I tripped on this reference to the President’s Financial
Inquiry Commission (FCIC) report, published 3 years ago, while looking for
something else. However, it’s worth reminding the Hill and policy makers that
the big banks and their partners—between 2005 and 2007--issued more than $2.5
Trillion in PLS subprime securities with poor underwriting, ersatz/inflated ratings
that soon generated three times more losses than F&F MBS. With that fact
rolling around their solon minds, ask them which of the two—the GSEs or the
nation’s big banks—have been more vilified and why?
The Financial Crisis
Inquiry Commission reported in January 2011 that many
mortgage lenders took eager borrowers’ qualifications on faith, often with a
"willful disregard" for a borrower’s ability to pay. Nearly 25% of
all mortgages made in the first half of 2005 were "interest-only"
loans. During the same year, 68% of “option ARM” loans originated by Countrywide Financial and Washington Mutual had low- or no-documentation requirements.
So why did lending standards decline?
At least one study has suggested that the decline in standards was driven by a
shift of mortgage securitization from a tightly controlled duopoly to a
competitive market in which mortgage originators held the most sway.The worst mortgage vintage years
coincided with the periods during which Government Sponsored Enterprises
(specifically Fannie Mae and Freddie Mac) were at their weakest, and mortgage
originators and private label securitizers were at their strongest.
Banks Endemically Thuggish?
In several years’ worth of blogs, I’ve hammered away
about the untrustworthiness of big banks, their penchant to run over, around,
and through their financial regulators and commit violations of varying degrees
of severity, paying fines when they are caught and then promise never to do
again--what they always go back to doing.
They are banks, after all. They exist to make money and
they will get as creative as their state and most federal overseers (who often
husband the institutions) will allow.
I am comfortable arguing that the banks—far more than Fannie
Mae and Freddie Mac—are the culprits which deserve dismantling (see passage
above), a position a lot of people smarter than I advocate because of their
risk and management instincts to keep going to the well to steal water.
New York Times’ Neil
Irwin, once a Washington Post financial reporter/columnist, last
week noted the continuing aberrant bank actions and in a column asked
(paraphrasing),”Are the nation’s banks are intrinsically bad and flawed?”
Vacates With Much Left to do--So What’s New?
As the Congress raced out of town for five weeks of
vacation—with so much left undone on their agenda—the House GOP did find time
to form the Tea Party’s obligatory circular firing squad (“fire, ready, aim”)
and begin the process of suing President Obama for…..perceived sins and, also, Sssh,
for being Black or not wholly White.
Please, nobody get in their way or try and stop them. GOP
self-flagellation is so much fun to watch.
IMO, this preliminary step to House impeachment antics will
so quickly backfire and may allow the Democrats to hang onto Senate control in
November, which currently appears to be slipping away from them.
Anyone reading this blog knows that I’ve expressed unhappiness
with President Obama’s performance.
He’s paying for his perceived detachment and
intellectually approach to national office, his lack of collegiality, failure
to reach out and schmooze to the traditional DC power people in both parties,
and not possessing the alley fighter instincts that his job demands
domestically and internationally.
Big D Win?
But, Democrats will be the huge beneficiaries of any GOP
effort to impeach or even sue the President, as the Republicans expose
themselves for the obstructionist, time and money wasting blockheads which many
Myriad internal and foreign problems face AMERICA. When will
this House of Representatives cut out the narrow minded local golf club political
machinations and begin legislating for their constituents and the rest of the
Can the R’s nastiness and Marie Antoinette approach to
their responsibilities be any more obvious?
Disagree with Obama all you want—as I have—use your anger
and disrespect (which contains a healthy racial component) constructively and
offer competing policy alternatives. Don’t just turn it into a campaign to
remove his behind from office. That only exposes the GOP’s extremists in a way
D’s can’t by just arguing issues and facts.
The more the “impeach or sue” Obama noise in the next
three month the better the situation for the House and Senate D campaign
committees and Democrats holding onto the Senate, which should—by any
historical sense—run to the GOP in November.
The nation needs House Republicans to get into the policy
game and quit hyperventilating over misperceived slights and Administration
Even former VP Dick Cheney thinks this is stupid
Republican politics. But please GOP, heap it on, follow that Ted Cruz (R-Tex.)
train right into political purgatory.
