“Restore Fannie Mae”
I go on vacation for one week and the GSE flood gates open up (much like the Thursday/Friday skies above Rehoboth Beach, Delaware) and out comes both heavenly manna and some “caca.”
Naturally, the first are three new shareholder lawsuits aimed at the US Treasury’s 2008 takeover of Fannie Mae and Freddie Mac. They join an original legal action, arguing the same principles, filed previously by the Seattle based Hagens Berman law firm (lead Washington partner Jennifer Connolly).
The “caca” is House Financial Services Committee Chairman Jeb Hensarling legislative effort to, yawn, do away with Fannie and Freddie, push back the nation’s clocks and history about 80 years and pretend that commercial banks still want to make mortgage loans without the federal government’s financial backing.
Jeb is heading down the wrong PATH!
Jeb is heading down the wrong PATH!
The Chairman is in for a big surprise when his upcoming hearings produce little support for his efforts save from his conservative committee brethren and the usual leaning-right think tanks.
Hensarling: “Y’all agree with me on this, don’t you boys?”
House Financial Services official Amen chorus: “Aye, aye, aye…. (Applause).”
Hensarling, channeling his best Elvis: “Thank you, thank you very much!”
New Lawsuits Reflect Fresh Interest/Action
Gosh darn, right, these lawsuits are important and they would be even if two of the more prominent jurists in American, Ted Olsen and David Boies, weren’t steering them.
As I commented to friends, it forces issues to get raised in a grand manner that a small typo ridden blog hitting similar themes could never hope to secure.
It’s not easy beating Uncle Sam in court but it can’t hurt to have famous advocates and deep pockets arguing that Hank Paulson misused or abused his authority to cast Fannie and Freddie into conservatorship and played fast and loose with the companies resources in so doing.
I have no idea to what astronomical amount the four suits accumulated damages could accrue, but—at some point—someone in power might suggest it’s easier/smarter to settle than to let that whole ball of string unravel.
Lawyers in each of those firms, as well as the litigants represented, draw media attention and know lots of people on Capitol Hill. I would be very surprised, if the merits of their case (and the merits of F&F both before the takeover and today) don’t’ get shared with Senators, House Members, and their staffs.
That also means squadrons of new, different, and important people trying to build support for anti-government case.
Since “campaign time” on Capitol Hill is all of the time, Fannie and Freddie support money should flow into some congressional campaign accounts, always an important factor.
Ted Olsen’s Gibson Dunn law firm already has created a website to make the broader Fannie Mae (and Freddie Mac) case and raise funds to revitalize the mortgage giants. Here is an excerpt from their detailed website, which is a must read.
“Funds will help promote the restoration of Fannie Mae and Freddie Mac through advertising campaigns, web development, legal services, and any other means necessary.”
Sure that thinking could backfire, but the lawsuits are based on perceived sins of people no longer in DC or near office, let alone in office. For Many in Congress, there is small sympathy for those targets.
But, for reasons I often have discussed, F&F’s public understanding, support, and esteem is almost as low as Congress' own—despite lots of contrary pro GSE arguments—and, from my perspective, attention, public debate and squabbling only can help illuminate some of the GSE distortions forced on the nation and perpetuated by ideologues and business opponents.
There were lots and lots of people hurt in the conservatorship move, along with major systemic damage, these lawsuits easily could bring additional “copycat” lawsuits, some of which will be dismissible, but others won’t and that just amps up the attention and focus about how Fannie and Freddie might have been screwed over in the Bush era by a vengeful partisan GOP agenda, nicknamed “Project Noriega,” first revealed in the Bethany McLean, Joe Nocera book, “All the Devils are Here.”
Here is a link to an article on the new lawsuits.
L. Summers Instead of J. Yellen? Yak, Gag!
Yes, that was last week’s “Who will be Ben Bernanke’s successor?” rumor, assuming President Obama gets to name BB’s heir.
London bookies have Larry Summers high on their bet list, with odds only slightly lower than Janet Yellen’s (meaning less likely to get named).
But how many mistakes could President Obama make if he chose his old friend Larry and passed over Yellen, the extremely well respected current Fed Vice Chair? Only about a million.
Let’s see, she is super capable, with vast experience, knows the Fed system and how to make monetary policy, probably has a few enemies but not many, is a woman in an Admin still suffering from too few X chromosomes and Larry Summers is……..Larry Summers.
Egotistical and insufferable are labels which go with Larry no matter where he hangs his hat. Common enough in DC but many Hill people like their Fed Chairman to ass kiss not thumb their nose.
This Administration can’t want Summers, somebody whose ego is so big that everything about him becomes “about him” and not what’s best for the nation’s economy or international central bank goodwill.
If Bernanke chooses to leave, then I don’t think Summers even gets all of the D Senate votes let alone the handful of R’s he would need for the 60 vote approval. (Many of the female Democrat Senators will have issues with him.)
Janet Yellen should succeed Bernanke.