Monday, August 10, 2015

"Summer breeze, makes me feel fine....."


Good earnings, nice comeback, but..


Once again, the mortgage “Terrific/Terrible Twins” financially/systemically came through for the nation and its taxpayers, ticketing another $8.5 Billion for Treasury in September (when the actual “sweep” occurs) with their recent quarterly revenue announcements.

The two reversed some early in the year hedging losses and benefited from a better interest rate environment and business volumes. 

The thing to remember is F&F produced, provided deep liquidity and succeeded. There are ways to sustain that operational and systemic accomplishment—not through disruption and partisan chaos and not by doing away with them--just release and recapitalize the two.

It’s not nice to chortle over the good news, but I will employing what others said at the expense of two professional naysayers. 

As Investors Unite, headed by investor Tim Pagliara, articulated about the GSE financial performance in the last quarter……

“That strong outlook….. must surely be a shock to some of the naysayers who predicted that the GSEs would not be profitable, chief among them Mortgage Bankers CEO Dave Stevens and Treasury’s Michael Stegman, who is counselor to the Secretary for housing finance policy.”

Or, as my grandkids (and I) might say to Stevens and Stegman, “natty, natty boo, boo!”


Freddie Q2 earnings:


Fannie Q2 earnings:

Don’t forget to remind Rep. Ed Royce (R-Cal), too, what the GSEs just achieved.


The GSEs still need help


As we all have come to learn—and rue--good financial news,  which should track equally good mortgage origination new through the end of this year, doesn’t mean a thing unless some federal judge somewhere supports the GSEs and plaintiffs in their 2008 Housing and Economic Recovery Act (HERA) and “Third Amendment” lawsuits. 

In a new development, last week the US Court of Appeals has asked the Delaware Court to look at whether the Third Amendment “sweep” sweep violates Delaware state law-- as former Delaware Supreme Court Chief Justice Myron Steele--declared in an amicus pieces filed by Center for Individual Freedom…….. (See Todd Sullivan’s article in ValuePlays.) 

Even a positive opinion in Delaware that the “sweep” breaks state law, won’t necessarily facilitate federal proceedings, but it certainly would be better for the cause than a poke in the eye with a sharp stick! 

I’ll repeat my belief that President Obama, even beleaguered as he is and losing the confidence of middle income Americans, won’t release and/or recapitalize Fannie and Freddie before he leaves office.  

I just don’t think that move is in BHO’s political DNA. (Maybe he can look at last week’s NAR report on falling homeownership and see a linkage?)

Senator Chuck Schumer 

I emailed my thanks to Sen. Chuck Schumer’s (D-NY) office last week for his timely and bold opposition to the Iran deal, a pact I believe is quite flawed (as I wrote weeks ago in the blog)—but fixable, even if John Kerry drives the negotiations car. 

Any deal, which fails to allow UN inspectors into any site, anywhere in Iran—unannounced—is not a good deal. 

Yes, Iran, face it, “the Great Satan” doesn’t trust you—or your proxy military cabals, either--and why should we?

Get over it, “You done bad to/by us” and the American people are pissed. 

The Ayatollah’s acolytes screaming “Death to America” and “Death to Israel,” while he discusses the deal, is not exactly a warm “Welcome Wagon greetins!”

Unlimited access to possible nuclear weapons sites is the price you should pay to get the sanctions rolled back and your financial assets thawed and made available to you.

GOP Presidential Debate; What I thought 

The event was very entertaining, most candidates having something he/she can point to that was distinctive. Maybe I was the only one, but the only discomfit I detected was between the three Fox network hosts—who asked excellent questions—but didn’t see too comfortable with one another. I don’t know if they were competing, just their chemistry seemed feigned.

Donald “Icarus” Trump. Did he fly too close to the sun when he disrespected Megyn Kelly? We’ll soon find out.

GSEs only came up during the earlier “kids session” (seven candidates who didn’t make the top 10) when Carly Fiorina mentioned F&F. 

