Sunday, May 25, 2014

Geithner, CorkerWarner, Stevens, F&F, Castro, Memorial Day, etc.



Lots of Holiday “Cats and Dogs”


Former Obama Treasury Secretary Tim Geithner is out hustling, hitting the book selling circuit and TV interview scene, pitching his new book about the 2008 financial meltdown.

The flinty former banker (is there another kind?) already grasped for a sympathetic straw in his first interviews, reminiscing AND APOLOGIZING, We should have done more for individuals not the institutions." 

Yes, Timmy, but if my aunt had balls, she‘d be my uncle. 

Talk is cheap and 9.5 million mortgage borrowers still are under water on their loans while—surprise, surprise--the banks are flying high with record profits in 2013. (And nobody in your Admin forced FHFA’s Ed Demarco to help F&F mortgagors in those circumstances, letting him mostly ignore them. But the banks got top shelf treatment.)

I called Secretary Geithner “the DC Democrat the big banks like the most.”  

If I was interviewing Mr. Geithner, today, I would ask:


-- “Why didn't you insist that some of the $425 Billion in Treasury’s Troubled Asset Relief Program (TARP) money pay down individual mortgage loans for borrowers, who had good credit history, but whose mortgages were severely/partially underwater?

That money could have gone right to the banks, wiped out the mortgagors loan indebtedness, and not even touch the borrowers hands, reducing any risk the money would not be used as intended.


--“Why didn’t you and the other financial mavens insist on reciprocal bank lending when you lavished all of that taxpayers cash on them, with no real strings? Why did you permit the  banks just to enhance their bottom lines--arbitraging short term Treasury and Fed securities with their/our new money—and allow the depository institutions to go almost two years without generating any significant commercial or mortgage loan originations?” 


--And finally, “Why were F&F charged 10% repayment dividends—and denied any congressional representation capacity--when banks only were charged 5% for funds borrowed from the Treasury and had no limitations on their ability to influence the Hill?”

I wish I could measure the political/media outrage and angry hyperbole over the $187 Billion the Treasury infused in Fannie and Freddie, some of which continues still, against the very few complaints coming from Congress and the press over more than double that amount of Treasury support for the banks.

It’s always good to remind people that F&F have returned to taxpayers their $187.5 Billion with an added $25 Billion cushion. 

Speaking of Gall…..

There is an old Ralph Waldo Emerson dictum, “If you are going to kill the King, you better not miss.” 

I wonder if Virginia Senator Mark Warner (D-Va.) will bury his ego enough to go back to Freddie Mac, where he spoke a few months ago (and maybe even visit his constituents at Fannie, too), and do a mea culpa for trying legislatively to kill those two workplaces and cost the employees their jobs? 

Most F&F employees live in Northern Virginia, which would have felt the financial and economic shock if Warner’s CWJC bill had been approved. 

The at-times pompous Warner may not loudly campaign that he was recruited by Senator Bob Corker (R-Tenn.) to be the lead Democrat in slaying F&F, But now that the Senatorial pair apparently have failed, What’s their next step? 

(“Hey, Mark. Let’s you and me nail your constituents, heh, heh, heh and then have us a fundraiser.”) 

We know Corker doesn’t have thousands of F&F professional employees, their families, and relatives living in his state (can you say voters?), but the opposite is true with Warner and he’s up for November re-election in Virginia. 

Will Warner try and do a little fence mending among F&F folks who could be formidable, numerous, pissed, and raise a lots of money against him, if they were so inclined? 

Having flopped, does he still want to take credit for attempting to destroy all of those local jobs and the negative impact that would have had on the Northern Virginia economy or maybe consider a strategic pivot? 

Or maybe—if Warner gets re-elected—he’s going to keep coming at F&F, which suggests those targeted mortgage people should do something now?? 

BTW, Senator Warner, please tell your money raisers—who send me frequent requests—I still don’t want to support your fundraising efforts. 

Frankly, as a show common sense, I would urge you to dip into your reported $400 Million to $500 Million net worth and self-fund your own campaigns.

The MBA’s Dave Stevens Said What?

For a guy who just had months of his lobbying efforts jammed back in his face like a cream pie--when the Senate Banking Committee failed to pass the CorkerWarnerJohnsonCrapo bill with sufficient numbers, likely ending its consideration for this year and possibly the immediate the future—the Mortgage Bankers Association’s David Stevens seemed to take a lot of bows at the MBA National Secondary Mortgage Market meeting in NYC last week. 

Stevens speech, linked below, makes it sound like he and the MBA influenced all sorts of positive things, including FHFA Director Mel Watt pronouncements last week, which heartened so many in the mortgage world.

Stevens was engaging in some major spinning when he lamented the F&F system was not approving lots of low income borrowers and mortgagors of color.

Of course, Stevens has spent all year trying to blow up F&F, substituting instead his CWJC “let’s give it all to the banks” plan. 

I’ll let the F&F experts—with whom his members still must work--respond to Stevens on the applications matter, but two things leaped out at me as I read Stevens comments. 

(Link to Stevens’ comments.) 

 In dumping on F&F for mortgage application rejections citing HMDA data, Stevens knows—and it’s important for most others to understand--F&F never see loans not brought to them for securitization

It’s the lenders’ job to review mortgage applicants and apply the F&F guidelines for acceptance, based on which securities they seek. It’s in the primary lender’s domain where decisions get made to approve or not approve a mortgage loan application and then to send it either to F or F.  

