In the above video, Jon Stewart—with humor and facts--says
it as well as anybody commenting on all the federal shutdown BS, which now has
been wrapped in a political death march to increase the government’s debt limit.
The “Teahadists” may think they live in a protective political
cocoon, because of their gerrymandered congressional districts, but the Republican
Party is exposed and likely will suffer (and has if recent surveys are accurate).
Yes, voters do forget and their memories sometimes are
short when things get back to normal and improve, but some things are not
easily forgotten with round the clock 24-7 news, amplified by social media.
Because of so many idiotic GOP statements and offensive
allegations, anyone running as a Republican better be prepared to defend this
partisan hyperbole for a long time (meaning through next year’s election cycle).
I still am sticking to what I said will be the near term
resolution. It will be some short term debt limit extension and a deal to work
on some spending issues.
But, this can will be kicked down the road again because
the Tea Party won’t settle for anything but complete surrender by a bipartisan
numerical majority who are not as Teahadist naïve, disbelieving, and
“To tie [the debt ceiling] to something
about whether you break the promises of the United States government to people
all over the world as well as its own citizens, just makes no sense. So it
ought to banned as a weapon, it should be like nuclear bombs, basically too
horrible to use.”
"A default would be unprecedented and
has the potential to be catastrophic: Credit markets could freeze, the value of
the dollar could plummet, U.S. interest rates could skyrocket, the negative
spillovers could reverberate around the world, and there might be a financial
crisis and recession that could echo the events of 2008 or worse.”
U.S. Treasury report studying impact of debt ceiling brinkmanship in 2011,
published Oct. 3
“I think, personally, it would bring
stability to the world markets.”
Rep. Ted Yoho (R-Fla.) on what happens if the debt limit isn’t raised, The
Washington Post, Oct. 7
Senator Ted Cruz (R-Tex)
Most people think that “Teddy Bin Laden,” as one conservative columnist referred to the junior senator from Texas this weekend, is a major political winner in the current fight over first Obamacare and currently the debt ceiling. Some observers say the positive attention from his right wing supporters is fueling Cruz’s presidential aspirations.
I think Cruz may get a presidential nod in 2016, but only from a third party which splits off from the traditional GOP and fields its own candidates across the board.
That would be the best political development to happen in and to the United States in a long time.
The Teahadists have captured the traditional GOP—or at least rendered it operationally impotent--and the TP “fringies” feel policy constrained by the party’s shrinking, but still important, “country club” element, also known as the wiser, saner heads.
Spew that venom Ted, capture the Right, drive it from the GOP over relentless backward looking demands, and pave the way for moderate control in both houses of Congress and the White House.
Court Cases, Redux
Last week, I sent to a number of regular blog readers a
separate missive discussing the latest on the 10 lawsuits brought against
Treasury over its 2008 Fannie and Freddie takeover.
Those legal challenges will move at whatever pace the
courts set and I don’t look for Congress, statutorily to try and pre-empt any
of the plaintiffs’ challenges, because that would bring additional lawsuits on
whatever bill they would employ.
Given the dollars involved, any decision likely will be
appealed, ultimately to the SCOTUS, and we’ll see what our nine solons have to
say about Fannie and Freddie “takings” and related issues.
I don’t believe David Boies and Ted Olsen, two of the most
successful and well known American lawyers, normally don’t lend their prestige to
cases they might lose.
I suspect the plaintiffs’ attorneys in these cases
have some reason to believe that Bush Treasury Secretary Hank Paulson screwed
up around the issue of whether Fannie and Freddie were privately held companies
or simple wards of the government that politicos easily could disdain and violate.
The problem is—just as in my 21 years at Fannie--there is
substance and facts for people to argue both sides of this question.
Including this lovely bon mot from a court decision last
conservatorship is by nature temporary, the government has not acceded to
permanent control over the entity and Fannie Mae remains a private
There is a funny/ironic story circulating about the
efforts of Senate Banking Committee chair Tim Johnson (D-SD) and his ranking
Republic Mike Crapo (R-Idaho) to produce their bill.
It’s reliably reported the two senior guys are basing
their draft on the C-W bill. But recent requisite staff meetings to develop the
proposal have been choppy and poorly attended because Corker and Warner
staffers are observing the federal shutdown and there literally is a law which
prohibits them from engaging in these behind the scenes talks.
Go ahead, laugh. I did, too, when I heard it.
