Ugly Political Future, F&F Chug Along

Election Thoughts, F&F Next Steps

 

 

There is nothing much I can add to what already has been reported about last week’s elections.

The Republicans kicked major butt.

It was a GOP political tsunami, bringing more conservative strength to their bulging House numbers (a black Mormon woman elected from Utah!!??), and Senate victories made a legitimate scallywag, Sen. Mitch McConnell (R-Ky.) the Senate Majority Leader.

The GOP cut like a hot knife through butter; D’s got wiped and pushed out of the South, making the GOP responsible for all of those states which were part of the original confederacy, something which is symmetric but hauntingly ironic that with 57% of the south is home to Black Americans (source 2010 census), it’s now represented in the Congress by today’s political party which is so antithetical to minority rights.

Seven of the 10 states, with the fastest Hispanic population growth, are in the south (source 2013 HuffPost). 

Few convincingly can deny that this was a massive rejection of President Obama’s policies and program initiatives. He suggested that himself a few weeks ago and, sadly, he was correct. 

I am not lamenting that Washington will be run by the Republican party for the next two years as much as I gag at the transparency of their ideology and dogma. It’s seeks to recreate an America which existed at the end of WWII, both economically, demographically, and socially, except that ain’t never happening again, unless the GOP opts for pogroms!.  

The forces that created the Grand Old Party—primarily in the past 20 years-- sculpted a massively non-inclusive affair shaped largely for the benefit of the tightly connected homogeneous  “haves,” who already possess too much of our national wealth.

 

The southern and south western states now firmly in the GOP camp—including Kentucky, Louisiana, Tennessee, Mississippi, Alabama, Georgia, South Carolina, Texas, et al--represent many of the poorest educated states, the states with the least amount of income, the states with highest degree of medical problems; states with the highest levels of poverty, and all sorts of indicia of backwardness and need.

State officials and their residents may blanch at those qualities, but statistically it’s true.

 

What types of federal programs, save more of "feed the rich" are their GOP Congressmen and Senators going to produce to help them?  

Save me from the GOP pointing to a Black southern Senator, a Black far western Congresswoman, a few Hispanic others (Cubans are not “Hispanic” in my book) and arguing that their party is a big tent.

The Republican Party is not, hasn’t been, and won’t suddenly become inclusive and open, because the party’s controls all are in the hands of very conservative extremists.

If in your GOP gut, you don’t like black and brown citizens, and don’t need their votes, you are not going to spend a lot of time trying to help them. 

 Some Dems Should Disappear

The Democratic congressional leadership—Sen. Harry Reid (D-Nev.), Rep. Nancy Pelosi (D-Cal.), Rep. Steve Israel (D-NY.), Sen. Michael Bennett (who?), and the DNC head Rep. Debbie Wasserman-Schulz--quickly should apologize to their national membership, resign, seek party successors and then run and hide their shame.

Sure the “D’s will fight will go on,” but the uphill incline is much steeper, especially if the congressional Republicans don’t—as I suggested they could—puke all over themselves, reprehensively, in the next two years and create hope for the Democratic Party. 

One of the more constructive columns I read, a column by Charles Krauthammer in the Washington Post, has the GOP throwing around its weight but in some positive ways.

 

http://www.washingtonpost.com/opinions/charles-krauthammer-seize-the-day-control-the-agenda/2014/11/06/35af2aa6-65f9-11e4-bb14-4cfea1e742d5_story.html 

The next two years are going to be loud, rancorously ugly and require the best of each of us to pierce the noise and calumny.

 

Is the Conservative SCOTUS Warming Up?? 

Last Friday, the Supreme Courts quick (goose?) stepped into the GOP’s ongoing Obamacare fight, absent any triggering underlying case resolution requiring pending SCOTUS interaction, saying it will decide whether the tax subsidies in that law are constitutional.

That scares me given what I think is the activism level of our highest court and its willingness to turn back the clock to a long gone era. 

