Monday, September 28, 2015

Boehner, the (@#$%#@&) SEC, and Lund

John Boehner—It’s a Crying Shame;
Is Jeb Hensarling in the Speaker’s mix?

Even though we seldom agreed, I always liked John Boehner, found him easy to work with him when it was necessary (years ago before he was Speaker), and always considered him a decent man, a good guy.
As Speaker, he was stuck in a rotten position with the House GOP crazies gnawing at him dedicated to sociopolitical, religious, and rightwing Kant issues that, IMO, never should rise to the noise level they did in congressional leadership politics.

I think President Obama’s public comments about Boehner were honest and heartfelt, “a good man.” The Washington Post, while acknowledging some Boehner good points, took a cheap shot at him in the editorial linked below.

Months ago, as the House wolves even then were circling, I asked a long time GOP friend and a Boehner insider —who once was a Fannie consultant-- if the Tea Party types would take Boehner down. Again, six months ago, his answer warily was, “Not yet.”

For what it's worth, I always thought the D's liked JB more than they would admit and it was reciprocal. He was, in some ways, a throwback to when Members crossed party lines and spoke to one another outside of the office.

I know in 2008, Boehner--reading from the Wallison distorted history sheet--blamed F&F for the financial meltdown. But he knew little about the two and was spouting the GOP “blame the government” line. That also positioned him not to listen to the AEI sirens and not push the dramatic market changes for which they whistled.

But, as I told two of my pro-GSE friends, both R’s, I think the House GOP crazies will rue the day they stabbed Boehner in the back, with their effort to roll back House Republican policy and political clocks to the “Father Knows Best” and “Leave it to Beaver” era.
It’s just a matter of time no matter who the House GOP caucus elects--(likely Majority Leader Kevin McCarthy (R-Cal.)—that the same crowd will try and infect the Senate, going after Majority Leader Mitchel McConnell (R-Ky.) and the GOP presidential race. (See gnarly comments already from candidates Senators Rubio (R-Fla.) and Cruz (R-Tex.).

Watch how quickly some of those announced Lilliputian politicos run to suck up to the House Tea Party types.

The congressional GOP—for many of the reasons Boehner stepped down—have failed to show their ability to govern. That reality won’t go unnoticed when America elects a new president next year.

(Oddlot: The Majority party in the House can elect as Speaker anyone it wants. He or She doesn’t have to be a sitting Member! Hello Sarah Palin? It has never happened before but there’s always a firs time. I wonder if the House R’s know Palin can see Russia from her Alaskan home’s front porch? Boehner couldn’t claim that!)

BTW, here’s what the Washington Post says could happen before Boehner leaves office in a month. (Sadly, much of which could have happened before.)

Speaker Hensarling???

Last week, my friend Trey Garrison, editor of Housingwire, suggested that HBC Chairman Jeb Hensarling (R-Tex.) should be the next Speaker. Hensarling certainly wants it but I believe his ascendancy would be GSE-bad.

Hensarling may (or may not) know a little bit more about financial services and housing finance matters, but he has a certain anti-GSE agenda—that you don’t want in a Speaker--spelled out in Hensarling’s “Housing Path Act,” legislation which barely got out of his House Banking Committee last session and then died aborning.

Jeb H’s solution is simple, get rid of F&F and turn the entire mortgage market over to the big banks.

The Chairman clearly hasn’t learned anything beyond the AEI rants and understands little about what major damages his big banks visited on the mortgage markets, this nation, and other countries when they issued $2.7 Trillion of poorly underwritten, falsely rated, and toxic bunches of their own institution-named mortgage backed securities, created and guaranteed going outside the Fannie and Freddie systems.

Bank mortgage bonds produced three times the losses the GSE MBS did and—seven years later--the banking sector still hasn’t gotten back into mortgage lending, except for loans bring to Fannie or Freddie. In part because MBS investors don’t trust the bank guarantees behind those securities. The markets, however, do trust GSE warranties.

Sorry, I have to turn thumbs down on Jeb Hensarling’s proposed Speaker candidacy.
I wish John Boehner lots of (natural) sun, good golf, and—after a few months off—a speedy return to Washington as a lobbyist, a natural career for his approach and skills and charm.
Shh, don’t tell the crazies, but Boehner also gets along with Democrats and has.

