(So, when you finish some 1500 words of original prose, as I did on Sunday, and make your final edit, are supposed to hit “Save” on the WORD page? Why didn’t anyone tell me this before?)
When I Walk Point, am I a Scout or Sniper Bait?
I’ve always been a worrywart, never content with today’s success, always scanning ahead for the next trouble spot, or, when I ran Fannie GR operations, the next political challenge.
If I was/am fortunate enough to see the next headache early enough, I planned, strategized, and sought help to manage and, ideally, head off the problem and the more creative, he better.
I employed that skill professionally at Fannie, with great encouragement (and hoping I taught that skill to those who worked for me). It was one of the reasons Fannie was so successful when we lobbied, but also the source of lots of stories--some true, some apocryphal---about our lobbying intensity and pervasiveness.
I remember one House Member, who revealed at a hearing that--earlier in the week--he contemplated introducing some anti-GSE legislation and told only those on the Hill closest to him.
After a harrowing day on the Hill, the very tired Congressman arrived home late. He and his wife had dinner and the guy quickly prepared for a good night’s sleep. It was then he reported to his colleagues, his wife asked him, “Why are you hassling Fannie Mae?”
I think the GSE community is paying too little attention to the GSE provisions in the bill shepherded through the SBC by Chairman Dick Shelby (R-Ala.), which features a few steaming piles courtesy of Bob Corker (R-Tenn.)--and likely his D partner in GSE crime--Mark Warner (D-Va.).
Shelby's F&F proposals primarily would alter the existing system.
I called these “camel’s nose under tent” amendments or “stealth,” because—while they don’t end the enterprises-- they begin the weakening process and open F&F to easier takeover by competitors (a group some future Congress will better define).
One change would bind the hands of any Administration—by limiting its use of the government’s GSE preferred and common stock ownership—in any recapitalization plan. Another forces the banks into the common securitization platform project, others andates more risk sharing (which both F&F already are doing), limits Admin use of GSE revenue for non-GSE uses (I like this one), and more.
The remainder of the Shelby legislation—which passed the SBC on a straight 12-10 party line vote—contain popular regulatory relief provisions for small banks, anti-Federal Reserve language giving some of the Fed regional bank presidents authority at the expense of the Washington Board of Governors, big bank holding company relief and other flotsam and jetsam.
Here is a section-by-section discussion of the Shelby bill, with all of the GSE statutory proposals in Section 7.
Nobody in Washington has spoken out against the Corker-Warner-Shelby GSE provisions, although the Admin and FHFA should. So should many of the trades which sit quietly convinced they don’t need to go on record, hoping that section of the bill dies?
GSE allies need to remind Senators that disassembling F&F can come one brick at a time and could be more successful than previous efforts which contemplated blowing them up over five years.
The Democrats have put together their own “reg relief for small banks" bill to match the R’s, since Sen Sherrod Brown (D-Ohio) knows you can’t beat something with nothing.
They have no GSE provision of their own, but what could come out of negotiations is concerning because there are few overt GSE allies in the SBC, but several (Corker and Warner) who would reduce their F&F effectiveness, ASAP.
Dick Shelby, who I repeat should never be underestimated, doesn’t construct legislation to get it jammed back in his face.
Last week, Shelby was asked about the progress of his banking bill and he smiled and said, “It’s just resting.”
Shelby’s still raising prodigious money and now may have upwards of $20 Million in his campaign war chest.
Corker may not be the most well liked Senator in the GOP Caucus, but he has some GSE momentum.
Mr. Worrywart (that’s me) easily can see Senators, late in this session, seeking to look good, rallying around the small bank provisions, and going with the anti-GSE stuff, and whatever other bank and Fed language Shelby pack can roll in because they appear popular nobody cares to stop them.
Maybe I just should stop this blog lobbying and take the direct route to power, invite Annette Shelby and Elizabeth Corker--wives of the Senators--to lunch and appeal to the real decision makers in those two congressional families.
(“Bobby, Richard, are you hassling Fannie Mae, again?)
That would be marital music to my ears.
Forget the White House
I don’t know what cards the Obama White House has to play in this game but years of ignoring he Hill are coming back to haunt this Admin here and elsewhere. Can you say inter-national trade.
The limitation on using the GSE securities is designed to tie Obama's hands, but the WH may not want to recapitalize F&F anyhow. It can’t welcome being told not to use GSE revenues for things other than GSE business; but then it might welcome fouling up F&F in other ways.
Trevor Thompson on F&F and Minority Home Ownership
Last week, U Massachusetts Trevor Thompson issued a homeownership paper pointing out how minorities will suffer if Fannie and Freddie are blown up by Congress.
It’s a point which many of us have tried to preach to the White House and this President but which seems to fall on deaf ears because those closest to President Obama and maybe the man himself seem to believe that the big banks will do a better job for minority mortgage aspirations.
What a misread of history that view is!
The Hebrew Hammers knocks it out of the park.
David Fiderer produced an outstanding response to the Wash Post article by Steven Pearlstein.
Naturally, his piece is reflective of his longer Paulson tome ,headed for e-book publication in several weeks. Great work DF.
Judge Wheeler’s AIG Decision
Screwing up the blog production (my bad!), as I did, allowed me an extra day and the opportunity to see Judge Wheeler’s AIG decision.
Not moved. It’s like “kissing your sister.”
Wheeler middled it and kicked the judicial can down the road.
Yes, there were government takings but nobody deserves compensation. Perfect decision for appeals purposes.
I am sure all of the jailhouse lawyers and other ones who should be JHL’s will read tons into Wheeler’s call for and against the GSEs.
But, I still am waiting for a judicial decision which supports F&F; it will be the first one.
The WSJ on Wheeler
What Others Are Saying
The Leadership Council for Civil Right sent a lengthy letter to the White House, calling for a relaxation of the GSE conservatorship and arrangement whereby F&F shareholders would help boost low income lending activities. Some in DC saw it as a “trial balloon.”
This Admin doesn’t need the artifice--if it wanted to recapitalize F&F--which I don’t think is on its agenda anyway.
Josh Rosner’s excellent recent GSE presentation to the CATO group.
“Bro with no Ho!”
Who needs D naysayers when the GOP attacks their own?
Sen. Mark Kirk (R-Ill.) earned the Washington Post’s, “Worst Week in Washington”, award last week for his snarky comment about fellow Senate Republican Lindsey Graham, a presidential candidate.
BTW, many of my Republican friends don’t believe Sen. Graham (R-SC.) will stay in through the entire nomination GOP process. One reason is his realistic political interests revolve around his home state and not the presidency.
Just give these damn tropical storms numbers or name them after colors! I don't want that attention.