Monday, April 20, 2015

In this corner, from Iowa, weighing….




April 20, 2015, “Sword of Damocles?”
Or Just a “Damn Senate Sword?” 

Countless hearts soared a few weeks ago, when Senator Chuck Grassley (R-Iowa), Chairman of the Senate Judiciary Committee, burst onto the GSE scene when sending two very tough letters to Treasury and the Department of Justice, challenging the lack of openness and transparency in how the Obama Administration was responding to the “Third Amendment” discovery challenges, in Judge Margaret Sweeney’s order. It was a position first taken in a well-regarded column by New York Times financial columnist Gretchen Morgenson.



Cue the breathtaking music…—Monday April 20--is the day that Chairman Grassley, in writing, asked the Admin to provide answers to his questions. 

Will Grassley get stiff armed and receive nothing more than an extension request, get hit with some other delaying tactic, or receive merely a mishmash or generic answers citing nothing more than the Admin’s right to hold back documents, if it so chooses.

(I am kind of hoping for the latter because that will piss off somebody on the Hill and, possibly, give Grassley more ammunition to shine a bright light on this travesty and try and force some long overdue honest dealing on the WH to provide plaintiffs lawyers with the information those attorneys are seeking.)

If the Admin balks or otherwise delays, as one of my earthy friends bluntly put it, “If Grassley has a ---- -- (slang for male erection) for the Administration over this and/or other issues, the Chairman won’t accept the stalling—or a pack of non-answers—and will have cause to flay the White House.”

Here is a link to a Grassley Bloomberg Television interview last week, which I thought Bloomberg turned into a grand waste of the Senator’s time, asking little about the core issue of the Obama Administration slow walking court-ordered “discovery.” 

We’ll know later today if and how the White House chooses to respond to the Senate Judiciary Committee Chair.

(Update: As of Monday, 4-20, 8:30 PM EST, no response from DoJ or Treasury to Grassley's letters. This is not surprising as most all "deadlines" in Hill letter requests are missed, but--as suggested--going forward, we'll see how Grassley handles the slight, blowing it off or getting angry.)


Stegman Dashes My (Faint) Hopes

Mike Stegman chose to grace the Financial Services Roundtable (FSR) crowd with his presence last week and had the choice to deliver a fabulous speech or give big financial company reps the same tired crap about the flaws in the current system.

But, alas, poor Mike turtled at the end, crawled into (See link to particle transcript, below.)


The major cause of my disappointment is the following, which a close-to-the-WH source swore were the remarks Mike, originally, had made up his mind to deliver.

“Folks, I’ll be candid. You and I know you don’t want to take over the primary and secondary mortgage   markets unless the Congress votes you a major new (and additional) federal subsidy/benefit to protect you against your own mortgage securities losses.” 

“We in the Obama White House—having lost sight of financial services history and our own moral compass--are willing to give you that, because we like the big banks and we hope if we bribe you, frankly, you won’t, once again, hurt us.”

“Some in Congress are not willing to go along with our scheme because they believe it bestows too much on the Too Big To Fail institutions (or, if you pardon the gallows humor friends, “too big to jail”) and won’t do enough for low and moderate income families (Shh, also known as traditional and historic Democrat party supporters), who require some equitable mortgage finance assistance that doesn’t tilt toward you providers.”

“Those so-called independent congressional thinkers—all ten of them--say our approach rewards the wrong people, costs too much; turns upside down an operational home loan system that works; likely will add huge additional costs and uncertainty; and still would leave Uncle Sam on the hook.”

“Nonsense, we say. After all, look at our deft mortgage finance track record and our myriad other policy successes in sensitive bread and butter domestic areas (not to mention our foreign policy triumphs). Doesn’t that glorious record, politically, suggest we know better? Doesn’t it, really, honest doesn’t it; can I get an Amen from anyone?”

“Trust us and our plan. If I, and other Obama insiders, prattle enough and crap on the “unworkable” current mortgage finance model—which, despite our bumbling, continues to function smoothly, darn it,—maybe the Hill policy makers will lose their focus, buy our pig in a poke, and bequeath the TBTF institutions everything you guys want but don’t deserve, and likely would abuse—if their past practices are any evidence?”

“So, Hell, let’s hear it for indecision, confusion and chaos, guys and girls, the Obama way.”


Alas, Mike’s headlines would have been so much better had he given my—er, I mean—his original speech! 

