All Those Holidays Sound Alike

You Don’t Have to be Jewish to….

 

Congress takes its Easter/Passover recess at the end of this week. 

Some non-Jews confuse Passover, which celebrates the Moses-led Jewish exodus from Egypt, with Yom Kippur, the holiest of Jewish holidays where Jews fast, go to temple, make amends and atone for their sins. 

That confusion could be great for us suffering citizens and truly serve our nation well this year. 

With their dubious record of any success, Christian and Jewish Senators and Members, alike-- even those (quietly) professing no religion—should rush right home and atone for their public and professional sins.

In fact, even before they go home, they should run to their offices, drop to their knees, and seek forgiveness for failing to serve this nation as faithfully and honorably as it deserves. 

If it makes them feel better and helps them get over, they still can have the traditional Passover matzo, which isn’t a treat associated with atoning and Yom Kippur.

 

Fundraising: “Laissez les bons temps rouler”

 

Now that the targets of their fundraising campaigns no longer can argue, “I’ve maxed out” (___ __ you very much, SCOTUS!), our Washington solons in both parties will revel in new opportunities to shakedown their “financial supporters.”

 

The funders, who now can’t hide, will give more and reciprocally demand action on their priorities. Congress will talk out of both sides of its mouth and do little that’s good but a lot that isn’t.

Our public officials, all, will grandly explain why that resulting legislative activity is necessary or desirable “to insure ……. (Fill in your favorite hackneyed justification.)!” 

As always, Members of Congress will fence with the truth.

 

What’s Doing With F&F?

 

The next big F&F thing, unless it comes off its tracks, is a Senate Banking Committee markup of the CorkerWarnerJohnsonCrapo (CWJC) bill set for April 29. 

In my first 2014 blog written three months ago, I predicted that Chairman Tim Johnson (D-SD) and his ranking Republican Mike Crapo (R-Idaho) would be able to report mortgage reform legislation from their committee, with the requisite votes (12 is a pure majority, but who knows how many of the 23 members will be present to vote that day). 

Reportedly, CWJC has 10 hard supporters, requiring two more to report a bill to the Senate floor. But Johnson and Crapo reportedly want to get at least five or more additional committee backers to show broad support, which they believe increases the proposal’s bipartisan floor appeal.  

Maybe? 

A small group of Democrats want more assisted housing, both rental and single and multifamily for lower income families, and the Republican would prefer less. 

Right now, save some quiet words from Senators Sherrod Brown (D-Ohio) and Elizabeth Warren (D-Mass), nobody on the committee seems to care about the massive power infusion the bill holds for the nation’s big banks. 

Some of the big homebuilders care; certainly the smaller community banks and mortgage lenders care; and the behemoth National Association of Realtors (NAR) should care, because if the banks get stronger it will be harder for them to defend the NAR’s statutory protection which keeps banks out of their business.

 

Just saying, NAR, and in keeping with our seasonal theme, I'll remind you that even Jericho’s walls came down. 

Not sure how canny Senate Majority Leader Harry Reid (D-Nev.) will react to all of this, but he can’t stop the Senate GOP campaigns--running against his vulnerable Democrat incumbents--from labeling this bill as anything but grotesque deficit spending and a bank giveaway, with its multi-trillion dollar federal budget price tag and Uncle Sam standing behind all of it (even what’s left after they atomize Fannie and Freddie). 

If that line sells back home, look out Senate Democrats in November, if you voted for this bill.  

That means the Leader may not cave to a floor vote and not have his Senators walk the plank, which says nothing about the Republican-control House agenda which would remove the federal government totally from mortgage finance system, as per the “Hensarling bill.” 

The latter, which rids the nation’s mortgage finance system of any real federal presence, barely emerged from the House Banking Committee, limping to the House leadership offices to be held in abeyance for months. (Translation: The top House guys ain’t wild about their own bill, either.) 

In the meantime, a purported senior citizens Koch brothers surrogate (is it pronounced “Coke” or “Cock,” since I heard it both ways?) has started a $1.7 million media campaign in the states of certain key US Senators urging defeat of the CWJC bill. 

Gives new meaning to the phrase, “Things go better with……!”

(Yes, I admit it, I am parodying their name!) 

Some brave spirits—ooh, ooh, ooh, me teacher--believe CWJC isn’t needed and something far less drastic, earth turning, and more workable could be fashioned if GSE scalps weren’t a predicate to producing a bill.