Fifteen DC based housing and mortgage finance trade
groups roused themselves to jointly send a letter to the Fannie/Freddie regulator,
the Federal Housing Finance Agency (FHFA), asking it not to lower the Fannie/Freddie mortgage ceilings while the
mortgage marketplace is still sensitive and adapting to regulatory changes from
This does not make all of these business interests
F&F fans, although some are. It just shows that it is easy to sign a letter
but tough to actually work the Senate and House over substantive legislation.
However, if a Corker-Warner or Johnson-Crapo bill comes
out of the Senate and some/many trades don’t like it, they are tough groups to ignore
when you are running for reelection as everyone in the House is and a gaggle of
Senators are in 2014.
In the House, you still have the Hensarling mortgage reform
bill, which has no federal role in it unlike what exists on the Senate side,
but still lacks support from a majority in House.
I still don’t see the Congress approving any major mortgage reform legislation until 2015 at the earliest, because next year is a congressional election year.
I should have noted that the mega commercial banks trade association,
laughingly—in my view—called the Consumer
Mortgage Coalition, also sent a letter to FHFA opposing lowering the F&F
mortgage ceilings. The bigs spend most of their time trying to throttle F&F
and when a regulator seeks to shut down a small piece of the market and allow
everyone but Fannie and Freddie to go after it, the banks complain because that
means more competition and—more importantly—no Fannie and Freddie mortgage security
guarantees on the bonds into which those loans must be turned for easy trading.
Hello, again, the private label security (PLS) experience which those same
banks screwed up so famously in the build up to the 2008 financial meltdown.
Securitization Forum, which once numbered most of the bank and investment
bank usual suspects—but recently split over association executive control and
compensation issues—also sent FHFA a letter seeking a “marginal reduction” in
the F&F loans limits. Not sure who belongs to the ASF but it’s depository
members, if there are any, can’t be happy with that communication and position.
Lastly, the American
Bankers Association (ABA), the grandfather of the banking trades, says it’s
just been slow with its letter to FHFA asking it to hold up any changes.
Given that about 100 MoC’s also have asked FHFA not to
cut the ceilings, it will be interesting to see how Acting Director DeMarco
Platform; Déjà vu, Again!!
Quietly, almost stealthily, FHFA has mandated that Fannie
and Freddie give way to a common securitization
platform which the agency claims is necessary/desirable for the nation’s
future mortgage finance system.
Huh and why?
The dirty little secret, which is not so secret, is that
for 30 or more years, Fannie has had the superior mortgage backed security which
is recognized and market preferred (and one of the reasons Wells recently
Fannie pays their MBS investors sooner and there are more
Fannie mortgage securities outstanding which means greater liquidity and better price.
Freddie’s security implementation is similar to Fannie’s but
not identical and does not trade as well.
However, IMO, the slight difference between the two
either didn’t dictate such an elaborate and wasteful bureaucratic exercise
calling for a third model.
But, apparently, that’s not the FHFA way. It now has chartered
a Delaware limited-use corporation,
with its own board, its own building in suburban Maryland, and a head hunter
looking for its CEO, and all of the bells and whistles that FHFA believes is
necessary to put together this “common securitization platform.”
Why can't their regulator just pick one of the two existing platforms or even figure
out a way to meld them?
Why go through all of this silliness with a new government
created company, a board, senior officials, blah, blah, blah?
It is so reminiscent of when FHFA’s predecessor the
Office of Financial Housing Enterprise Oversight (OFHEO) was created in 1992
and mandated to develop a risk based capital oversight model, since both
F&F had invested in and were operating their own state of the art RBC
Rather than chose one or the other, an amalgam, or just
employ an oversight supervisory look at what capital each was establishing,
OFHEO insisted on building its own RBC system—which the statute permitted and
gave the agency two years to do—but took 10 years, finally, to produce.
Naturally, F&F paid for all of that and will pay for
all of this new time waste.
See linked below FHFA’s latest press release describing
its success. (Always beware of government agency press releases which include self-laudatory
I love all of the recent talk about the big financial
behemoths being dismantled into some of their component parts.Unfortunately, it’s all just talk, but that’s
the single best way to end the “Too Big to Fail” distinction. And, no policy maker
anywhere should fall for the bogus line, “But if you make us smaller, we won’t
be about to compete with our foreign competition.”
Watch any financial services exec who makes that
statement and see his or her nose immediately get longer!