SEC “Settles” With 2 of 3 Fannie Execs

What a joke of the Securities and Exchange Commission’s (SEC) most recent GSE investigation. It took five years for the agency to realize the “Emperor in its legal case” wasn’t wearing any clothes.
Nonetheless the case disrupted lives, damaged reputations, professional opportunities, and had negative personal and familial impacts—and for at least one target, it continues to run.

But, now it’s over for two of the three when the SEC dropped charges.

No, I’m not talking about Frank Raines, Tim Howard, and LeAnne Spencer Garmon, but Tom Lund and Enrico Dallavechhia who, in 2011, the SEC claimed signed off on documents which might have misled Fannie investors.

It took 8 years, from 2004 to 2012, for a federal judge to find Raines, Howard, and Spencer innocent of securities fraud (SEC had weighed in, wrongly, there as well). With the most recent release, SEC took only 5 years to smell the coffee.

Former Fannie CEO Dan Mudd, who also was cited by the SEC five years ago, still faces SEC scrutiny and did not settle last week.

The SEC finding produced an absolutely lame and silly sanction. Dallavechhia and Lund and must pay $35,000 combined ($25K for Dallavechhia and $10K for Lund) in a “gift” to the Treasury, not the SEC.
The money won’t even be personal but come from Fannie Mae.

But the core SEC allegation, which pivoted around the agency’s impractical definition of “subprime mortgages,” was squishier than a bucket of eels dipped in motor oil.
It couldn’t prove that anyone knew loans acquired years ago were “subprime,” since there was no common definition of same. That made the SEC’s case very weak and resulted in that bizarre settlement which looked more like an agency surrender sans white flag.

The bottom line for this sorry episode is “subprime” is/was in the eye of the beholder—see the Pied Piper, Peter Wallison--and the SEC couldn’t sustain its opinion.
At the time of the original indictment five years ago, two financial services savants, my friend David Fiderer and the NYT’s Joe Nocera, both wrote that the SEC’s charges were a tad ludicrous. (See below.)



I don’t know Enrico Dallavechhia, who came to Fannie after I retired, but I do know Tom—who was known in Fannie as a very conservative businessman--and I am extremely happy for him and his family that this current nightmare is over, with the result showing he did nothing wrong.

It’s important for me to note, Tom was the Fannie Mae author of an internal report advising senior management not to invest in private label securities (PLS), which unfortunately was ignored by his bosses.

(Below are links to Tom Lund’s Financial Crisis Inquiry Commission (FCIC) appearance and to news stories on last week’s SEC action.)


and this

Good luck to you Enrico and Tom. You’ve earned some.

What Others Are Saying
Presidential Corner
How does Speaker’s Departure
Impact GOP Presidential crew?


Was Carly Fiorina was a ‘secretary” and a successful Hewlett Packard CEO.
Fiorina’s record as posted in a letter to Politico.
“Carly Fiorina was the daughter of the dean of the law school at Duke University who later became a federal appeals court judge. Carly Fiorina graduated from Stanford and has an MBA from the University of Maryland and a master’s degree from MIT (she had a summer job somewhere in there as a secretary). Carly Fiorina is a charter member of the 1% in power and influence if not wealth. 
As for her tenure at HP. While she was running HP her company sold embargoed goods to our enemy Iran. They may have structured the deal through a third party and a third country but the reality is that the company that she headed traded with the enemy with her knowledge. There is a term for someone who does things like this, traitor.”

Is Fox Chortling (too soon?) because Trump polls show some softness?


Bush says Dems Offer Blacks “free stuff.”

Is HRC Stalking “Joe?”

Fannie/Freddie Corner

Josh Rosner Tweet re an October conference sponsored by the Bipartisan Policy Center which first produced the report that Senators Bob Corker (R-Tenn.) and Mark Warner (D-Va.) later turned into their “GSE Reform” legislation, which died in the Senate. Both Senators are set to speak to the assemblage.

