Monday, August 5, 2013

Nothing Happens in DC in August



Keep our Men and Women and their Balls at Home

Bumped into a Republican friend of mine this week, who grabbed me to say, “It seems only Michelle is “-------“(slang for intimate relations) Barack more than his buddy Putin these days. Har, har!”

OK, Iran, Iraq, Syria, North Korea, the UN, and now Edward Snowden, it does seem that the President’s “friend” Vlad Putin is going out of his way to frustrate,  embarrass and anger  the President of the United States.

It’s not in Obama’s makeup to do anything drastic on foreign policy to retaliate against the Russian thugs, but........


He could author a bold move--which most American likely would applaud--that would signal his unhappiness and hurt Putin and the Russians in their collective egos and wallets, if Obama would announce that he is keeping the US out the 2014 Winter Olympics in Sochi, Russia because of continued Russian recalcitrance and poor behavior. 

Pull the jocks from the games, get NBC to yank the television plug and offer to pay for any contractual fines the network may encounter. 

I am certain that a significant majority of congressional Republicans, if not every one of them, would endorse necessary legislation doing that.

Let Al Jazeera or whatever facility broadcast it, without the pre-eminent country in the world sending its athletes.

It would take luster from the event and money from the Russian nation and be a black eye for Putin, his current ex-Olympian wife or girlfriend or whatever she is (who reportedly is pushing him to make all of the investments in Sochi). 

Will the Russians and some others hate us? Yes, but so what, they hate us already.

Some US athletes would be bummed out, but there always will be national and international  competition available for them to set their world records and to show. 

Just boycott it Barack!


OK Guys, I'll Return to The Mortgage World


In the July 20 Barron’s, Jonathan Laing took a poison pen approach to current congressional interest in Fannie Mae and Freddie Mac and displayed a bias and fact void, shocking in a seasoned reporter.

Laing wrote:  

"Both companies got caught in the mid-2000s cooking their books in order to meet earnings targets that maximized executive bonuses."


 (Maloni note: This was a common yet bogus accusation by Fannie's business and GOP political enemies.)


In 2004, three senior Fannie Mae executives were accused in a shareholders lawsuit of engaging in securities fraud, following a politically motivated regulatory report suggesting securities violations. By year’s end, the executives were forced out of the company but continued to fight the allegations.

Shortly after, in 2005, the Bush Administration blessed replacement for the departed Fannie officials, notably Dan Mudd succeeded Frank Raines as Chairman.  

And the company—now led by compliant and politically cowed officers--paid a fine for the nonexistent regulatory offenses  

But, in Fannie Mae’s case, eight years after the fact,in the fall of 2012—a year before Laing published his Barron’s piece--federal Judge Richard Leon, issued three separate rulings throwing out the charges saying no evidence existed which could convince any jury that the three Fannie officials were guilty of securities violations. 

But, that news never made Laing’s Barron's column. 

To me, Laing ignored the Judge Leon actions-- which both blew up the 2004 Bush Administration’s politically driven charges--and undercut Laing’s current Fannie Mae disdain, because a lot of crap thrown at the GSEs flowed form those baseless charges. 

A journalist with Laing’s credentials should present the total story not just the Right Wing pap which perpetuates a fallacy.


Watt Vote Put Off

Senate Majority Leader Harry Reid (D-Nev.) pulled the planned vote last  week on Rep, Mel Watt (D-SC) to become the new Fannie and Freddie regulatory Director and said it will come up in September.

That’s not good news and suggests Republican opposition. That GOP block could soften if they get some support for their versions of F&F reform or who knows what else they would trade for supporting Watt. 

In one sense if they can speed the destruction of Fannie and Freddie or  put tighter controls on them in whatever is their transition to the “new mortgage world,” it makes Watt’s ascension almost an afterthought, since—if the Republicans get their way—there won’t be too much of F/F to oversee.

