Hardy Har Har!

 

No Good Deed Goes Unpunished

Or, I Easily Can Laugh at Myself !J

 

The other day I was researching a Fannie Mae issue and came across an investors’ website thick with Fannie Mae commentary. 

I noticed several posts by somebody self-identifying as “TimothyHoward” and many accolades for that “TimothyHoward.” 

Knowing that my friend doesn’t communicate in that manner, but needing to make sure, I contacted Tim and asked if he was “broadsiding” on the Internet. He confirmed that he wasn’t on any website commenting on GSE or Fannie issues and I was free to say that. 

So, I went on the board, identified myself as a “blogger, friend of the real Tim, etc. etc.” and assured posters “the” Tim Howard, former Fannie CFO and author of the “The Mortgage Wars,” was not on the board and that someone was pretending to be him. 

Shortly, I received the following from a board poster: 

kbkhkmartz | Report Abuse  

Hi Bill
I'm new here and you (sic) a big shot blogger but I read your blog and I suggest you change name to Bill Malarkey.

Thanks for your time.  

 

Mr. or Ms. Martz, you are welcome and I suspect you are part of a not very exclusive club! But, your funny post made my day and I shared it with several others. 

 

Treasury Happy With F&F Revenue

 

In an unusual release, Treasury publicly lauded Fannie and Freddie for their quarterly dividend payments, which allowed the US government to run a $53 Billion December 2013 surplus, compared to a 1.9 Billion deficit in December 2012, yet another sign of a strengthening economy (but you wouldn’t hear that on Fox Network News).

See story linked below.

 

http://www.bloomberg.com/news/2014-01-13/u-s-posts-record-december-budget-surplus-on-fannie-mae-payments.html

As this blog often has discussed, Fannie and Freddie shortly will give back more in dividends than the $187 Billion Treasury initially invested in the two.

 

Unless turned over by Treasury regulation or statute—or possibly even a court decision in the major pending lawsuits--the “send all F&F revenue to the General Fund, over minimum capital” will persist for as long as F&F exist (which some in Congress would make a rather brief interlude).

 

The well-established F&F cash importance to the federal government, for me, calls into question the logic and viability of the Administration’s call to abolish the two. 

Some in the nation’s capital believe that the steam already is running out of the Bob Corker (R-Tenn.)-Mark Warner (D-Va.) legislative campaign, which also would do away with F&F.

 

Of course, reportedly a Senators Tim Johnson (D-SD)-Mike Crapo (R-Idaho) version of the bill is waiting in the wings, kind of making it C-W 2.0.

 

In a related note, last week, Sen. Corker suggested that there is some virtue in the claims of Fannie deferred and common shareholders, but he walked back that statement the following day.

 

Interestingly, Inside Mortgage Finance, two days after Corker pulled back his statement, published the following (Repeated here with the permission of IMF publisher, Guy Cecala).

 

Sooner or Later, Congress Will Face the Music on GSE Shareholder Claims

By Charles Wisniowski

cwisniowski@imfpubs.com

In 2014, lawmakers and the Obama administration will no longer be able to avoid confronting claims by GSE shareholders seeking recovery, according to one industry expert.

At the recent Financial Services Roundtable Housing Policy Council forum on GSE reform, financial industry consultant Bert Ely quizzed Sens. Bob Corker, R-TN, and Mark Warner, D-VA, about GSE securities. Specifically, Ely sought their positions on the merits of Fannie Mae and Freddie Mac preferred and common shareholders’ claims that there should be a mechanism for recoveries on those securities.

Corker replied that he and other lawmakers are drafting an enhanced version of the GSE reform bill he and Warner filed last year and recognize that “somehow or another, that has to be dealt with.”

“What I think their answer did was bring home to folks the extent to which there is a linkage between these residual stock interests and some kind of eventual restructuring of government guaranties in housing finance,” Ely told Inside The GSEs after the event.

