Mel Watt:
Respectfully, “Tell the President Obama,
“Take that job and
shove it (onto somebody else)!”
They lied to you Mel.
Heading up the Federal Housing Finance Agency (FHFA) is not a
cakewalk, it's not a sinecure, it's not controversy-light (just the
opposite).
Yes, you are a bright guy, head of the Congressional Black
Caucus and you worked on Dodd-Frank, plus sat in on about two million
(boring) hearings about financial services and mortgage finance
matters, but—unless I am gravely mistaken and you are the rare
Congressman who knows and understands securities and mortgage
matters--none of your prior experiences will ready you for being the
titular head of the agency which oversees Fannie and Freddie.
Forget your industry
“friends,” people whom you felt over the years with an open ear
and votes in the Financial Services Committee and the House; they are
not your allies any more.
How about that ringing endorsement the
Mortgage Bankers Association just gave you? See it? Oh hard to find
in David Stevens BS rhetoric wasn't it? It wasn't even “faint
praise” and this is a guy who once was an Obama appointee. How
often did MBA lobbyists come to you for help?
Remind your fellow CBC members of the
MBA's actions.
(BTW, contrast that with the way the
NAR came out for you right away and upfront. The Realtors didn't
cavil or hedge their bets. If you get the job, remember them and the
MBA.)
But that's the way of this town.
Thanks, But No Thanks BO
Tell the President, "Thanks but
no thanks."
Nobody with your experience
should sign up for this amount of grief and aggravation,
unless you are being paid seven figures and given a cadre of
knowledgeable and loyal assistants to help you carry the load, which you are not.
I know the Obama folks are telling
you “piece of cake,” but Capitol Hill types already betting you don't have the 60 votes. They're counting noses and coming up short of GOP Senators
who might buck their party vote and for you.”
I think I know why you want the job, I
worked 11 years on Capitol Hill for a senior Democrat on the House
Banking Committee (what it was called then), who retired after
20 years because the job got repetitive, boring, too much ass kissing
and fund raising. And he was in the majority—a major subcommittee
Chair--and had every reason to believe the D's would stay in control,
which they did for another dozen years.
After a while, that work is tedious,
filled with righteous assholes everywhere. The job's
public service gilt quickly wears off s off.
Running the regulatory agency which
oversees Fannie and Freddie probably seems to you like a good and
easy job.
It isn't.
Bloody and Venomous F&F
History
The history—which cannot be
avoided—and you inherit is bloody, ugly, and filled with emotional partisan back
alley fights, and extends to the media and business and low income
groups today. The House R's don't even mask their contempt, which is
based more on Tea Party reasoning than knowledge.
I heard you say that most everyone
wants to wind down F&F and bring in more “private capital.”
Well the Republicans do, but there is
no such thing—as you should know—since those big banks get as
many explicit and implicit federal benefits as did Fannie and
Freddie. So don’t kid yourself.
As I've written, copiously, the banks
don't want the job, unless you pay them to do it by guaranteeing the
losses on failed mortgage back securities they issue.
I know you have big banks in North
Carolina, but don't trust them, either (if it is not too late). By
now, after 20 years, you should know what banks are about and it
isn't consumers or even the voters in your district where the banks
live.
It's money! And, for many years, all
that drove the big banks and their F&F opposition was getting
their hands of the mortgage giants' revenues.
If you have to learn on the job,
assuming enough GOP Senators get bought off, you are going to
encounter issues where everyone seems right or everyone seems wrong
and your instincts tell you not to rely on FHFA people because you
don't understand their personal agendas, which most of them have.
FHFA's Work Force
A lot of “evil critters” burrowed
into the FHFA policy woodwork and protected themselves with a civil
service prophylactic and you can't get rid of them. And I won't even
hazard a guess at their IG's real agenda, except that eh wants a
gaggle of more lawyers to investigate his own agency.
By many reports, although not on every
issue, Ed DeMarco earned the respect of Fannie/Freddie officials as
well as the Home Loan Banks execs, those orphans are yours, too.
The Admin truly dislikes DeMarco, ergo
your appointment. But, he has a civil service right to return to the
agency, somewhere.
Suggest to your Admin friends that they
make Ed an offer he can't refuse, Ambassador to France or head of
some national security agency, some place—other than FHFA--where
he really wants to be.
Send Ed to Camp,
Somewhere!
Having DeMarco rejoin FHFA invites
trouble and confusion. People on the Hill calling him not you,
generating odd staff alliances, people checking with him before
carrying our your plans, poor communications and disarray (if not
slow walking “your” agenda).
