The State of the Union—Meh!
I am kicking myself for missing last Tuesday’s season premiere of “Justified,” my favorite TV show. It eluded me not because I was glued to President Obama’s annual SOTU message but because I succumbed to watching the Pittsburgh Penguins outplay but lose to the Philadelphia Flyers, a National Hockey League game (3-2 Flyers in OT).
I had no plans to watch annual snoozer to the Hill. Base on new reports, had I tuned into the speech, I might have done “a Ginsberg” and nodded off seven or eight times.
I think the President is a nice guy—as most are/were-- but BHO is overmatched, has little credibility, and no ability to produce against anything he seeks legislatively, unless it’s waiving a white flag at the GOP, which depending on the issue he might do.
Very little he said—all well leaked in advance—seemed important to me.
OK, he’s allowed one last SOTU attempt to polish his legacy but the U. S. exists in an international environment—where antagonist clash daily, often with us and our allies—and its begs more than a few drive-by generalities.
I didn’t expect the President to announce the end of F&F conservatorship, but “help a Brother out, Barack” give Mel Watt something with which to work! (Maybe even a line Mel can use this week, when he appears before a House Banking Subcommittee, which has F&F repayment denier Ed Royce (R-Cal.) on it.)
As I suggested to one notable GSE blogger, who enjoys a major following, I don’t see any hidden Obama plan to leap out and “free” F&F, just more FHFA edge nibbling, which is fine, as long as they don’t chew away substance.
Obama’s (paraphrasing) “desire to work with the Congress on GSE reform” line still pops up and PO's me, although some claim it embraces a delayed stealthy BHO maneuver to move in the opposite direction, cutting F&F conservatorship ties.
Who am I to rain on their parade? (But, I ain’t buying, which makes me a rainmaker here and I suggest you bring your umbrellas.)
Just Who Has the President’s Ear?
I desperately want to know who is advising the President on these matters. Who is it that thinks mortgage consumers and families are better off dancing to the rules of the nation’s largest banks and their allies?
I’ll keep banging that drum until I get an answer that shows somebody in or close to the White House gets it. And that person makes the connection between why the Admin’s financial regulatory agencies keep citing violations and collecting multibillion dollar fines from the people to which Obama says he wants to cede the national mortgage market?
The banks and the GOP are tearing what’s left of Dodd-Frank to pieces on the Hill, right now—before his very eyes--and folks close to the President are saying, “Give ‘em more, maybe they’ll stop?”
Who is the “Neville Chamberlin,” downtown, watching those bank fines pile up and then whispering to President Obama, “Oh, ignore that. They really are good guys and we should help them corner what’s left of the mortgage market they don’t control.”
Cheating or playing fast and lose is endemic to big bank culture, someone needs remind the President of that.
The Sound of One Hand Clapping
Last week, I featured a single subject in my blog. It was an absolutely superb paper written by J. Timothy Howard, Fannie Mae’s former CFO and 23 year employee, and one of the smartest financial services minds I’ve ever encountered.
As the 600 or more who read it on this blog found out, Tim’s paper was well written, cogently argued, and laid out simply his contention that two former Treasury Secretaries committed possible malfeasance (Paulson) and misfeasance (Geithner) in the handling of Fannie and Freddie from conservatorship through the now heavily litigated “Third Amendment.”
He offers substantiations supporting his charges.
The paper was circulated to dozens of people who follow these issues. In addition to this blog, it appeared on Investor’s HUB, the “Restore Fannie Mae” website, TH717’s blog, and at least two other GSE related blog sites.
I have heard many fabulous responses to Howard’s paper, but—as of the night before this blog gets published--I have not seen one professional media report of Howard’s work.
No newspaper, weekly publication, national, network or financial website, covered it, despite having been given copies.
It’s should leap to somebody’s attention when the two companies—and the national system they serve--are and have been screwed by prominent Treasury officials, each of whom has written books trying to lionize themselves—and somebody prominent says the Cabinet officers broke or bent the law.
If Howard is right, Paulson was a partisan thug, who took advantage of 2008’s financial/economic chaos, lied continuously, and botched his attempt to implement a GOP ideological priority—ending F&F--at the expense of the national common good.
Paulson didn’t succeed in dismantling F&F, as six years of operational success and recent fabulous returns show, but he sure threw sand in the gears and %^$#@&$ it up!
