Daivd Fiderer is in the House, not on the Roof
How about President Barack Obama!!
He gives a great inaugural speech, showing lots of cajones and vision, but can he follow up with enough action and success to fill in behind the words?
It’s the difference between taking the talk and walking the walk.
The GOP is pissed at the speech's content/tone and already is planning on waging more political/legislative war with him over his words and vows.
Lets’ see what happens; conflict isn’t bad if it is constructive. It’s just democracy in action, although what largely has been missing is the inevitable thoughtful R/D compromise.
The nation and both political parties would win, if there was agreement on dent limit, spending cuts—which frankly must include some entitlement savings—and that’s before they even contemplate taking on tax reform.
Our tax code is festooned with bennies for so many industries, companies, and interests that it groans under the weight. I still am waiting to see GOP list of what it would cleanse from our, which alone could function as Deficit Reduction 101, since most of those exemptions or carve outs for favored tax and non-tax payers represent lost revenue to the U.S. Treasury.
Hold onto your seats.
What Else is Happening? Fiderer is Happening!
I found David Fiderer’s work and I am not going to let it go. See why.
The pre-2005 Fannie and Freddie secondary mortgage market model worked extremely well for the entire nation, despite a crusade to sully them. But now we just may be getting more proof of the political antecedents of how and why the mortgage giants were diminished.
The undeniable post-2005 excesses of Fannie and Freddie management, which featured lame management decisions to purchase billions in poorly documented Alt A mortgages and Wall Street private label subprime securities, all but wiped out respect for a private sector model which efficiently served million of families and well.
Fannie’s business and political opponents successfully helped erase their pre-2005 positive history with campaign which demonized the two companies.
Ironically and unwittingly Fannie (and Freddie), with their post-2005 subprime mortgage purchases, aided those who would obliterate them.
The fallout from Fannie’s and Freddie’s takeover by the Treasury in 2008 masked how the two, previously, had been screwed by their opponents.
Slowly the details of that campaign are being revealed to the world as more and more people analyze the facts and some delayed revelations are enjoying public attention.
As long as I write this blog, I intend to highlight evidence which rejects the popular view of Fannie as a wrong doer or as cause of the nation’s major financial woes several years ago.
I do this not to gloat or say “I told you so,” but for other salient reasons.
One is that Fannie/Freddie--still being cursed by many, wrongly in my opinion--continue to be heavily utilized by mortgage players and still, to the public’s delight, produce long term fixed rate financing, even with the clumsy hand of government wielding them. And two, the Congress soon will get back to examining Fannie and Freddie, as it struggles with legislative demands to replace the two entities.
Before they do this, however, Democrats and Republicans need to separate the wheat and chaff and see what was real and what was hokum before undertaking devising some new mortgage market structures.
With a few tweaks (and the federal government standing way back), we might just have in place fairest and most efficient mortgage model available.
In past blogs, I talked about the seminal attack leading to Fannie Mae’s eventual demise as a private company.
It started in 2004—with bogus regulatory accusation suggesting “securities fraud”—and like the proverbial downhill snowball, it grew and breeched all protective walls, swept away all political support and helped produce some of the international financial upheaval, when strong, responsible Fannie corporate executives were forced out and then succeeded by weaker ones who committed crucial business mistakes.
The bogus 2004 Office of Financial Housing Enterprise Oversight (OFHEO) claim of “securities fraud”-- leveled at Fannie’s CEO Frank Raines, CFO Tim Howard, and Comptroller Leanne Spencer-- was the event which turned into a tsunami, as happens best in DC, when know nothings citing spurious reasons, piled on and forced out those three executives and the backwash brought in lesser successors who unwisely made horrendous and costly business decisions.
I began telling this story last year when federal Judge Richard Leon, eight years after the case first was began, produced three “summary judgment” decisions concluding that no facts existed in million of pages of hearings and testimony by which a jury could find any of the three Fannie execs guilty of the alleged OFHEO charges, but the damage to them and the company was done.
My writing merely touched the surface, but last week David Fiderer , Op Ed News, produced a zenith article on this topic, heavily researched and sharply written, showing why there was “no there, there” to the fraud charges and why Fannie’s regulators, as well as the “we agree” Securities and Exchange Commission—once called Wall Street’s Chamber of Commerce”--were both incompetent and culpable in this partisan assault.
