Mommy, did that masked man give you a silver bullet ?

 

 

Corker: "Hang ‘Em High, Tim and Mike;

Let folks see their life fluids drip out!

That’ll Show ‘em How Tough We Are!"

 

(By the way, heh, heh, heh, Warner and I have a fundraiser $$$$$ tonight, for all your bank boys in town; there will be another one $$$$$ soon, since you can’t max out, heh, heh, heh.) 

 

Slowly and somewhat painstakingly, workmen are constructing the gallows outside of the Senate Banking Committee hearing room, using the stoutest of wood and  the strongest other materials, since one of the intended hangees is carrying a little over $3 Trillion in assets and the other a little under $2 Trillion. That’s a lot of dudette and dude to “stretch,” with nobody sure over what period of time they’ll have to hang out, so to speak.

Is there anyone who can save these two innocents? 

 

This coming Tuesday, the Senate Banking Committee plans to markup its “kill Fannie and Freddie and let’s give the world to the big banks mortgage reform bill,” in the process abusing and redefining the word “reform.”

As this blog is being written continued issues are being raised and amendments surfacing to fix observable problems. 

The Senators should understand that you are not reforming squat, if your recreate an existing system, name the parts different things, have the federal government stand behind all of the losses, except for some “private capital” upfront (which ironically comes from another federal subsidy), put a 90% federal guarantee on the transaction, create a new and untried federal agency to implement and watchdog the larcenous big banks, slap the whole thing on the federal budget (on the backs of the taxpayers), and take a deep bow because you’ve killed Fannie and Freddie, albeit not too quickly, just in case you messed up and they’re still needed.

 

Death Be Not Proud

 

On that latter point one of these brilliant solons should be able to answer when do Fannie and Freddie die? 

The two have been carrying the entire national mortgage market on their shoulders since the 2008 meltdown and this “bury them” scheme rests on a bed a promises wrapped in some regulatory and operational concepts which never before have existed, but presented by people known for disappearing quickly from crime scenes. 

Reminder guys and girls, you are screwing with a system which represents roughly 18% of the nation’s economy.  

Do you poison them before hanging them or slowly “boa constrict” F&F to death, roughly in concert with the evolution of the new Federal Mortgage Insurance Corporation (FMIC)?  

What if there is a “flapdoodle,” as we say in Tennessee, and FMIC doesn’t come online as fast as the “we never tell a lie or stretch the truth” CWJC sponsoring Senators swear it will? 

Do you hurry up and do a financial Heimlich maneuver on F&F so they can rise and fill the breach?  

Do you think that Senator Warner (D-Va.)--who is running for re-election, killing good salaried  jobs for maybe 10,000 of his constituents, while bragging of his exploits to all who will listen, including owners and employees in all of those Northern Virginia stores and businesses (run by people who also vote) and who like having those F&F folks and their families as clients and customers—will panic if a market emergency sets in,  and rush to do mouth-to-mouth on Freddie and Fannie (“Eew, which do I do first the boy or the girl?”), saying, “I’m sorry, I’m sorry, you don’t have to produce 30-1, just breathe, just breathe, please!”

 

Does Part A Go Into B, F or H? 

Is there anyone who believes that CWJC’s Rube Goldberg-Frankenstein regulatory arrangements with guarantors, aggregators, and insurers --which has vilified by many liberals (see recent Urban League letter) and hated by Conservatives (See letter from 25 conservative groups, plus opposition from Cato, AEI, and Heritage)—is going to happen on time with no false starts, breakdowns, glitches, and revisions even if congressional control changes at the end of this year? 

Now maybe if the bill was creating oath breakers, abductors, seducers, and out of wedlock fornicators—given current congressional backgrounds--its legislative implementation would be no challenge. 

But, CWJC purports to create guarantors, insurers, and aggregators, whose twains may never meet, if Senators Sherrod Brown (D-Ohio) and David Vitter (R-La.) see their amendment pass. Reportedly, it denies what appears to be corporate vertical integration. (Vitter is liking the hell out of the fact he can go home, get people’s minds off his dalliance with a woman of the evening, and argue forthrightly that he denied “integration” to somebody or other. Not sure if he will call his next opponent’s sister a “thespian,” probably only if it’s necessary?) 

Too Much for Banks,

Not Enough Low Mod

I am tired reminding that the bill rewards financial miscreants who will round ever square corner to get an edge and make a buck, plus there isn’t a lot of low income housing certainty in the Senate Bill. But, I'll let the Urban League letter and similar missives from others make that point.

This is an excerpt from a Gannett Washington DC News Bureau story about the bill (and Tennessee Republican Bob Corker’s role in it). 

