Mel Watt to Get FHFA Job?
Sen. Harry Reid’s successful application of the “nuclear option” to permit Presidential Obama’s judicial and other appointees to be approved with a simple majority vote--rather than a 60 vote beat the filibuster number--could make Mel Watt the new head of the Federal Housing Finance Agency (FHFA), F&F safety and soundness regulator. (I am hedging slightly because who knows what tricks the GOP may pull for retaliatory purposes, although they never will admit that motivation.)
BTW, I strongly disagree with the Washington Post, which editorialized that Reid should have worked out a deal with the minority Republicans rather than dumping the 60 vote accord.
Screw that, the Republicans stiffed Obama and Reid for months on the appointments and weren’t going to budge, so Reid went over them.
If the Senate GOP feels so strongly about Senate minority rights, as the wimpy Post claims, then—if the R’s win back the Senate majority 2014—they can put Humpty Dumpty back together and vote to reinstate the 60 vote test for lesser appointees.
But, if they win next year, they won’t do that.
What Reid’s Step Means for Mortgages?
Ironically, it could hasten the pace of F&F “takings” lawsuits pending in the US Court of Appeals for the Circuit District of Columbia Circuit to which three Obama judicial nominees are headed.
More certain, it could mean that Rep. Mel Watt may get Senate approval to take over the FHFA from Ed DeMarco, with the longtime Republican bureaucrat moving on (to a right leaning think tank or some other appropriate position outside of government).
If approved, Watt might slow down some of the DeMarco agenda to diminish F&F operations through regs, not waiting for Congress to act with legislation.
Watt could go back, overrule what DeMarco decreed, and help mortgagors without underwater loans or stuck in loans with high interest rates and an inability to refinance into more affordable mortgages. Although that seems less crucial than it was last year.
The new Director also might move slower on the DeMarco plan to bring in an gaggle of outsiders to develop an “independent underwriting platform”--separate from the F/F platforms--which presumably would have used to channel business away from F&F and toward other lenders, primarily the large commercial banks or their subsidiaries.
And then there is the question of adjusting downward Fannie and Freddie maximum mortgage ceiling, which DeMarco was hot for but which Watt might not see as that significant a priority.
Nobody truly knows what Watt will do with any of these and related issues, if and when he succeeds DeMarco. We’re all speculating.
Advice for Mr. Watt
Let me repeat some “advice” I offered Mr. Watt a few months ago, when his nomination first circulated.
Mel, bring with you a dynamite financial services/securities staffer, ideally one who has worked on Wall Street and who complements and expands your mortgage market understanding.
Don’t take anyone from your Hill staff or the House Banking Committee, likely they won’t have the skills you need. (I’m not describing me and I am not seeking a job.)
Your “man or woman” needs both to advise you and protect you from the remaining DeMarco acolytes—invariably populating FHFA-- whose agendas may be closer to the outgoing Director’s than they are to yours.
These individuals will test you and see if they can undermine your agency objectives.
FHFA still has many employees who maintain an anti-Fannie and anti-Freddie profile and who buried themselves into the protective Civil Service woodwork.
If you get the job, Rep. Watt, watch your back. Your in-house “baddies” need dislodged or canceled out.
Corker Hypocrisy On Display
This past week, before the Senate Banking Committee, I watched a brief exchange between Jim Millstein, former Obama Treasury official and now principal in the Millstein Company, and Sen. Bob Corker (R-Tenn.).
After playing Alphonse and Gaston with witness Mark Zandi--in a bizarre segue--Corker announces that people familiar with Capitol Hill and the legislative process see the flaws in certain congressional or government actions (Okay….Senator, we know that), but to panel witness Millstein he suggests that Millstein’s antagonism to parts of the Corker-Warner bill, in part, were influenced by Millstein’s ownership of some GSE preferred stock.
Millstein rightly interrupted Corker, letting the Senator down slowly and gently, corrected the Record and noted that he currently owns no such stock and had sold what he once owned.
Corker mumbled some non-apology, saying he was “happy to hear that,” gathered his papers and left the hearing room, with what looked like his tail between his legs (figuratively speaking).
Just what point was Corker trying to make? Had he never encountered anyone with a vested interest who testify before Congress or sought the Senator’s support after revealing such?
People who do that, Senator, generally are called open and honest.
This was a tawdry Corker effort to demean Millstein’s mortgage reform position, which includes a thoughtful proposal to maintain parts of F&F serving the national mortgage finance market, but not as they currently are structured.
Corker’s mini-assault and bad manners likely masks what most of us know already, the Corker-Warner bill contains major gaps in it, which raise significant policy questions and leaves unanswered a lot of workaday mortgage market operational questions.
(C-W, What’s your solution to the TBA market? What happens if all of that private capital needed for your MI experiment doesn’t materialize? Should F&F be junk piled before you have those answers?)
Paranoia or Just Bad Phone Manners?
Last Wednesday, I needed to speak with a Fannie Mae employee, but didn’t have his office number or cell.
So, I called the company main number and after the recorded message asked if I was calling about a variety of Fannie-offered programs, an operator answered and asked if she could help me?
Maloni: “Yes, I am trying to reach, ____ ____ and his last name is spelled _ _ _ _ _ _ _ _!”
Silence, while she found the right name.
Operator: “And to what is the call to Mr. ______ in reference?”
Maloni: “I’m sorry, it’s personal business between Mr. _______ and me.”
Operator: “We are not allowed to put through personal business calls.”
Maloni: “No, I meant it’s about mortgage issues, I have a question to ask him.”
Operator: “I am sorry, we are not permitted to connect calls for that purpose.”
Maloni: Now frustrated, I figured I could weaken her by mentioning the names of important Fannie people, I asked, “Can I speak to Mr. Tim Mayopolis?”
Operator: “No, goodbye.”
Now, I was pissed (an easy circumstance for old guys).
I dialed my old Fannie extension, hoping someone would answer who might remember me or just put me through to my friend.
Fannie Assistant: “Hello, Ms.______’s office.”
Maloni: “Oh, I am sorry, I was trying to reach Mr. __________ and I must have dialed incorrectly, can you please transfer my call or just give me his direct number.”
Fannie Assistant: In a cold, very cold voice, “No, we are not permitted to give out internal numbers. Goodbye.”
Collective bad manners or mandated behavior?
I am going with "A." Someone must have told staff who handle incoming calls not to be phone forthcoming.
These agencies are federal captives which do mortgage things. They are not sensitive/clandestine national security agencies.
I would argue, since they are owned by the taxpayers, their owners deserve to have their phone calls connected to those being called, without a caller having to submit to a contemporary “Spanish Inquisition.”
How could connecting me to Mr._______, or giving me his phone number, expose sensitive information to Al Queda, the RNC, Sarah Palin, or other US unfriendlies?
I am blame the all controlling FHFA, which keeps F&F and their officials on very short leashes. Get a grip FHFA, suggest the “mortgage gestapo”--in charge of switchboards and telephone policy--lighten up.
For what it is worth, three Fannies whom I regaled with this story were equally shocked but didn’t try to rationalize the operator’s lack of cooperation. One former colleague said, “Maybe you misdialed and got FHFA! They don’t like you.”
(Post-publication explanation. Look in the comments section for a GSE employee who wrote to explain the preceding.)
Deal With Iran?
Sorry, I don’t trust the Iranians and believe whatever US deal they agree on only benefits the Iranian desire to construct a nuclear weapon.
What Others Are Saying
Let the record show that I penned my blog on Saturday, before seeing Mr. Timiraos’ article.