Speaking of Shilling for the Big Banks… 

Rousing himself from solving the Iran nuclear agreement problem, Sen. Bob Corker (R-Tenn.) lead a cabal of likeminded solons in arguing the that Fannie and Freddie’s work on the common securitization platform (CSP) was not moving swiftly enough and needs some, in the form on non-GSE talents to aid them. (Senator Bob, do you want to add those the same bank experts who royally screwed the US mortgage market 7 years ago and then—more recently-- tried to hijack the London Interbank Borrowing Rate, LIBOR, index/apparatus to boost their earnings?) 

Excuse me while I barf. 

What is it that Corker and the other usual suspects don’t understand about “COMMON” securitization platform and its intended use??

This Obama plan is deigned to create a single platform for all security issuers—government and non-governmentand to give access to everyone wanting to be part of the system.

The estimated $300 million development costs have or will be borne only by the two GSEs—as they were compelled to agree with--when the FHFA forced them to create the exclusive special Delaware single purpose CSP corporate entity. 

Right now, the banks and other non-GSE mortgage security issuers will get it when it is ready and likely free. 

I am not sure what the Senators think will change--with the  addition of a few bank foot draggers, looking out for their own industry interests—except more delay if two (or more) antagonizing stakeholders are put together? 

Are Corker and the other TBTF friends afraid that a new Administration headed by someone not named Bush, Rubio, Walker, Cruz, Graham, Walker, Paul, Christie or Palin (please, God, let her happen!) might decide the entire exercise is/was folly and just let the CSP’s two real owners deploy it to all mortgage finance system users, as they do now with their own technology and software?

Fiderer “Heat Seeker” Progress 

Is the necessary catalytic synergy coming together to ignite David Fiderer’s “heat seeking missile article?” 

In the last blog I mentioned that David was finishing a 10,000 word shocker, aimed at exposing the corrupt role former Treasury Secretary Hank Paulson carried out putting Fannie and Freddie into “conservatorship” and precipitating the bizarre following events.

DF’s document has drawn interest from one major source and interest from three others. I hope of them one chooses to sponsor his work and give it grand attention.

He and the subject deserve the best and boldest presentation.  (See Paulson reference, below.) 

What Others Are Saying 

Paulson: “Are Fannie and Freddie still around?”

(Maloni: “Yes, despite your best efforts, you arrogant Son of….!”)

Politico’s Jon Prior, quoting Hank Paulson (and a bunch of responding tweets):


Washington Post Accurately Nails Congress

The Washington Post, generated the best editorial line of the week commenting on this Congress, in a lead editorial asking how an anti-big campaign money Florida mailman, piloting a gyrocopter from a 60 miles away Gettysburg, Pa. airport, could elude all elaborate and expensive federal security protection and then land on the US Capitol lawn. (Hope ISIS, Al Queda, Korea, Iran, or the Russians don’t know about gyrocopters!) 

“Federal officials may offer some boilerplate explanation about no security regime being truly airtight, no matter its level of resources and funding. Maybe it is undeniable that the Capitol remains a magnet for the unhinged, the unbalanced and the unconventional — and not only for those elected to serve there.” 

All Hail Borowitz



WASHINGTON (The Borowitz Report) — Americans took to the streets in large numbers on Thursday to show their support for a fifteen-dollar-an-hour wage for members of Congress.



Lenders think GSEs still working pretty well, says Brandon Ivey, writing in Inside Mortgage Finance.

By Brandon Ivey

While policymakers continue to work on reform of the government-sponsored enterprises, lenders suggest that a change to the housing finance system isn’t urgent.

“From our vantage point as a lender in the system with the GSEs under conservatorship, it works pretty well,” Peter Carroll, executive vice president for mortgage policy and counterparty relations at Quicken Loans, said on Tuesday at a discussion hosted by the Financial Services Roundtable and CoreLogic.


Star Crossed? 

Last week I commented on apparent self-inflicted conflict wounds which MBA’s President David Stevens seems to incur. (A theme repeated below in this blog.) 

This week among others, he’s been doing battle with a group of pro F&F folks, who Stevens believes really are hedge fund stooges or a cabal funded by big money, and now has banned them from his Twitter world (whatever that drastic “tweeter” action means?)

That makes for good soap opera content, but the problem is, David, It’s not accurate. They’re just regular folks.

The one principal--who months ago revealed his ID to me as part of another GSE issue--is a working grunt and a long time F&F investor from the Midwest--retired but, from familial necessity, still hustles for a paycheck. 

This innocuous antagonist likes to use graphics and animation to make his mild didactic points. He has no financial or contractual connections to any hedge funds, although I am sure he wished one would adopt him.