"This would be huge for the financial sector. They are drooling," Dean Baker of the liberal Center for Economic and Policy Research, said of the Corker bill.

But Baker and other critics question whether a new agency, the FMIC, should continue the practice of taxpayers guaranteeing mortgages. Even a 90 percent guarantee would be pretty sweet for private firms, they contend.

"I can't believe we would be going back to that," Baker said. "Were these people not alive in 2008?"

Similarly, Julia Gordon, a housing expert at the Center for American Progress think tank said, "Not surprisingly, we view it as giving the keys to the car back to the guy who drove it into the ditch."

But Corker said his bill "levels the playing field" by giving local lenders, like credit unions, access to many of the databases and other technologies Fannie Mae and Freddie Mac employ.
 

Senator Corker’s nose must have increased significantly when he offered that empty and meaningless justification for his work.

Um, Bob. Virtually every lender in the nation—banks, mortgage companies, and credit unions—already are linked, contractually, to both Fannie and Freddie and as such have access to all of the operational and information data each has and the lender might need to originate loans for either to securitize. 

Senator Bob’s been eating too much at McDonald’s if he thinks F&F both have some “special mortgage sauce” they are holding back from their customers and therefore he needs to smite them. 

Oh and Senator Bob, the small banks (ICBA) and the federal credit unions (NAFCU) oppose your bill–see their Senate letter--because they are afraid of the big banks consuming them. 

If the bill is reported out of the Committee—and if it ever makes the Senate floor—the only thing those vulnerable incumbent Democrats need to do is read the letters and statements from the complaining conservative groups to get a preview of what charges their GOP opponents will throw at them in November.

Because of housing overhang and the less than buoyant local economy, Nevada is one of those states which least can handle any cataclysmic mortgage market disruption caused by the uncertainty inherent in approval of a stunning structural upheaval in residential real estate market financing, even if it is somewhere down the road.

 

Listen, Is That D Sanity Coming? 

 

Wait, what’s that sound? Could it be???? 

“Return with us now to those thrilling days of yesteryear, when out of the west comes the thundering hooves of the great white horse, Silver (wearing adornments form Reno), and astride his back, is a man with a broad white hat, two six guns blazing (are those silver bullets from Reno, too?), and he’s wearing a mask and a vest which says 'Majority Leader.' ”

Why it’s the “Nevada Loan Arranger” racing in to bring some sense to the addled and venomous (not just you, Senators Corker and Warner). 

“On big fellow, on, faster, faster boy!”

Will the Nevada Loan Arranger get there in time to bury the proceedings, but not the victims? 

Tune in next week little Rangers and see if truth, justice, and some political common sense—not to mention the “American way”--are victorious, or will the colossal Wall Street institutions win again?

 

Who is Saying What? 

In anticipation of the next chapter of “What can we do for poor little Wall Street?,” I offer this Slate article. 

http://www.slate.com/articles/news_and_politics/politics/2014/04/house_members_who_work_for_wall_street_center_for_public_integrity_investigation.single.html

Here is a link to the National Urban League letter opposing the Johnson-Crapo bill. 

http://nulwb.iamempowered.com/newsroom/policy-news/marc-morial-blasts-johnson-crapo-housing-finance-reform-bill

 

From Capital Alpha’s Chuck Gabriel comes the story and link to all of the documents the FHFA sent to the Hill late Friday, including letters from Fannie and Freddie opposing parts of the bill. (Thanks, Chuck.)

http://mail.aol.com/38539-111/aol-6/en-us/Suite.aspx

Here is a link to the letter two dozen conservative groups opposing Johnson Crapo sent to the Senate.

http://cei.org/sites/default/files/Johnson-Crapo%20Coalition%20Letter%204-21-2014.pdf?utm_source=iContact&utm_medium=email&utm_campaign=John%20Berlau%20Messages&utm_content

Last but not least is the latest from David Fiderer, as the "Hebrew Hammer' uniquely rocks CWJC.

http://www.nationalmortgagenews.com/blogs/compliance/the-fatal-flaw-in-the-johnson-crapo-gse-reform-bill-1041631-1.html

4-27-2014: Post original publication, I’ve added this link to Gretchen Morgenson’s excellent column about Senator Elizabeth Warren (D-Mass), which appeared in Sunday’s NYT. It speaks well of Sen. Warren, says so much about Washington and the issues I’ve been pounding for years, including the major problem in CWJC. It makes me proud that, a few years ago, I labeled Treasury Secretary Tim Geithner, “banking’s best friend in Washington.”

http://www.nytimes.com/2014/04/27/business/from-outside-or-inside-the-deck-looks-stacked.html?ref=business&_r=0

 

 

 

 

Maloni, 4-26-2014