You think your House GOP “colleagues”
on Financial Services—led by Jeb Hensarling (R-Tex)--
are horse's exteriors, now, wait until
you testify before them?
Temporarily, you can hide your unfamiliarity on
substantive issues and history for a few questions and refer back to
your prepared statement, but it soon will catch up to you and if you
come up short you'll feel embarrassed and angry. And, as in
professional sports, your opponents will go for your injured and
weak spots.
But, you soon will be responsible for
trying to explain Fannie/Freddie/OFHEO/FHFA history which has been so
distorted by political opportunism and filled with fear and mistrust,
that you might mutter about the most expedient option –which might
be the worst one-- entertain dissolving the two entities.
Then, immediately, your friends on the
Left weigh in and you begin to hear from the housing industry
groups who believe in what Fannie and Freddie do and don't think the
large commercial banks can replace them.
Understand What the WH
Really Wants, If It Knows
Near term, the Obama Administration
doesn't want F&F to go away (let Hillary worry about that),
because the two are poised to feed billions (as much as $300 B or
more, over the next four years directly to the US Treasury and
provide the Obama Administration with greater revenues and
added resources to fight congressional budget fights.
Whatever clear and specific orders from
President Obama (yes, FHFA is an “independent agency, but.....),
you'll have to deal with Senate Republicans—who deeply supported Ed
DeMarco and can gum up any legislative action or regulatory
proposals, they chose.
Do you think your former GOP colleagues
in the House, whom you have experienced up close and personal, can be
part of any rational process to utilize Fannie and Freddie in a
constructive manner?
I am sure you look forward to this
challenge, but this new job—after all of the negative noise which
already has started—might be one you'll want to leave or could make
you unhappy and someone who needs stomach remedies daily.
Yay, Mel!!
BTW, if you really said to Ralph Nader
what has been reported in the press, in his meeting with the CBC, God
bless you, Mel Watt.
Nader's arrogant egomaniac run for the Presidency in 2000 brought the
world George W. Bush.
One last thing, in a bit of self
promotion, read as many of my blogs from the past four years as you
can.
They contain more political and mortgage
industry truth and value than you will find in any WH briefing book.
Remember the post-2004 Fannie--after
Frank Raines and Tim Howard were forced out by political hacks
masquerading as your FHFA predecessors and different GOP blessed
Fannie officials took charge—made huge subprime mortgage
acquisition mistakes, but those errors didn’t happen when Raines
ran the company, although many Fannie opponents will try and falsely
conflate them.
Find out the truth for yourself.
Understanding our mortgage finance history is crucial to plotting the
nation’s future of mortgage finance system.
Maloni, 5-3-2013
6 comments:
Thank goodness, Bill, you have regained your vigor.
No more shillyshallying about.
Watt, after confirmation, must come up with a viable plan to regenerate F%F in a new guise. Primarily a "branding" exercise as the marketeers say.
Mel Watt didn't help himself with that "interview" answers he gave the WSJ's Nick Timiraos.
I don't know if Watt's handlers deserted him or the Congressman just winged it, but nominees should stay away from the media until they've had their hearings and have a basis and statement on which to stand.
MW's responses weren't confidence generators and may just have given the GOP more grist to challenge him.
As noted, it is not going to be easy for Congressman Watt, either the nomination process or the job, if he secures it.
But, I still can't see any legislative structural changes to the mortgage market until 2016, at the earliest, when a new President takes over.
2016?
My bet is that between now and then an advocate will rise from the ashes and ask what the treasury thinks it's doing.
1) Conservatorship
2) Full sweep
3) Off balance sheet nonsense
3) No plan
Each which could and should be challenged. These are private companies, damn it.
Fair enough.
A variation of that question also should be put to congressional Republicans, asking them what is their ideal primary and secondary mortgage market structure?
I'd welcome answers from both sides.
Those likely could come up if there is a Mel Watt nomination hearing.
I think Wallison speaks for them: 'Let them eat cake!'. j/k, I really don't think that's true.
Instead, I think most repubs would accept FnF's role bankrolling safe, fixed mortgages, and how that ultimately strengthens the nation, as long as HUD and other crazy liberal initiatives didn't come with the deal.
I tend to agree (my hesitancy is based on how much the AEI/CATO types would make support a test of "conservative courage).
I also think the pragmatic big banks like the mortgage risk transferance which F&F offer.
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