Fiderer’s outstanding work is too lengthy to reprint, so I just link it, but read it and educate yourself about what really happened in beginning in 2004 and why? It’s a well written but sorry tale of regulatory incompetence, venality, and partisan bloodletting.
Fiderer has produced a solid documented tome, and it should be mandatory reading for every Financial Services Committee Senator and Member and their staffs, since as I noted Congress will again confront the working of the nation’s mortgage markets of which the two entities remain keystones.
Former Fed Governor Alan Blinder’s Book
As faithful blog readers know, I have challenged the work of Peter Wallison and Ed Pinto, two of the American Enterprise Institute’s finest fiction writers, who have produced thrilling but inevitably inaccurate reports concerning Fannie Mae’s past business activities.
They consistently have misstated Fannie Mae’s actions leading to 2008 financial meltdown and argued—despite overwhelming evidence to the contrary—that the company bought millions of bad loans in the 1990’s and later.
Numerous columnists, authors, and commentators have rejected the AEI accusations and the Pinto/Wallison work, either by name or by reference.
The Fed and Fannie Mae haven’t always agreed, almost quite the opposite. But occasionally, the Fed or one of his illustrious brethren speaks out and confirms something that “housers” believe and Fannie antagonists don’t.
Most recently this occurred--in the Washington Post’s Blog Wonk--when former Fed Governor Alan Blinder discussed his new book, “After the Music Stopped,” with an interviewer.
Below is Blinder’s response to mortgage finance questions in the period leading up to 2008 financial debacle. (Bold facings in Blinder’s answers are Maloni’s.)
DM: Do you think the Fed could have done more to prevent the crisis, or perhaps to pop the housing bubble as it grew?
AB: I half agree with that. The half I very much agree with is, not so much pop the housing bubble, but one of the enablers was the abandonment of sanity in underwriting. Banks were making many, many irresponsible if not downright foolish loans. The Fed could have cracked down on that and it didn’t. When I said the Fed has performed admirably, I’m talking about from post-Lehman Brothers on. I don’t agree with what they did on Lehman, I didn’t at the time and I don’t know. But that’s a long time now, when they’ve been absolutely terrific.
DM: Do you have any sympathy for the view that Fannie Mae and Freddie Mac, driven by the Community Reinvestment Act, drove down loan quality and contributed to the crisis?
AB: I have very little. If you make a long list, that belongs on it, that Congress pushed Fannie and Freddie into this subprime or alt-A market, less quality loans, more than it should have. But the facts of the matter are that they were not the major players in the mortgage craziness. They came in later because they were getting their market share decimated by the less responsible lenders. What’s more, they started getting out before the crisis, their portfolios were shrinking, not rising, and thirdly, within the universe of subprime and alt-A mortgages, it was clear that the workout has been going on for so long that Fannie and Freddie had the better stuff, not the worse stuff.
If you look at the performance of the loans in Fannie/Freddie’s portfolio, I’m willing to put them on the list of people or institutions that made mistakes, but they belong pretty far down the list. CRA, I mean man oh man, this was passed in 1977! It sure took a long time! When I hear things like that, I used to joke sometimes that if everything good in the 90s was because of Reagan’s tax cuts, why don’t they go back to Andrew Mellon’s from the 1920s? At some point you have to inject a little common sense.
Ed and Peter, with apologies to Matt Damon, “How do you like them apples?” It looks like Alan Blinder disagrees with you, too.
Banks Love Borrowers, Except When It Hurts Profits!!
The WSJ’s Alan Zibel and Leslie Scism penned an article last week (see link at the end of this paragraph) describing how major lender organizations are opposing a Fannie/Freddie proposal to substitute a cheaper version of necessary home owner’s insurance, which would save mortgagors @$2000 annually.
Cloaking their self righteous butts in arguments but the true one, the lenders claim that this proposal—which is under regulatory consideration—is outside of the Fannie and Freddie charters and risks GSE losses.
There will be losses, alright, but not to consumers or Fannie and Freddie if the “Zurich plan” is employed, but to bank income.
A fair translation of the lenders doubletalk is, “Don’t do this. If you save consumers money, it is going to come out of our profits and we oppose that!”
Banks and other lenders are enjoying record profits in mortgage originations and virtually all new home buyers can use that saved $600-$800 a year.
If the F&F regulator rejects this pro-borrower idea, consumers can lay blame on the Mortgage Bankers Association, the Financial Services Roundtable, and the American Bankers Association.