F’s PLS subprime purchases fifteen years later.

And His Distortion Was Blown Up With Facts

The most damming unalterable fact for the AEI/Pinto/Wallison arguments is that the loans Fannie bought and securitized through the all of the 1990’s, and into the following decade, did not go bad.

More than a dozen years of corporate records filed with HUD, the GSEs new safety and soundness regular OFHEO (now FHFA) and the SEC—as well as reported in the national and financial media--show superb loan performance (no defaults) and few losses.

Ed, claiming the mortgage loans were faulty doesn’t make them bad, just the opposite when there is no evidence of failure or poor underwriting.

I don’t know how I –and others--can be more clear refuting Ed’s very shaky premise or how the GOP forces can continue to support the Pinto/AEI/Wallison thesis.

Speaking of Church….

This is a Washington Post reader’s Internet comment on the Catholic Bishops opposing President Obama making birth control services/devices available to women.

“We are fighting a war in Afghanistan; Middle East on verge of melt-down; hunger, drought and famine in Africa; Greece and Portugal heading towards bankruptcy; millions of Americans still out of work; millions of homeowners underwater facing foreclosures; Moe, Larry, Curly and Shemp running for Republican nomination; and the most important thing on the minds of the Catholic Church and its autocratic Bishops is whether or not the American woman has access to contraception. Are you kidding me?”

Last Week’s Mortgage Deal With the Lenders

I think the big mortgage lenders got off cheap at @$25 billion, given the much larger mess which still exists. I hope the state AG’s push the banks to restructure far more loans than those possible, given the funds mentioned.

Maloni, 2-12-2012

Sunday, February 5, 2012

Russia (and China), Again

The Russians are first in the world on my list “courve and goniff” (“thieves and whores”), but the “Red” Chinese are real close to the top.

Their respective UN performances last week denying a Security Council move on Syria’s bloody repression were contemptible. Part of the Sino-Russian fear is loss of plain old business as usual--reflected in Syria being a large business partners of each (with Russian weapons arming the Syrian military)--while a lurking other concern is the possibility of some future UN coming after both Russia and China for brutalizing their own restive citizens and denying them freedom.

Russian and Chinese officials seem to live to frustrate America policy initiatives and with trade revenue as a primary motivation, how do they value those Syrian casualties killed by their own government, in their hypocritical UN posturing about concern for the Syrian people?

I have a doctor friend, who was born in Homs, Syria, and whose parents “and hundreds of cousins” still living in and around the city. Every time we talk, I ask what’s going on and the fate of her loved ones.

“The government is killing people left and right and nobody is stopping them,” was her latest reply.

I can only hope when this ends, not only will someone have “Gadaffied” the Assad government and Assad, but the Russians and Chinese pay a price in national treasury—which is what they seem to care about the most—as well as lost prestige and influence in that volatile region.

Obama Administration “Does Away” With Fannie and Freddie?????

The Washington Post quoted Treasury Tim Geithner saying, the Obama Administration (slightly paraphrasing) “will continue in its effort this year to do away with Fannie Mae and Freddie Mac and attract more private capital to the national mortgage market.”

What’s that mean, Tim?

The Administration doesn’t have the political will or power to do anything in an election year, especially something that would further scramble the still sensitive residential real estate market.

More germane is the fact that the nation—and the world--is filled with “private capital” in the hands of businesses and banks. That money once flowed easily into US mortgage finance, logn before anyone ever encountered subprime lending.

There are no laws prohibiting those potential mortgage investors from buying or financing mortgage loans. What is it that you plan to do to “attract” them, offer more federal guarantees?

But, if you do that, that really isn’t “private capital.” It’s federally insured private capital which has a budget costs and still puts taxpayers behind the big banks, which we all know—your rhetoric to the contrary—are not “too big to fail.”

What’s the alchemy you plan to employ?

You can’t call “time out” because the mortgage market moves constantly, 24-7 and 365 days a year. Currently Fannie and Freddie still are serving a giant share of the market, as most of your “private capital” guys stay on the sidelines and only make loans which Fannie and Freddie will securitize for them.

