Thursday, August 28, 2014

Labor Day Blog: Say it ain’t so, Tim Mayopoulis



Fannie to Sell “3900 Wisconsin Ave”


Fannie Mae officials told staff on Wednesday that they plan to sell their distinctive and prized 3900 Wisconsin, Avenue, NW headquarters, in the next few years, and move all staff to downtown DC, consolidating employees from a handful of area locations in a single leased facility.

If they follow through, it troubles me that Fannie is going to give up the much heralded building. But I am more surprised that they have the balls to plan three years into the future, given that so many people want to behead, eviscerate, abolish or otherwise shut them down.
I can’t wait to hear the rationale and the inevitable complaints from the Hill regardless of the price they receive for this very, very prime piece of Washington real estate and no matter where they move. 

Don’t be surprised if many of the august area private schools (Sidwell, Cathedral, St. Alban’s, Maret) look covetously on the acreage, if no more than to demolish it and build anew.

Then there is the question of what Freddie does, if as I suspect this move was dictated by FHFA (which must have had something to do with it), since Freddie’s McLean, Virginia HQ is not that picturesque, albeit newer.


When I first started at Fannie in 1983, there were daily rumors about “Arab investors” wanting to acquire the location, with its red brick Williamsburg look, which--before Fannie bought it--formerly had been home to an insurance company.

That company was called “the little Equitable” to distinguish it from the NYC giant with a similar name.  

Fannie’s attractive and well-manicured site once was scouted by Hollywood for possible location filming as part of the movie “St Elmo’s Fire.” That didn’t happen, although some scenes for the movie were shot in DC’s nearby Georgetown section.

One Fannie Mae vet reminded me, if Fannie moves downtown, it will come full circle, since their original pre-3900 offices were there at the Madison Hotel on 15th Street, NW. 

Then company officials responsible for the move to upper Wisconsin Avenue, managed to reopen a shutdown Virginia brickyard to supply matching bricks for a 3900 building expansion.

In a future blog—while noting lots can happen in three years—I’ll write about many of the unforgettable and some truly laughable moments which occurred in and around 3900 during my time in the building. 

One final and serious thought.

I haven’t been an insider at Fannie for 10 years, but there is not a person now with whom I speak--at both companies or who follows them--who fails to note how ridiculously overstaffed are both F&F.

Maybe Fannie management, before moving from its to-die-for corporate headquarters--four long blocks from the National Cathedral, with choice parking behind the building, and a pastoral setting beyond that--should do a serious and critical work force audit and see if they can reduce that number by half or more (which is the figure people always suggest) and then just house everyone in 3900. 

How many of those spots filled since the 2008 emergency have ossified and are unnecessary, like those who hold the jobs and could thoughtfully be jettisoned? 

A surgical operation like that make more sense than stuffing an inflated staff—with little work to keep them busy--into another non-descript downtown DC building.

There’s architectural character and historic value in 3900 that you won’t find elsewhere and there is virtue in lean and mean (although I realize you are not allowed under FHFA rules to be “mean” or even entrepreneurial)! 


MI Industry Seeks More Help from FHFA


What, more pleadings to generate additional revenue?

With the QM rules fully applicable to most every loan F&F securitizes, responsibilities should be easier for the private mortgage insurance industry (PMIs). 

MI companies provide policies on loans where the mortgagor doesn’t have the required 20% down payment. When a default occurs, the insurance company covers losses of the investor or guarantor. 

With most but not all of their of their business going to Fannie and Freddie, the MIs are being asked to insure a much higher quality of loan, reducing their own risk as well. 

That didn’t stop Moody’s Mark Zandi and the Urban Institute’s Jim Parrott (I remember those guys!) from advocating looser rules for the MI’s, in a report commenting on the Federal Housing Finance Agency’s (FHFA) proposed tougher requirements for the MI industry.

Both men were major advocates for the Senate’s CWJC bill, which would have opened huge market opportunities for the MIs, so their advocacy is consistent.....kind of.

Work the Hill and work the agencies. It’s an old game for some folks. 

(Note to MI industry leaders, you might want two of your ilk--PMI, the company, and Triad--to pay F&F what they owe from the last debacle, since their recent SEC filed 10Qs show only partial payments.)