I just see the possibility of a gaggle of older Catholic guys writing 5-4 majorities for this court on any number of matters.

Should the nation worry over which of these long standing decisions could be challenged and reviewed, possibly with an eye to changing them, especially if some GOP berserkers in either chamber decide to mount a real or PR challenge?

• Racial segregation: Brown v. Board of Education, Bolling v. Sharpe, Cooper v. Aaron, Gomillion v. Lightfoot, Griffin v. County School Board, Green v. School Board of New Kent County, Lucy v. Adams, Loving v. Virginia
• Voting, redistricting, and malapportionment: Baker v. Carr, Reynolds v. Sims, Wesberry v. Sanders
• Criminal procedure: Brady v. Maryland, Mapp v. Ohio, Miranda v. Arizona, Escobedo v. Illinois, Gideon v. Wainwright, Katz v. United States, Terry v. Ohio
• Free speech: New York Times Co. v. Sullivan, Brandenburg v. Ohio, Yates v. United States, Roth v. United States, Jacobellis v. Ohio, Memoirs v. Massachusetts, Tinker v. Des Moines School District 

I am sure there is some legal answer out there besides, “Trust them; they never would do that,” which may satisfy me that this Court and its congressional Amen Chorus won’t start to reshape the country in their “1950’s TV family” ideals.

 

Let’s Talk Fannie and Freddie

 Generally good stuff.

While nothing in the election results making F&F situation any worse or better—and some arguing they now are worse--the GOP takeover of the Senate likely means that Alabama’s Dick Shelby (R-Ala.) will be the next SBC Chairman.

Shelby is a wily Senator who I don’t believe will take on issues which are not ripe or worse, sour, and I doubt that he would try and make the Senate swallow a House approved mortgage reform bill.

With the 2015 numbers, major Senate action means 60 votes at the bottom line (with @ 55 R’s in the chamber) to survive an Obama veto. 

Currently, Shelby isn’t a GSE fan, but he’ll move carefully on what he tries to pass. 

Still to come next month in the House GOP Caucus is a possible challenge to HBC Chairman Jeb Hensarling (R-Tex.) from committee member Frank Lucas (R-Okla.), which could impact committee action against F&F.

 

F&F Earnings

Yawn, as predicted here last week, Fannie and Freddie last week reported that they would send $6.8 Billion to the Treasury’s General Fund, raising to $230 Billion the amount over and above the $188 Billion figure the government infused in the two in 2008.

That success won’t stop the noise to get rid of the two but it does show that if the Obama Admin decides that it has consumed enough F&F honey, there is money that easily could go to corporate capital for protection against future losses or even some possible reduction of the conservatorship rules. 

Here is a Detroit News story on the earnings.

http://www.detroitnews.com/story/business/real-estate/2014/11/06/fannie-mae-results/18581937/

 

Clea Benson in Bloomberg interviewed the top guys at both F&F for their perspective on earnings and related issues...

http://www.bloomberg.com/news/2014-11-06/fannie-freddie-ceos-tout-their-own-housing-finance-fixes.html

 

F&F Urban Institute Conference 

Last week, there was a “F&F going forward” confab co-hosted by CoreLogic and the Urban Institute, which featured among others, Jim Millstein and current UI GSE guru and former Obama WH official, Jim Parrott.

Moderator: Faith Schwartz, senior vice president, government solutions, CoreLogic
Ø Andrew Davidson, president, Andrew Davidson & Co.
Ø Julia Gordon, director of housing finance and policy, Center for American Progress
Ø Jim Millstein, chairman and chief executive officer, Millstein & Co.
Ø Jim Parrott, senior fellow, Housing Finance Policy Center, Urban Institute. 

The takeaway from the event was continued belief about the difficulty of a new Congress moving any significant restructuring legislation on the subject and more support, with caveats, for the long stated Millstein approach that the Obama Administration should use its regulatory authority to make necessary and desirable operational changes in the mortgage giants. 