Lighten up, Mr. MBA—just as sometimes a cigar is just a cigar--in those scary offshore mortgage waters, sometimes, “There not be monsters out there.”


Investors Unite--—It’s Beef with David Stevens 


Morgenson, in her column, Preaches Hoenig. (Is the congregation listening?) 

Call it out, Sister!



George Will in the Washington Post

Raisin “Takings” with the SCOTUS; hope for GSE lawsuits?  



Maloni, 4-20-2015


Unknown said...

you can add myself, mother, grandchildren and wife to the list of regular folks. I dare say they would wonder what a Cabal was. But they sure would understand that Hank Paulson letting insiders know he was going to cut shareholders heads off so fast they would not know until their heads hit the floor was not working for regular folks.
They would know that the TSY and WH work with a select group of financial people to control massage and manipulate markets.
They would know the POTUS uses regular folks and meddle class in his speeches Yet? He hides behind Executive Privilege

Bill Maloni said...

DM--I am sure your family benefits from listening to you discuss and debate these matters.

That's not an activity in which most families engage, congrats.

G. Buckman said...

Bill, I second what DM stated. I'm just a regular Joe with a family, not a Hedge Fund. Just a long-term investor that believes in America and the rule of law!

BTW, my pseudonym G. (Gil) Buckman (Parenthood) is nothing more than an example of what's most important to and being the best father I can be!

Looking forward to that 10k word missle.

Bill Maloni said...

GB--Me, too.I can't wait to see the reaction.

I just checked with Fiderer and he has it poised. He's weighing his options and I think, will pull the plug (light the fuse??) tomorrow or the next day on his chosen placement.

Up to the sponsor then when it appears.

Bill Maloni said...

Readers--I just put this 8:30 PM "update" into the blog's body.

(Update: As of Monday, 4-20, 8:30 PM EST, no response from DoJ or Treasury to Grassley's letters. This is not surprising as most all "deadlines" in Hill letter requests are missed, but--as suggested--going forward, we'll see how Grassley handles the slight, blowing it off or getting angry.)

Anonymous said...

So much for the venerable system of checks and balances.

Obama, who admires the Castro's, fears the Chinese and envies Putin is single-handedly showing the world that the word "democracy" is a joke and just like his secretly worshiped rivals, he too can govern without Congress or the Judicial branch, unencumbered, making judges and lawmakers the buffoons they are.

Bill Maloni said...

Anon--IMO, BHO's receiving far more abuse than he's delivering. I wouldn't want to trade lives with him, truly.

But, this always has been about the courts, which is why the moneyed folks put their cash into high end lawyers and lawsuits not dozens of lobbyists.

The partisan and ideological confusion over "what to do" with a F&F system that needs no near term fixes (I didn't say "at all")
will keep the Hill at bay until Sweeney or Lamberth's peers act.

Too said...

Wonder if it has occurred to those who propose legislation to turn FF over to the tbtf banks that those banks still have the profit motive for which FF have been demonized. The utility model sure makes sense where execs would not need to scramble quarterly trying to figure out who they can squeeze to increase revs and earnings.

Too said...

Oh, and I too reside in the Midwest Mr Stevens as does my mother. Both of us own Pre 2008 Fannie preferred. You know Mr Paulson not only knocked our heads off but also Wall Street analysts who thought there was no way FF would stop paying the pfd dividends. Hah, that rolling sound was indeed some stupid taxpayer heads mr govt official who serves and protects.....

Bill Maloni said...

Too--Thanks for your comments. I think the "utility model" has lots of pluses, when Congress finally decides legislation is necessary/desirable (after we get a new President in 2017), it will get lots of attention.

Because of the large hedge fund presence, the fact that there still remains some "Mom and Pop" shareholders is lost on most. In fact, a large majority in Congress has no idea--their rhetoric to the contrary--the role that stockholders play, so it is easy for the law makers to ignore to ignore them.

Stevens--I am amazed at how many interests find themselves clashing with David Stevens; most facile trade association execs would not want that rep.

Again, big picture, near term the significant action is in the courts.

The attention that raisins got in SCOTUS and Judge Wheeler's AIG comments I consider quite helpful.

Too said...

Bill, are you part of the camp that believes FF will stay in conservatorship until after the next pres election? Thks

Bill Maloni said...

Too--I don't think Congress will make any structural changes in the GSEs and I don't believe the Obama Administration will dramatically change it's position.

What I can't predict is the impact of any court decision favoring the plaintiffs and whether--if it is appealed--whether this SCOTUS will agree to hear it.

I think the election of a new President--no matter his/her party--is a logical place to look for some resolution movement.