However, that was a harbinger. You can expect GOP candidates, regularly, to malign Fannie and Freddie more often, because both names have become Republican or code for how the Democrats or Washington has screwed up. Even though most of the real damage was done under former President George W. Bush, while the past six years of problem-free mortgage business success happened under the Obama Administration. 

Few of the “GOP 17” really know or understand F&F or how mortgage finance works. It’s like a juvenile using a catchy foreign language verb or noun. Employing the names “Fannie and Freddie” sound cool and it appeals that way to their friends, too, who then use it hoping to sound just as cool or “with it.” But, beyond spewing the polemic, none rise above and offer workable policy alternatives based on consumer or mortgage market needs. 

GOP Debate Specifics

I loved Trump’s first answer that unless he liked/respected the GOP candidate--if it wasn’t him--he wouldn't guarantee he would support the person. Little doubt everything revolved around Donald on debate night and will for many weeks to come. He’s the one monkey that makes the show! 

Trump, himself, may be one, but his answer was declaring, “Most of these individuals are Lilliputians and I’m not going to support one I don’t think is up to the job.” 

The GOP and the media lionized Trump and his message—which several on the stage shared—his misogyny is another thing. But, I doubt the Donald drops that quality. He sounds as if he has doubled down. 

Now let’s see if the GOP has the institutional gonads to kill his candidacy or freeze him out knowing that most people tuned into Fox last week just to see him perform.

Gov. John Kasich came across as honest and sincere, but a little unpolished. (For the record, when Kasich bragged about being “the House Budget Chair who worked on the first balanced budget,” etc., the head of OMB in that era-- (and for two consecutive balanced budgets--was Bill Clinton’s Budget Director Frank Raines, who returned to Fannie later as its CEO.) 

I thought Chris Christie helped himself; Best lines went to Dr. Ben Carson (“Why would I discuss race, I am a brain surgeon” and when he noted his experience removing half a brain from a patient and then suggesting--given what happens in Washington--someone else accomplished that same thing). Huckabee’s send up—of what everyone thought was assumed was Trump—but brought major laughs from plain inhaling when he threw out Hillary’s name, instead. Jeb didn’t hurt himself, but didn’t help himself. 

I didn’t think Ted Cruz did well, nor do I believe Marco Rubio did as well as many others seem to think. He looked too young and lacked sincerity. 

Not surprisingly, President Obama took lots of hits, especially over the Iran deal. (Sen Chuck Schumer (D-NY.) coming out against the pact on debate night didn’t help BHO, either. But I am glad that Schumer did.)


“Fort Shelby” gun fire not aimed at “Dick!” 

There is no truth to the rumor that gunshots fired at Mississippi’s military camp “Fort Shelby” last week came from an angry GSE-advocate, showing his disdain for Senator Dick Shelby (R-Ala.), who’s been screwing around with legislation negatively impacting the GSEs. 

After my extensive research, I can report the Senator has no known familial ties to the camp. Camp Shelby was established in 1917. The post was named in honor of Isaac Shelby, Indian fighter, Revolutionary War hero and 1st Governor of Kentucky, by the first troops to train there.



What Others Are Saying 

OMB’s Shawn Donovan objects to Senate appropriations bill and the “Shelby bill amendment” it contains.

Urban Institute says mortgage credit still tough to get. Finance Update&utm_content=HFPC+Update+-+8%2F4%2F2015
If the FHFA and the White House puppeteers removed some of the GSE constraints that situation will change. But someone downtown must make the connection. The blinders most of them wear when it comes to conventional mortgage-- finance and freeing the GSEs--prohibit that nexus. 

Dunderheads; just believe in your own regulatory success since 2008 and free Fannie and Freddie, just a little bit.

The Washington Post has two positive mortgage pieces in last week, an op ed and a letter to the editor.