While Geithner, an arrogant former NY Federal Reserve banker --misplaced in his Treasury nomination--made his own set of mistakes. After huffing and puffing, threw his weight around, institutionally mugged F&F’s regulator, taking the latter’s statutory authority, and then may have violated the Constitution’s prohibitions against the federal government taking citizen’s property.
Nope, none of that looks like news to me, Rupert. What do you think Mr. Bezos?
Maybe, next week, we can get some thrilling industry poop about non-bank mortgage lenders or, if we are fortunate, Vice President, oops, I mean Secretary Castro will reveal some meaningless FHA statistics?
Banking Oversight Hearings Coming
Both Senate Banking Chairman Dick Shelby (R-Ala) and HBC Jeb Hensarling (R-Tex.) announced plans for vigorous oversight hearings on many/all of the issues which sends Republicans running for Kaopectate, not surprisingly will go after all things Dodd-Frank, the Consumer Financial Protection Bureau (CFPB); Fannie and Freddie, partridges in Fed pear trees, and whatever else they seek to scuttle.
The HBC also voted to give Chairman Hensarling individual subpoena power, so look out Mel Watt. Maybe Jeb will use his new toy to go after some of those F&F documents that Treasury is massively stamping “Secret” to keep them out of the hands of plaintiffs’ lawyers?
Pull up those lifeboats: no joke, someone last week told me Hensarling bought his first house with the aid of an FHA loan, you know the loans provided by one of the government mortgage programs Jeb loves to thrash and hopes will disappear? Why not, he got his, if this report is accurate.
As Congress wrestles with itself and the President, the one saving grace for F&F supporters is “Sticks and stones may break their bones nasty threats never can hurt me.”
Despite the rhetoric you hear, I don’t believe F&F’s quick demise is near the top of anyone’s “do it now” lists.
The 114th Congress is not going to move on busting up Fannie and Freddie, roiling markets, and generally behaving like……rogue elephants (get it?).
The congressional R’s need to show they stand for something other than disassembling what they perceive as federal programs or anything standing in the way of their “1%” allies.
That isn’t because they love F&F, but replacing the two involves considering a plethora of GOP ideas all of which suck.
Oh, I mean they have major shortcomings and flaws, not the least of which are the mammoth problems that would injure 20% of the nation’s GNP--even with a lengthy transition period--if the government tried to shift from the current form of popular mortgage borrowing to a new system, new players and new business relations, one which benefits the nation’s Too Big To Fail behemoth financial institutions.
That ugly, indecisive, confusing, and no win Republican-driven political mess, is not something the Grand Old Party wants to lug into next year’s congressional or presidential elections.
Congress both is growling and yawning. But, there are billions and billions of dollars tied up in the court cases wending their way with no known schedule or urgency.
But, those judicial decisions—when they come and their appeals run out—easily could decide the shape and ownership for the nation’s mortgage finance system and, even, continued existence of the 30 year fixed rate mortgage.
What the Pro-F&F Community Faces
And What You Can Do About That
For a brief moment, forget that is Jeb Hensarling’s committee page. These historical fabrications could emanate from any number of public officials, Senators or Member of Congress. It just happens to be part of the Chairman of the House Banking Committee’s website, which I assume it wouldn’t be there if he didn’t agree with most/all of it.
The stuff is farcical to most people familiar with what really happened to F&F leading up to an including conservatorship. But, for a majority of folks “inside the Beltway” or even outside, this is the objectionable robe F&F wear, an erroneous meme shared by dozens of policy makers in both parties.
Those of you looking to “bell the cat” in communications with your congressional representatives should use Hensarling endorsed statements (on this webpage) as your target and evidence of the bizarre thinking that’s at work in the congressional environment, in this case by a very powerful Chairman with committee jurisdiction over the entities he distorts.
Let every member of Hensarling’s Committee, D&R—and your own Senator or Congress Member--know you are not buying the twisted Hensarling spin on events.
If Hensarling changes his page, you’ve scored a tiny victory. If he gets more GSE bellicose, you have additional ammunition to use against those ideas.
Apropos of Speaking to the Hill
My thanks to David Sims (hope you are feeling better, DS!) for sharing with me items I thought people might enjoy.
The first are links to messages shared by members of Investors Unite, who travelled to Washington to meet with their congressional representatives and discuss GSE issues and the court cases.
David also provided a link to the briefing IU and its primary organizer, Tim Pagliara, provided media and congressional staff before some of the visits.