(They seem to forget that, right now, Fannie and Freddie are what is producing, seamlessly, their and every other Senator and Member  constituents' conventional mortgage financing.)
IMF Survey on F&F

Inside Mortgage Finance (IMF) the preeminent industry publication for both reporting and data, conducts regular polls of its readers. 

Here are the current results of a recent poll, based on the emergence of legislative alternatives to Fannie Mae and Freddie Mac. (My thanks to IMF publisher, Guy Cecala, for letting me use his survey info.) 

Poll Archive

Two major GSE reform bills have surfaced on Capitol Hill this summer. Both call for closing down Fannie Mae and Freddie Mac in relatively short order. But only one proposes a replacement entity that would continue to provide a government guarantee on conventional mortgages that are securitized. What do you think?

It’s a good idea to replace Fannie Mae and Freddie Mac with some sort of government MBS program that provides catastrophic insurance coverage.


Fannie Mae and Freddie Mac should be dissolved but not replaced with any new government program. The private sector can fill any gap in mortgage financing.


It’s a big mistake to eliminate Fannie Mae and Freddie Mac given their current importance to the mortgage market as well as the fact that they are paying billions of dollars to the Treasury.


What Others Are Saying 


One begins to see editorials opposing House passage of the Jeb Hensarling (R-Tex.) legislative restructuring of the mortgage finance system legislation, which includes Fannie and Freddie obliteration. The House Financial Services Committee Chairman’s legislation was reported favorably—by only three votesfrom his committee. 

Maybe some are awakening to the fact that Hensarling plans to turn over the nation’s mortgage finance system totally to the commercial banking industry and their investment banking subsidiaries and appreciate the danger of that move.


Milwaukee Journal 




The Golden Goose 

Hensarling:” Let’s eat her now!” 

C-W: “Let’s wait awhile until she gives more eggs and eat her then!”


U.S. Treasury Lowers Borrowing Estimate For July to September Quarter

Dow Jones Global Equities News

By Jeffrey Sparshott

Monday, 29 July 2013

(c) 2013 Dow Jones & Company, Inc.

WASHINGTON--The U.S. Treasury Department trimmed its borrowing expectations for

the third quarter of the year after big dividend payments from mortgage giants

Fannie Mae (FNMA) and Freddie Mac (FMCC) boosted its cash holdings.

The Treasury Department estimated Monday that it will issue $209 billion in net

marketable debt from July to September, down from its estimate of $223 billion

made three months ago.

The adjustment follows $66 billion in dividend payments, received June 28, from

the government-controlled mortgage lenders. That left the Treasury with a $135

billion cash balance, $60 billion more than it had anticipated.



This came out just after I published this morning, but if  David Fiderer (aka "The Hebrew Hammer" )wrote it and Barry Ritholz "tweeted" it, it's well worth my crowd reading it.

Maloni, 8-5-2013







Anonymous said...

Although the executives were not found guilty of securities fraud, both companies restated earnings which would qualify as "caught cooking the books"

Bill Maloni said...

Possibly in a non-political world, but not in the DC world of GSEs.

IMO, Fannie's paid them because it was easy for the new CEO and chastened board to put out cash and--in effect--say it was because his predecessors were bad people (that was the essence of the deal with the WH, which now had Fannie by the short hairs.

Judge Leon's decisions in 2012 should have put to death all of the securities fraud BS--and so much else which most in the public never will see and know including how accurate was Fannie initial implementation of FAS 133--but which will be made public if a certain book gets published this year.

Let me note something here which I've offered before but bears repeating, Fannie and Freddie were different companies, had different cultures and operating styles.

I don't have the depth of knowledge about Freddie and always have had some doubts about their bookkeeping and regulatory approach in the pre-2005 era.

But, the political world treated F&F alike and we all could benefit from some senior and respected former Freddie talking about what he or she saw.

Anonymous said...

Why is Obama taking a 180 degrees turn on the GSEs issue and endorsing the Hensarling's bill? Obama stated today his idea of giving the MBS business to private banks, is this the solution to help future homeowners? I am disappointed at his new ideas.

Bill Maloni said...

See my new blog up in a few minutes.