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


Anonymous said...

Hi Bill, I heard this week in Bill Maher's show, panelist Eliot Spitzer (former Democrat governor of New York) and Stephen Moore (conservative economist) agreed that the financial crisis was caused by the Banks and therefore Fannie Mae and Freddie Mac should be shut down. I wonder if these educated guests understood that the GSEs are not Banks and what is their role with mortgage securities. Moreover the fact that neither of these have direct relationship with home buyers. I am more concerned with the first guest's opinion since he has dealt with Wall Street for years and should have better understanding on the role of these institutions. Bill Maher didn't agree with them but somebody should educate the American people before this becomes an issue that will become "too big to ignore" in the November election.

Bill Maloni said...

Dear "A"--Sorry to be so tardy in responding.

Short answer is that the gap between GSE reality and GSE negative hyperbole is oceans wide to the nagtive side.

It's easier to remember F&F the purchasers of ALT A and Wall Street originated subprime securities in 2005 and later, than the F&F who once were part of the "homeownership solution" not part of the problem.

Frankly the "other side" did a great job in degrading and demonizing the two copmpanies, an effort greatly aided by Fannie's and Freddie's ALT A and private label subprime purchases.

Several prominent people have tried to right that massive information tilt (Joe Stiglitz, Mclain and Nocera, et al), but I suspect it won't change the popular image.

I've heard rumros of a new book--in the works--which might help some, but the best hope of keeping alive the F&F "function" as dedicated mortgage investor and continuation of the 30 year fixed rate mortagge, is a sceond Obama Administration relieved of reelection pressure.