Despite its' rejection, Stevens continued to tout the CWJC proposal over the current F&F system, which he claims is flawed.

In waxing over the dear departed CWJC (large and bold text for emphasis), DS never admitted—his low-mod wailing to the contrary--there was nothing in CWJC which compelled a lender to make loans for lower income families!  

For emphasis, I am going to repeat there was nothing in CWJC which compelled a lender to make loans for lower income families! 

Yes, CWJC would create a mortgage subsidy fund but with no requirement for any lender to dip into it.

(How about annual low-mod enforceable lender goals, Dave?)

Stevens took credit for MBA praising F&F employees, but he seems to skip over his heavy personal involvement in seeing the giant mortgage investors disassembled and allowed to die, with nothing functioning in their place, save CWJC’s Rube Goldberg regulatory arrangement and its huge new federal subsidies to the nation’s biggest banks scheme. 

Bloomberg’s Jody Shenn discusses the MBA exec’s racial mortgage rejection comments and some post-speech rebuttals he produced.

Stevens’ allegations produced a “Twitter storm,” according to a Housing Wire report.


Here the New York Times weighs in on reactions Stevens comments produced.

Grease F&F Bandwagon Axles? 

I predicted that congressional and industry observers would start looking at ways of reviving Fannie and Freddie, since that might be a more promising way to produce a revived and efficient national mortgage finance system, with more access for all borrowers and lenders, and much faster and cheaper than anything in the CWJC legislation, given the bill’s controversial bank mortgage security subsidies and virgin insurance regulatory structure. 

John Taylor, President and CEO of the National Community Reinvestment Corporation, publicly called for what is, in fact, occurring behind the scenes with some influential housing and mortgage finance people discussing the revival of F&F. (Probably not David Stevens, right now.)


Foreign Banks Break US Laws; Join the Big US Banks, It’s Easy! 

Only because it tracks so well with what I’ve said and written, in almost every blog I’ve produced this year and most of last, here’s this week’s story about the Swiss headquartered Credit Suisse violating US tax laws (and our banking regulations). 

Here is another “this week” story about France’s BNP Paribas bank, vitiating our bank laws by managing/moving funds for Iran, Sudan and Cuba. 


By all means Senators Corker and Warner, let’s turn over our national primary and secondary mortgage markets to the big banks. They are responsible and would never try and manipulate any regulatory or legal systems, right? ;-) (Sarcasm!)

(Heh, heh, heh, now Mark and I have some fundraisers coming up…..!)

One More DeMarco Fiasco

I have hammered away on the Common Underwriting Platform (CUP), which Ed Demarco forced Fannie and Freddie to create (single purpose Delaware corporation) and fund, as part of Ed’s dream about doing away with F&F. 

Hoping he could preside over killing off F&F, the former FHFA Director, first asked them to facilitate their deaths by creating an underwriting platform to be shared with the domestic mortgage market.
Right now the project has a vague annual cost of possibly $300 million, with up to 300 new employees headed offices in to Bethesda, Maryland---which currently are empty).

But last week, the FHFA’s Inspector General found a few major problems with this DeMarco creation.

End it Mr. Watt; putting your fingerprints on DeMarco’s project just attaches you to a total waste of taxpayers’ money for reasons I’ve spelled out in previous blogs. (Every wasted CUP dollar is F&F revenue which doesn’t back to taxpayers or is lost to possible future F&F recapitalization.) 

If you believe it’s absolutely necessary (I don’t), detail 20 techies from each company—or 40 from Fannie or Freddie--and have them build one, giving them a year to complete the task or dump it.


Who Said What Recently?

Josh Rosner offers some tax advice to facilitate mortgage finance and boost the middle class.

How about this tome on risks to bank reputations for violating federal government rules?


Here’s another perspective on underwater homeowners from the Hass Institute.

Bruce Katz, a former Senate Banking Committee Housing Subcommittee staffer, deputy to former HUD Secretary Henry Cisneros, and currently a Brookings Institution’s VP—writing in Politico-- offers some thoughts on what new HUD Secretary Julian Castro might undertake

Remember, hug a veteran; I’m able to write this and you are reading it because of them and their sacrifice.


Maloni, 5-25-2014

Again, comments, questions, (some) epithets welcome; see  below.



Anonymous said...

Bill, nice blog. Got an idea, let's put Stevens, Warner, Geithner and Corker on a desert island survival reality TV show and watch them kill each other with their ego. I also heard the next harebrained bill will lay ground work for the sequel to Dumb and Dumber III. I would like to see Warner go back to Virginia and hand out hundred dollar bills to an angry mob. Also thanks for continually bringing up DeMarco's mega million shell company. Taxpayer waste at its finest but deserves top spot on The Fleecing of America.

Bill Maloni said...


Thanks for the idea, now if Hollywood only would.....

Corker and Warner are pols and most--not all--at any level have little substance.

In many ways, Geithner's book shows that--despite his Fed background (and Larry Summer's recommendation, which alone should have killed his candidacy)--he was a fish out of water.

Stevens is a trade association exec who has to be responsible to his member to continue enjoying his large salary and his members are at times conflicted. But, he, too, has to know he can't run too far from what he says one day to the next.