Judge Margaret Sweeney’s Own Words 

If there are those among you who lost a little hope when Judge Royce Lamberth issued his opinion claiming there were no lengths to which the government couldn’t go and control or work its will on F&F, take heart. This article linked below quotes Judge Margaret Sweeney on her support and decision for “discovery,” which will allow plaintiffs lawyers to fig into Treasury and FHFA records to see what evidence may exist suggesting the government played fast and loose with the law when opting for the F&F revenue sweep in 2012. 

www.valueplays.net/2014/11/03/sweeneys-words?utm_content=buffer2915a&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

 

 “Tim Howard717” and OFHEO Miscreants? 

When Steve Blumenthal, current DC lawyer and former special assistant (who left in 2006) to OFHEO (FHFA’s predecessor) Director Armando Falcon, argued last week in National Housing News that F&F should be combined, it caught the attention of “not our” Tim Howard 717.

Much of which was documented by a HUD IG’s report (now public) which came just short of saying certain OFHEO principals were guilty of major violations. 

TH717 called out  those 10 year old actions—for which the statute of limitations has run out—but promised to reveal more damaging material about what may have occurred at OFHEO during those tumultuous times. 

http://timhoward717.com/2014/11/05/the-real-stephen-blumenthal-and-wsj-challenge/#comments 

There are several people in town who still hold those two largely, but not exclusively responsible (because there were other antagonists at OFHEO), for the incendiary regulatory—as history now has shown--approach OFHEO took with the two companies and their execs, especially Fannie.

I don’t know who the TH717 is, except that he is not our former Fannie colleague, but I am looking forward to seeing where he goes with this foray. 

As a reminder, this is the guy who is offering major dollars for anyone coming forward with documented information proving that Treasury and the FHFA contravened laws in imposing on F&F both conservatorship and/or the “third amendment” revenue sweep. 

Here are other links to some of TH717’s spirited observations.

http://timhoward717.com/2014/11/10/what-a-wicked-web-to-unweave/ 

http://timhoward717.com/2014/11/09/victory-is-ours-to-lose/ 

http://timhoward717.com/2014/11/07/gse-ceos-unleashed-by-watt-prepared-for-flight/ 

http://timhoward717.com/2014/11/06/republican-victory-fuel-for-the-coup/

 

What Others Are Saying 

F&F earnings

http://www.bidnessetc.com/28807-fannie-freddie-to-pay-68-billion-to-treasury/ 

Fiderer likes to point out that given that more than 25% of that $188 Billion was forced borrowing to pay interest to pay on the interest—when the GSEs lacked income(shortly turned around in 2012)--the Feds, in truth, have made @$85 Billion for lending F&F @ $145 Billion.

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My thanks to the NAR’s Joe Ventrone for sending this release from last week’s Realtors conference in New Orleans on predictions for housing action next year.

http://www.realtor.org/news-releases/2014/11/new-senate-majority-unlikely-to-end-inertia-on-housing-finance-reform

 

DC Lobbying Firms Lick Chops Over GOP Control

http://www.washingtonpost.com/news/capital-business/wp/2014/11/09/what-republican-control-of-capitol-hill-means-to-companies-big-and-small/

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Mortgage Bankers Association’s early view of Next Congress

Here’s how the Mortgage Bankers’ Association is handicapping the new Congress and what housing related actions it could undertake next year.

http://mba.informz.net/MBA/data/images/Advocacy/2014_MBA_Election_Recap.pdf

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Maloni, 11-11-2014

 

Happy Veterans Day to all of those who serve and served, their families, and loved ones; each of us owes you men and women our everlasting thanks and support for what you do and did. (Thanks to my Uncle Isadore, US Army in WWII and wounded in Battle of the Bulge; my late brother Lou and my late cousin Bernie for their 1950’s service in the US Navy.)