Tooting Your Own Horn

When I came to Washington 45 years ago to work on Capitol Hill for Pittsburgh Democrat, Bill Moorhead--a member of the House Banking Committee--I remember him educating/counseling me, “He who tooteth not his own horn may not have the same tooted.”

The Congressman’s Washington self-promotion advice came back to me while rereading some recent blogs, when I called on the Administration to aggressively get after IS, engage other allies, and even work with Russia (which Obama never should trust) and Assad’s government to bomb ISIS in Syria, where they may have some vulnerable troop/equipment concentrations.

It appears the President is doing just what I suggested, his public comments notwithstanding.

Obama is the lamest of ducks, cannot run again and I doubt if he can help most Democrat office seekers, incumbents or newbies, but I also felt that his personal popularity would go up with the slightest projection of military power, which is more a comment on this nation than it  our President.

Going forward, I hope that BHO speaks less and does more.

ISIS hardly is naïve and the more the President and his aides talk about striking them in Syria, the more they disperse their assets.

More than six years into his job, the President still hasn’t learned to act first and then talk about it afterwards.

Now, if I just could get Mr. Obama to straighten out his head on GSEs matters.


Goldman Sachs, Pays the Feds, F&F


Industry icon Goldman Sachs became the latest to do a FHFA MBS perp walk and will pay $1.2 Billon for misleading F&F on mortgage securities sales.

Look for some/most/all of that money to wind up in F&F earnings (and therefore Treasury coffers) in the third if not fourth quarter of 2014.



And thanks to David Fiderer for alerting me to this FHFA document which catalogues all of the revenue generated from federal actions against lenders who, one way or another, screwed over Fannie and Freddie.

Note, this doc also refers to two cases still outstanding.

Congressmen Profit from “Inversion”

Are you shocked? Two GOP House leaders, including John Boehner, the Majority Leader, are profiting from US firms taking their business operations out of the US to avoid the US tax system. The process is called “tax inversion,” because the move produces a reduction in corporate taxes paid. 

The most recent example is Burger King buying “Tim Horton’s” corporate donuts operation and moving to Canada where the corporate tax bite is smaller.

I’m sure they are others in Congress from each both parties, doing what the prominent House R’s did, making money on firms which do that or facilitate those moves. But these guys have reported their financial positions thus the publicity. 

I wonder how the Tea Party’s “America firsters” view these financial machinations. 

Speaking of Burger King……

Everyone knows that Pershing Square’s Bill Ackman, who owns more Fannie and Freddie common stock than any other investor, has joined others in suing the Treasury over the 2012 “third amendment” which swept all Fannie and Freddie earnings into the nation’s general fund. 

Ackman’s certainly “knows his onions”—as we used to say on my street when acknowledging success and genius—but I guess he also know his hamburgers.

On one day last week, Ackman made over $200 Million on his Burger King investment, which now is in the $1.25 Billion range, following BK’s acquisition of the Canadian Tim Horton Company. (See Inversion story.)

Congress should pay closer advice to tAckman who has been pushing hard for Fannie and Freddie to be turned loose from their federal shackles and be allowed to once again lead the nation’s mortgage finance system.

What Others are Saying?

Laurie Goodman and her colleagues at the Urban Institute have put together a most readable document on mortgage finance reform, what has and hasn’t happened and possibly the why of it. It’s linked below.



Brandon Ivey, writing in Inside Mortgage Finance, notes predictable GOP opposition to the SEC’s proposal to tighten up rules for the rating agencies, which so glaringly abetted the big bank’s PLS activities in 2006 and 2007 by issuing inflated ratings for $2 Trillion of junk mortgage bonds which soon failed.


Added post-facto. The NYT today ran a panel discussion about bank responsibility and making banks more ersponsible. I am adding it to the blog because I read it post publication.


Maloni, 8-28-2014

1 comment:

Bill Maloni said...

Two "edits" required.

The old Fannie was located in the Madison Building, downtown DC, not the Madison Hotel.

Also, I forgot to give credit to the WSJ's Joe Light for his Fannie real estate article which I linked.