Unfortunately, those who think this way don’t have 12 Senate Banking Committee votes behind us.

 

Is the MBA Playing “Whacka Mole?”

 

The hardest working man in DC’s mortgage finance world has to be David Stevens. Seemingly, he is everywhere endorsing everything and opining on all related matters.

 

But, David, there’s working hard and working smart. 

Stevens is on record supporting every “get rid of Fannie/Freddie” proposal and is heavily invested in the CWJC proposal to shut down Fannie and Freddie and launch a new federal agency which would provide more income for his members and those owned by large banks.

One would think that slowing down F&F and their heavy earnings would make Steven’s heart twitter with glee. 

But last week, he was tub thumping for Fannie and Freddie to reduce their internal lenders fees and charges to allow more Americans to finance housing through the F&F operations (oh, and increase business/income for his guys/girls). 

Mr. Stevens, if Fannie and Freddie acquiesced (with Mel Watt's permission), wouldn’t that greater mortgage business volume just boost their earnings, as in “cut prices and make it up on volume,” and add to their Administration-appeal making it tougher to get some people off that federal teat and abolish the former GSEs? 

Memo to David Stevens: Slow down, tilt with one windmill at a time, hold off the glowing praise for every legislator/regulator who touches a F&F reform issue, and check over your shoulder to see what your members think. You get too far ahead of your dues payers and you might find yourself in an executive position at a fast food restaurant, practicing...

“Do you want eggs with those biscuits, honey?”

Two Examples of “The Devil is in…” 

Let me share two current, “live” examples of why congressional statute has to be read line by line and understood in its entirety. 

Josh Rosner, whose work I blog-highlighted before (and once blog-low lighted), apparently emailed various Hill people and pointed out specifically why the boastful language of CWJC advocates may not be accurate and may represent an even larger giveaway to the “you know who” gigantic financial institutions. 

Specifically Rosner wrote:

 “Beyond the section which allows the suspension of private first loss in uncertain economic environments (see page 331*), even in normal times the first loss is weak: Section 302 (4)(A)(ii) allows the FMIC to approve

credit risk-sharing-mechanisms that ‘do not represent the first loss position with respect to single-family covered securities.’

 

“Section 302 4 (B) also supports a diminution of first-loss: ‘Nothing in this paragraph shall be construed to limit an  approved guarantor from engaging in other forms of risk-sharing or risk mitigation using mechanisms that have not been considered or approved by the Corporation.’ ” 

Most Hill observers expect—if CWJC ever becomes law—that only the largest of financial institutions, banks and some “SIFIs” (strategically important financial institutions) would be approved as “guarantors,” under the bill’s provisions. (“Stan: What do you think Ollie, certainly no self-dealing or screwing the Feds opportunities in there? ;-) 

The other example of devilish details involve some missing ones. 

One of the smartest mortgage finance people I know, very detailed, very into the structure and operational aspects of mortgage and securities matters, emailed me last week, asking if I knew of anyone who had done a rigorous review of the new Maxine Waters (D-Cal.) ranking Democrat on House Banking, mortgage reform bill—which would do away with Fannie and Freddie—and substitute

a lender-owned mortgage cooperative to put Uncle Sam’s guaranty (as per FMIC) on mortgage backed securities? 

When I pushed him as to why his question, he said that he looked carefully at the entire bill and there were significant missing operational pieces or just assumptions that some future entity or regulator would fill in the gaps. 

So, sometimes it’s what’s not in proposed federal legislation and sometimes, it’s what’s actually in there which disturbs.

 

What Others are Saying

 

A Federal judge accepts Fairholme’s “discovery” schedule. 

http://www.valueplays.net/2014/04/04/fairholme-wins-court-vs-treasuryfhfa/

 

Fed Bank President Tells Japanese, “Pox on both the US House and Senate and the White House for…..”

 

http://finance.yahoo.com/news/feds-fisher-bashes-u-politicians-080137743.html

 

And I'll close with two Fannie Mae/Freddie Mac stories.

http://www.realtytrac.com/content/news-and-opinion/fannie-mae-freddie-mac-were-they-ever-broken-8024?accnt=219663

 

http://seekingalpha.com/article/2124543-government-profits-from-continued-control-of-fannie-and-freddie

 

Maloni, 4-6-2014