Monday, November 2, 2015

717, Trevor Thompson, and the Admin's Bank Butt Kissing

Booyah! TH717 and Trev Thompson

Do the Nation a “Solid”; see below.

All I can say about this video is Wow!! (Kudos to “TH717” and Trevor Thompson, who designed and created it.)


Other GSE Issues 

Lots of mortgage observers still are upset because the Obama Administration continues its robotic, belligerent, aggressive treatment of the GSEs. I know I am.

I’ve tried to explore the roots of this President’s reasoning, but have great difficulty finding an answer, save for this one thought, at the end of the day this crew of barely traditional Democrats trusts and supports the nation’s major banks, far more than those financial institutions merit.

White House Taken Prisoner

Ergo, Obama and friends have been “captured by the street.”

In any number of venues—to support the idea that the Fannie and Freddie add real value to system professional users and more importantly to the nation’s housing consumers—I’ve tried to dismember this WH’s GSE complaints and show why their arguments, today, are outdated  and financial fantasy, which also ignores the past 7 years of effective GSE regulation.

The Obama approach belittles the  supremely successful pre-2004 Fannie and Freddie, which carried out their national mortgage liquidity missions, despite the Bush and Clinton Administration  ratcheting higher GSE housing goals until they were more than 50% (as high as 55%) of their annual business (when the low-income market demographic never was that high). It also ignores the post Housing and Economic Recovery Act of 2008 (HERA) of F&F regulation, which has been fine, albeit too stringent.

Absolutely, the GSEs generated income or “made money” in their halcyon days —as they were designed by law to do (a fact reaffirmed year after year by a non-complaining Congress); but that’s how the mortgage lending market works.  Which institution, except the "Bank of Dad or Mom," lends money without expecting a fair return?

GSE critics, still upset over pre-2008 profit and compensation, don't realize that Fannie and Freddie had statutory limits (meaning established by Congress and overseen by OFHEO/FHFA) on their executive payment plans.

In addition, Fannie had complementary internal guidelines which kept compensation at a 60% measurement against non-government financial services companies; but the still mindless spout abuse about salaries, stock options,  and a litany of other  complaints.

"Antonio and Mike" Show

Last week, Treasury officials Antonio Weiss and Mike Stegman, the latter speaking to the Mortgage Bankers in San Diego, also repeated the hoary “the GSEs have not paid enough to the government for the help Fannie and Freddie were given in 2008.”

Stegman’s nose, aimed directly at the mortgage bankers' behind, also significantly grew as he cataloged untruths to the mostly gleeful MBA. Really Mike, “separate the primary and secondary markets”; hasn’t David Stevens dropped that dead animal, yet?

Your own &*^%$#@ regulators control these two enterprises. They can't do any business, anyway, which isn't first blessed the FHFA. GSEs can’t cross the MBA’s mythical “bright line.”

But Antonio/Mike, aren't your big bank friends anxious to buy or securitize all of those loans going to the GSEs???

Oh, that dog won't hunt either. Why is that Mike??? 

Here, I’ll tell you (and Antonio), the big guys don’t want to carry the risk and too few institutional investors trust the bank  PLS guarantees.

Seeing these two marionettes write columns and dance the “MBA shuffle,” forced me to ask myself, just what has the Treasury, or the US government done for the GSEs, save target them with abuse, flawed logic, retribution, and possibly broken the law and violated the Constitution.

Can F&F get a good word?

Think about it, has anyone heard any Obama official utter one positive word or statement about what the past 7 years of GSE success meant to the nation and its citizens?

(Mike and Antonio still are blaming F&F for the 2008 debacle, ignoring their bank friends’ activities, horribly lax federal financial regulation, and Greenspan’s loose monetary policy.)

The White House, post 2008 needed, quickly, to fix the US mortgage market, after its foundation was shaken.

Most people then (and to this day) ignored the huge commercial bank red ink debacle of $2.7 exclusively issued “private label” mortgage backed bonds --meaning no Fannie and Freddie participation in it--securities which were falsely rated to enhance their appeal and sold throughout the world.

Those flawed offerings quickly went belly up and cost the taxpayers far more money—in comparison--than the  rather small GSE bailout.

In seeking to buttress the mortgage market, the departing Bushies and the incoming Obama folks sought domestic and global respect for  US residential mortgage activity, so they turned to…….Fannie and Freddie.

They had options, they had options, but..

The Bush Administration, could have employed directly the Treasury itself, tried some Fed mechanism, turned to HUD, Ginnie Mae, or some amalgam of big banks to organize and keep loan money moving throughout the nation and the world.

But, they eschewed each of those flawed options and chose to rely on Fannie and Freddie. The two have responded fabulously in a new system, regulated by the same Obama folks who almost daily bedevil them and denigrate them. (Before that was the Bush Admin’s game.)

(Psst. Counsellor to Secretary Lew Antonio Weiss, here is your boss telling the House Banking Committee that Fannie and Freddie have repaid the taxpayer all that was given them in 2008.)

(Oh and before I go too much further, will the media and others note Secretary Lew telling Rep. Capuano the federal government backs Fannie and Freddie, which should cause someone to say, “Well why isn’t the GSE $5 Trillion in liabilities on budget, Jack?)

So, for the past seven years—and who knows how many years going forward the GSEs will  be needed—Fannie and Freddie  have operated quite well the nation’s mortgage markets. (I’ll save you the sorry commercial bank record, but find room to display it later in this blog).

Will/can anybody at this feckless WH or Treasury speak up and attach a value to that service? They are quick to say “F&F didn’t pay enough,” despite the GSEs sending more than $40 Billion to Treasury beyond what they were given in 2008, but how about all of that systemic success the two generated??
Some WH bright person should find some societal value there? But, how would we know?