The controversial individual in the following segment and the impeachment talk will produce more money for D candidates and more internecine Republican grief than the GOP already is facing over its position on women’s’ issues, voter registration bullying, minority discrimination, and domestic indifference (where is that GOP immigration bill or health plan alternative?).
Palin News Website
Get ready for a lots of Right wing hot air and “Todd’s
got the gun and I have the rack”* jokes when Sarah Palin produces her own
online website news. (*BTW. That line is one she used.)
The woman who many/most Americans just want to shut up
and go away was so infected by her 15 minutes of fame—when she lost as John
McCain’s VP candidate--that she can’t get out of her own way and just stay in
the 49th state and hunt moose, gaze at Russia from her door step, or do
whatever Alaskans do.
Even Megan McCain, the Senator’s daughter,
suggested…..she’s had enough of Palin.
Megan should just nose punch her old man and A.B.
Culvahouse for that mistake. A.B. is the well regarded DC GOP operative who
vetted SP for McCain’s VP position and, in full disclosure, A.B. once consulted
for Fannie Mae, when I was there.
I wonder who EsPee—whose current net worth is
estimated at $12 million--has lined up to pay for her new Internet wardrobe?
I am going to go out on a limb here and predict that if
her news outlet becomes reality, Palin’s pain-in-the-GOP-butt persona will help
revitalize the Democrat base with her ranting and soap opera family existence.
Just what are Hopper, Fluffy, Grab, and Tilt (I always
forget their names) and the rest of the Palin kids up to these days, any new
reality shows, books, drug offenses, out of wedlock kids, or plastic surgery?
Oh, here’s what Stephen
Colbert likes about the new Palin channel.
Seth Garrison, writing in Housingwire, discussed
one disgruntled non-attendee at the Guggenheim Partners meet in NYC, at which I
spoke and about which I blogged last week. Apparently the guy shut out at the
door owns F&F stock and is a GP investor, as well as a member of Investors
Unite (which supports F&F
shareholders’ rights). He was upset at GP’s attendance policies. (BTW, GP’s
Washington guy, the very capable Jaret
Seiberg, offered to speak to anyone who has questions about the GP
Here’s a link to Garrison’s article, which contains a
slug of what was in my last week’s blog. Make sure you read through to the end
and the reader comments, where I added some thoughts to what originally I
blogged about the “takings” law suits.
Nobody knows for sure—except some
FHFA officials—but the Washington Post
reports both F&F will announce earnings at the end of this week (Freddie on
Thursday and Fannie on Friday).
Story Competing for a Prize
One of the consequences of “conservatorship” is F&F
are not permitted to have advocacy congressional relations offices, just some
staff who respond to Hill questions and requests for information.
Similar constraints exist in their respective communications
office, which the public can see in the number of times reporters include “no
comment” from the two their communications when approached to discuss anything
which makes it into the news.
But, something slipped between the cup and the lip, since
one major PR industry magazine has nominated Fannie Mae’s financial success story
in the “financial turnaround” category.
Scroll down the awards to find the Fannie reference.
Keep them up President Obama and find new Kremlin targets
to squeeze. Use as many tools as you possess to support your rhetoric. All is
fair in financial and economic punishments, especially if you are going to slow
walk giving military support to the Ukrainian President and people.
Others Are Saying
Krauthammer, in a Washington
Post column, criticizes US Israel-Palestine policies.
Muolo—in Inside Mortgage
Finance--discusses a 2011 Blackrock report—(leaked from the from “takings”
discovery?)--that suggests Treasury may have known about F&F’s growing
financial strength before it decided
to sweep all of F&F’s revenues.
In her Sunday NYT column, Gretchen Morgenson looks at a
story I planned to cover but didn’t this week, which was a Government
Accountability Office (GAO) report on bank subsidies to the TBTF institutions.
But that report missed the biggest bank subsidy, which is
federal deposit insurance. A @47.5
Billion FDIC fund covering more than $6 Trillion in insured savings and
checking accounts, allows banks to raise working capital far beneath the true
cost of funds, if they had to borrow that money in the national/international debt
markets.(Thanks O for those numbers.)
That’s a rich subsidy thanks exclusively to Uncle Sam.
(Remember that unique subsidy the
next time the banks cry they are “private sector” and F&F are/always were