@JoshRosner Proper title: "Hey! We paid Corker & Warner to help us capture the mortgage market & all we got was this lousy conference"
More from Housingwire on why F&F didn’t need a Treasury bailout,

Bethany interviewed by Chicago TV
White House Dinner for Chinese President

Looking at the guest list for the President’s WH dinner for China President Xi Jinping, I noticed two of my former Fannie Mae colleagues attending, Tom Donilon and Wendy Sherman.
Has working at Fannie lost its pariah elements these days? Is that a sign BHO will support recap?
No and Hardly!!
Bank Corner

General Politics Corner
Government Shutdown? After Boehner’s act--probably not this month

Kim Davis and Her Family Dump Democrat Ties;
Family Research Council Gives her an Award

Rowan County Kentucky court clerk Kim Davis did not comment on the fact that she and her entire family changed their party registration from Democrat to Republican, when she was honored at the 10th annual Values Voter Summit last week, in Washington, D.C., but I am sure it didn’t hurt. The gathering of social conservatives is sponsored by the Family Research Council, an activist conservative group.

Let’s see this is the Kentucky Clerk who refused to issue marriage licenses to gay men and women, despite the Supreme Court’s rulings, has been married four times and has at least one child from an adulterous relationship with a married man.

She copped an old plea for her defiance of the law, she “found the Lord.” I guess her version of the Deity doesn’t get PO’d when adherents break various commandments or just ignore the civil laws of the United States.

“Hell, that ain’t nothin’, Bubba! Kim Davis claims none of the licenses issued by her staff are legal—since her name and stamp aren’t on them--which would mean none of those marriages are legal in Kentucky.”

If the judge agrees with her, it might be a quick trip back to the slammer for Kim and all of the visits from Mike Huckabee—who, IMO, soon will exit that candidate group—won’t matter in the least.

Politics makes for a strange set of social conservative values doesn’t it? I am so happy I never qualified for one of their awards.

Foreign Policy Issues

Putin, Ukraine and Syria

President Obama and “Vlad the Disruptor/Destroyer” are supposed to meet in New York this week to discuss common interests. My advice, don’t take John Kerry with you BHO, take instead old hands Zbig Brzezinski or Kissinger.

Remember my advice Mr. President, never to trust the Russians and always carry a big threatening stick with you. It’s a better message to Putin than any velvet glove you are inclined to offer. He and his regime are treacherous and interested only in making you and our country look bad.

Now, they want us to cooperate with them in Syria.
Putin’s backyard is hurting under your economic sanctions, don’t take your foot off the accelerator pending some major Russia concessions in the Ukraine and elsewhere. Be a wolf not a sheep. Yes, they both get eaten by bears, but wolves can inflict damage.
Don’t give him any more chances; maybe some of our now better armed Kurdish friends might want to take out a few of those Russian airplanes, accidentally, Putin sent to protect Assad? Or let a few ground to air missiles fall into ISIS hands, they seem to get all of our other martial supplies.
Bibi Netanyahu will mean with Putin, too, I wonder what he tells Vlad??

Russian, Iran, and Iraq—Maybe Iraq will give us some intel crumbs, the ungrateful SOBs?


Maloni, 9-28-2015


Bill Maloni said...

Add Bethany McLean to Fiderer and Nocera, years ago, expressing doubts about the SEC 2011 allegations against Mudd, Dallavechhia, and Lund.


Oh and it looks like Jeb Hensarling may have done his own polling and saw no support for him as Speaker. His office today announced that he is not a candidate for that post.

Do you think he reads my blog?

Anonymous said...

I'm lovin' the blog, Bill. Keep up the great work!

Bill Maloni said...

Thanks, Anon, but there doesn't seem to be a lot of you out there (raeders). I am thinking people are confident of a positive resolution and I still see lots and lots of obstacles, including in the courts.

Unknown said...

I think you have the Isis Syria conflict all wrong. Isis is Al Qaeda 2.0, created, funded, armed and trained by the west to be a covert army designed to do the things we can't be caught doing. When our false flag gas attack failed to be assads work and found to be our supported rebels doing, effectively thwarting our plans to war against Syria for humanitarian reasons, they spawned Isis. There's an abundance of reports and information that proves we haven't been sincere in taking out Isis and amazingly
Continue to funnel support and protections to them via various proxies. Russia, in a very short period of time, has turned it all around and is making short work of this largely propagandized boogeyman. We in America have a long history of removing secular and democratically elected presidents and installing puppets and we use covert means of terror to do so. I'm happy to prove every single claim, and any google search should prove it, providing you don't just seek out the cnn and msm bullcockey

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