When and how is all of this “attracting” going to occur?

To be fair, the same question can be asked of the GOP, when they don their “beat up on the GSE” rags and rage about the need for private capital in the mortgage markets.

One dirty little secret is a lot of large banks don’t want F&F gone, because they want and need a mortgage investor of last resort on which they can ladle their mortgage risks.

Which party’s principal, President Obama or Mitt/Newt, will be honest with the public and say, “If private capital (whatever that means since most banks are deposit fat because of federal subsidies and former TARP funds) comes back to the market--without a functional Fannie or Freddie, or its equivalent, establishing standards--consumers won’t have 30 year fixed rate loans, except by paying very exorbitant premiums.”

I am waiting or should we all just prepare for more insipid “get rid of Fannie and Freddie” talk?

Obama and the November Elections

If I can read between the headlines, the Obama folks are chortling over the emergence of Mitt Romney as the likely GOP champion. Sure, he’s going to need another few state primary wins, but he appears to have lapped a pretty lame field.

Rick Santorum soon will drop out, but Newt Gingrich and Ron Paul (whom I still believe, despite some nutso positions, utters more common sense than the other two) will hang on, ragging on Mitt and softening him up for the real event in November.

Romney, for all of his flaws and whatever the result of those internecine GOP muggings, could be our next President, solely because he is not Barack Obama.

President Obama is in trouble politically and while he will say and do dozens of things to appeal to various constituencies this year, too many people don’t like or mistrust him—and those are the Democrats!

Even if the President gets real lucky and unemployment drops, while business improves throughout the nation, the appeal of the “Obama way”—cheered by his coterie of Chicago political mafia—remains opaque to most Americans.

Traditionally the public is best served by divided government, with neither party in total control, but what about when the nation needs and wants action on any number of urgent issues?

Right now, a measured in negatives President Obama doesn’t appear to me to have the coattail strength to flip the House to Democratic control or add seats to the slim D majority in the Senate.

Does he even deserve a second term?

Would Romney and Republican control of both congressional chambers—Tea Party and all—use that unchallenged power to make the deficit reduction, structural, and tax changes needed to propel the nation forward? Or is that risk not worth the change in Presidents?

These are tough political questions for the nation to answer in November.

The Koch Brothers

Need someone to vilify and dislike motivating you to vote for Barack Obama (“the enemy of my enemy is my….”)?

How about the notorious Koch (pronounced “coke”) brothers, billionaires many times over and politically ultraconservative, head of Koch industries.

Last week, the Koch’s pledged over $100 million to defeat Barack Obama and his congressional supporters, reportedly posting $60 million on the spot to do so.

That would be small potatoes for the Koch’s, who made the statement while addressing a group of more than 200 well wheeled and equally conservative wingers, gathered to discuss common concerns. (Standard discourse: “Acquired any good countries or politicians lately? Yes, but have you seen the cost of caviar these days or the new Rolls? Both have become so cheap, I may stop buying them!”)

Guys like the Koch’s always have been around and always dangerous. Naturally the Supreme Court’s “Citizens United” decision has brought their money out of the closet and encouraged them to put it into candidates and causes heavily tilted Right.

But, there is something about the Koch’s “hands into everything,” as well their all out Obama assaults, which is quite smarmy and disquieting. Like some of the Russian antics I abhor, these brothers need a huge spotlight thrown on them for people to see just what their political machinations are all about.

Much of the early Koch fortunate –inherited from their father but grown many times over by the sons—came from mineral and ore refining.

No doubt part of their current partisan anger is because they, likely, were in the middle of and stood to gain handsomely from the Keystone Pipeline project, which Obama killed (the right way to handle your enemies).

Of course, if little people want to take little steps, they can stop buying products which Koch-owned companies sell, like Dixie cups, Brawny paper towels and Quilted Northern bath tissue and make public their paper product boycotts.

Maloni, 2-5-2012