GSE common shareholders became entangled in a financial limbo of sorts when Fannie and Freddie were placed into government conservatorship in September 2008. For more details on the legal outlook, see the new edition of Inside The GSEs.

 

Could Corker and Warner be trying to address shareholder matters in the draft bill being readied for the Banking Committee’s Chairman and Ranking Republican? 

Once again, it’s worth a clarification. 

As I write this, three junior House Banking Committee Democrats, announced plans to introduce a bill to sell Fannie and Freddie and keep the entities functioning in the mortgage market, sans any federal backup. 

Good thinking guys and good luck.

My Poker Game

 

There was a slightly heated, funny--and far from dispositive-- discussion at my poker game last week about NJ Governor Chris Christie. 

The verbose poker playing R’s claimed that would-be 2016 GOP presidential candidate Christie “will be fine politically” and the public will forget the bridge mess in a few weeks. The D’s—younger and more handsome to a man--said people will not forget or forgive and that Christie comes off as a hollow fool for being manipulated by his staff or a run of the mill liar.

 

I believe that Christie’s “political momentum” has been side tracked and he made himself vulnerable and subject to additional scrutiny and inquiry, which is not something the GOP needs as it tries to settle on a candidate to do battle with Hillary Clinton or whomever the Democrats nominate in 2016. 

No matter what one thinks, the following Bruce Springsteen/Jimmy Fallon video was one of the more creative responses to Christie’s troubles. 

 

http://www.nytimes.com/2014/01/16/nyregion/christie-and-springsteen-a-tale-of-devotion-and-a-very-public-snub.html?_r=0

Warner Gets Whacked and a Challenger

Senator Mark Warner (D-Va.) earned a whole lot of grief in a Huffpost article by Michael Lux, charging the Senator with dumping on the middle class and “benefiting Wall Street banks,” for his part in the Corker-Warner bill to abolish Fannie Mae and Freddie Mac. (Linked below.)

http://www.huffingtonpost.com/mike-lux/mark-warners-dc-centrism_b_4585862.html

About the same time, Warner picked up a new Republican opponent, Ed Gillespie, longtime GOP lobbyist and insider, who must win the GOP primary before he can get at Warner. 

One irony in Gillespie is that years ago, he once represented the forces that went to battle with Fannie and Freddie, but Gillespie—if he survives his primary run—or any other primary or general election Warner opponent, wouldn’t have to do very much to get to Warner’s “left” in a competitive spat involving Warner’s Fannie/Freddie exploits. 

That challenger only would have to support something short of killing off the two mortgage entities and if Warner persists, he could find himself facing a determined, angry, vengeful bunch of Freddie Mac employees, who reside and vote in Virginia and who have the time and resources—and now motivation--to invest themselves in a  political campaign. 

Not to mention the few thousand additional Fannie employees who live in the “Old Dominion” and would be stirred by the same set of facts.

 

 

Unless he’s ready to retire, a serious political challenge might cause “Mark “30-1” Warner to deal more fairly with possibly 10,000 F&F workers (and their families) whose careers he would destroy and who Warner would cast in the street. 

Most US Senators like to brag about how many constituents they helped get jobs, not how many constituent jobs their legislation destroyed. Senator Warner won’t want to talk about how many Virginians his Corker-Warner bill could “unemploy,” how much in local goods and services those families stopped buying, and how much in state income taxes they no longer can send to Richmond. 

A smart opponent easily could develop those numbers. (I doubt if the impact in Tennessee would be that dramatic.) 

There still is time to wise up Senator “30-1” and consider the consequences of your legislation, which does a swell job for the nation’s behemoth banks, but--unless those banks move in and hire thousands of ex-Freddie and Fannie Virginia workers--your constituents will get the short end of this deal.

 

What Others are Saying 

Richard Leong in Reuters discusses possible front running of Fannie and Freddie swaps by Wall Street traders.

 

http://www.reuters.com/article/2014/01/14/us-usa-swaps-probe-idUSBREA0D04N20140114

 

Maloni, 1-17-2014