Buehler, Buehler, anyone???

Most fair minded Americans would agree there are some GSE positives which this WH could extend to Fannie and Freddie, even rhetorically?

Maybe even a holiday card?

I am not suggesting a month, week, or even a single day to honor the GSEs.

Special Emphasis Programs Observances


--African American History Month 


--National Women’s History Month


--Asian/Pacific American Heritage Month

June 26

--Lesbian, Gay, Bisexual and Transgender Pride Month

Sept 15 --  Oct 15

--National Hispanic Heritage Month


--National Disability Employment Awareness Month


--National American Indian/Alaska Native Heritage Month

Those activities, events, interest groups which have just a single day number into the hundreds and possibly thousands, thanks to their congressional patrons sponsoring the required legislation.

Can anyone see through the crap wall GSE opponents have built and rationally decide the Fannie and Freddie deserve some positive recognition and acknowledgements, even a nicely worded letter, or Good Golly, a kind word or two from 1700 Pennsylvania Avenue?

Count the denigrations and abuses

No. Since conservatorship, Fannie and Freddie generally have been vilified, financially violated, and repaid for their operational support of our our mortgage system, with zero respect or cheers from “downtown” or the Hill.

(I just can see Lew, Stegman, and Weiss—adorned in Obama police uniforms—saying to wondering middle income American public, “Get along folks, keep moving, there’s no value in these two or what they’ve done.”)

The nation’s largest banks get bigger, more insulated and run circles around their own regulators; no longer lend broadly for mortgages, generate real fear in small lenders worried the behemoths will swallow up the tiniest or least efficient among them.

Occasionally—like every month--the big depositories get caught, but post-facto, in the shoddiest types of schemes—for which they pay their fines and then get on with doing the same crap.

These financial institutions are not the most desirable Obama mortgage finance stewards. But try telling that to the White House?

In my “What Others Are Saying” links, below, is a column from this past week’s “The Hill” newspaper written by Donald Grant, head of a group of African American banks saying their communities need Fannie and Freddie up and working.

Not a racial issue

This isn’t a just minority lament, it can as easily come from middle income majority families in every state. 

That is a lost message for this tone deaf Administration which prefers to kick the mortgage finance can down the road (I used this metaphor before, but it is so-o-o accurate) to the next White House occupant.

I hope he or she understands the matter between than the Obama White House.

Oh and as to the “rumor,” that BHO will come out of the mortgage closet now that the budget deals are behind him and  swing a big bat to “recap and release the GSEs,” I am going to adopt my Missouri persona and dare him (and Stegman, Weiss, Lew, Watt and others) to “Show me?”

What Others Are Saying

Presidential Campaign Corner

Bye-Bye Jeb?? Time to head for those “cool” things?

Fannie and Freddie Corner

GSE Earnings This week? Only FHFA knows. But look to Thursday/Friday.

Check the numbers, Black Bankers want GSEs Released

More Minority Groups Seek F&F Up and Working

New GSE Lawsuit

“Koo-koo-ka-choo, Mrs. Robinson”

Scary Dick Bove Article; BHO Leaves us in a Lurch!

Banks Foul Up Corner

Latest Pro-Publica report on which banks still owe Uncle Sam for their TARP bailouts.

Someone quick tell Sen. Corker (R-Tenn.) and Sen. Warner (D-Va.) that banks from their states, Tennessee and Virginia, have failed to repay nearly $100 Million in taxpayers funds, extended in 2008-2009. Just sayin’.

Foreign Policy Corner

Is this a case of ugly chickens coming home to roost??


Maloni, 11-2-2015


Anonymous said...

I think the video fails because it is missing the root cause of the entire mess. The banks were after profit, they did not care if the borrowers were black, brown, or white. The loans were made across all segments of the population, the only reason it hit disproportionately on minorities is the general lower financial capabilities to survive when the home equity dried up. (You touched on this in your post)

Most uninformed people are going to look at this video and think if this was all done for racial purposes it makes no sense that our first black president who has done everything he can to advance minority issues in his presidency would just sit on his hands and leave this issue alone. It just does not follow a strong line of reasoning.

Bill Maloni said...

Anon--Thanks for your comment.

But, are you really looking for logic in Washington "politics?"

Here's my "Grandpa line."

When I first saw the video, I sent an email to "717" saying I thought it was excellent and matched my professional experience with the problem of lending to minorities and other low income families.

The landmark 1992 "goals" legislation was all about that subject, on the housing side,as opposed to the new safety and soundness regulator on the structural side, because lenders wouldn't make those loans or made them sparingly with high profit margins.

Forget the bank hooey about CRA and other toothless federal decrees.

The GSEs were tasked with forcing/incenting the market to originate and sell those loans to F&F via pricing and other sweeteners we offered.

You can bet that there was (and still remains) some active lending discrimination.

There were solid reasons, back in the 1990's, that Fannie chose minority faces in the TV ads its foundation (I was on the foundation Board) board on NBA games and other venues.

It was part of an effort to show lower income families, if they had the credit and downpayment, they could qualify through the front door, not forced into the subprime market.

It worked, but that was then.

Anonymous said...

Bill, your thoughts on the proposal that came out last night? I sense some orchestration by multiple parties. Would you agree?

Bill Maloni said...

If you are referring to the Shapiro/Kamarck plan, I have no more intelligence on it than what others have.

While I would love to see it happen, just remember that no legislation will pass before 2017.

For those who think S/K is tied to a possible secret BHO divorce from the strenuous Lew, Stegman, anti-GSE position, remember the President can do the recap and release on his own, even if his Treasury Secretary disagrees.