Al Sharpton’s op ed in Wash Post



W Post Letter to Editor

Misunderstanding the Mortgage Crisis

August 3 at 5:19 PM

In his July 29 letter, “Stop blaming big banks,” Robert E. Long claimed “we now know” that the mortgage crisis was caused by a lowering of mortgage loan standards by Fannie Mae and Freddie Mac to meet the politically motivated housing goals mandated by the Clinton and George W. Bush administrations. There is nothing new about this hypothesis; it was considered, along with several other explanations, by the members of the Financial Crisis Inquiry Commission, whose report was submitted to the president in January 2011.

Of the 10 members of the commission, only one, Peter J. Wallison, took the extreme position Mr. Long holds. Of the four members appointed by the Republican congressional leadership, three rejected the idea that Fannie Mae and Freddie Mac by themselves caused the crisis, as did the six members appointed by the Democratic leadership.

Jim Taylor, Alexandria 

Banking News to Warm Bankers Hearts

Rising bank profits, rising Exec pay


By John Bancroft

A broad sample of 25 publicly traded banks reported strong earnings from their mortgage-banking operations during the second quarter of 2015, a new Inside Mortgage Trends analysis reveals.

The group, which includes the four megabanks and the major regionals involved in the sector, reported a combined $4.391 billion in mortgage-banking income for the second quarter. That was up 19.6 percent from the first quarter of this year, and it marked the group’s strongest profits in over two years.

Back in the first quarter of 2013, these 25 institutions racked up $6.876 billion in mortgage-banking income in what was one of the most profitable quarters ever for the industry.

At the midway point of 2015, the group’s $8.061 billion in year-to-date mortgage-banking income was up 15.1 percent from the first six months of 2014. For further analysis and an exclusive table on the mortgage earnings of the group, see the new edition of Inside Mortgage Trends, now available online.


And breaking news from England which might cool the bankers’ hearts!

UK—First LIBOR Prison Term

Maybe I should rewrite this article in small words, using big print, so the DoJ, SEC, Fed, Comptroller, and FDIC can understand it.


As Chuck Schumer pushes President Obama one way, Yahoo reports, interestingly, former senior Israel security/military officials push the other way against Bibi Netanyahu. 



Maloni, 8-10-2015


Wayne Olson said...

I don't think that the US ct of appeals (DC Circuit) would issue a one sentence order to suspend the schedule in order to ask DE for their input without some explanation. It's possible, but doesn't seem likely. Another theory is that they did so in order to ask Judge Lamberth to reconsider. It remains a mystery why they suspended the schedule (possibly in response to something Cooper filed on July 29th).

Bill Maloni said...

Wayne--Quien Sabe?

Just showing off my fluency in French by asking "who knows!" ;-)

(OK, I know it's Spanish, but it's summer tme!!!)

Anonymous said...

But then, the appeals court may have also issued an explanation for the "Lamberth" case scenario or even for the excuse of having received thousands of documents they must now include in the case. The one most certain explanation of why they issued a one-sentence order without further explaining the why it's because they may have a strong reason to keep that reason, whatever it is, away from public eyes.

The question to ask then is which of the 3 explanations MUST be kept away from public scrutiny:

1. Delaware input.
2. Lamberth reconsideration.
3. Court being overwhelmed by new documents.

Which one of the three would be the most explosive one?

Bill Maloni said...

My answer is 2-1-3 in that order.

Wayne Olson said...

Ceteris paribus, I agree with you.

Bill Maloni said...

I am going to have to go back and see "Tombstone," the Wyatt Earp movie, where Doc Holliday (Val Kilmer) quotes Latin to "Johnny Ringo" to defuse a little barroom mess, "In vino veritas."

"In wine there is truth," agitates Doc.

Mr fid l sticks said...

Nice Blog ...
Brisa de verano , me hace sentir bien
Soplando a través de los jazmines en mi mente
Brisa de verano , me hace sentir bien
Soplando a través de los jazmines en mi mente

Bill Maloni said...

Muchas gracias, poco palyer guitar.

(Mr Sticks is a popular guitar player in his hood!)