Monday, November 23, 2015

Happy Thanksgiving, good health to all, except ISIS and its supporters!

Cats and Dogs (and even a turkey)

Best Thanksgiving-themed GSE line of the week:

“LOL. Even turkeys got pardoned by the president. The GSEs seem less worthy than turkeys?! How ironic and sad state of America.” (Posted by hll7575 on TimHoward717’s bursting with comments blog.)

Barry Zigas

I was a bit surprised at the anger/upset caused by my former Fannie colleague and friend Barry Zigas’s column opposing GSE recapitalization and relief.

Barry, the Consumer Federation of America’s housing expert and leader, was a major fixture of the Bipartisan Commission’s study which more than a year ago produced the recommendations that because the CorkerWarnerJohnson Crapo legislative approach. Translation: he’s vested in much of their findings.

And, as I told him this past weekend, I thought he had written the same stuff months and months ago, ergo why the shock?

But the external reaction—mainly from those outside the Administration-- seemed to stem from his suggestion that the civil rights and social action groups, who now have taken up the recap and release cudgels, may be carrying water for the hedge fund investors, many of whom are involved in the contentious lawsuits (which I support because I think our government “did bad!”).

I didn’t agree with the BPC’s “get rid of the GSEs” recommendations or the old Senate bill, which died at the end from serious structural flaws, which long have been enumerated.

I think a regenerated Fannie and Freddie are capable of more positive things than Barry might believe, but how can anyone be confused about where he has been on these issues?

He was beaten up on Twitter and was surprised and dismayed about that. (Note to self, record that as another reason not to “Tweet.”)

But, just as I have, he has his reasons and his own (lengthy) history supporting civil rights and social action groups for the public positions he takes.

For the record, Barry does not believe there is a schism between the Lew, Stegman, and Weiss (or the “white boys at Treasury,” as some have started calling them) and the White House, with the White House starting to lean toward the community groups, despite continued rumors of same.

A GSE factoid which needs reiteration

When one reads about “Fannie Mae” opposing plaintiffs from deposing Egbert Perry, the head of the Fannie Mae board of directors, one should realize that this is not “Fannie Mae” the entity or Tim Mayopoulus, Fannie’s CEO, it is the FHFA, the GSE regulator.

As my good friend and former Fannie government relations  legislative counsel (who I claimed could do more with two commas than many lawyers could do with a paragraph), wrote, “ Remember, FHFA as legal conservator assumed all legal rights of the corporate entity Fannie Mae when the conservatorship was established, including the sole right to be legal voice in lawsuits.”

So, it’s the government Treasury/DoJ trying to block these actions (unsuccessfully, since Judge Margaret Sweeney has now ruled against that motion).
But, we know there will be more and other motions.

FHFA Wants Mo, Mo, Mo……

Read Paul Muolo’s article from Inside Mortgage Finance and ask yourself, why is all of this necessary. (Remember the FHFA’s IG office is the one which sought permission for their personnel to carry guns!!!)

Even Though the GSEs are Shrinking, the FHFA and OIG Keep Adding Employees  
By Paul Muolo

"The Federal Housing Finance Agency plans to increase its staffing levels by almost 12 percent in the New Year, even though the asset base of its two charges in conservatorship, Fannie Mae and Freddie Mac, continues to shrink.
Moreover, the agencies watchdog, the Office of Inspector General, plans to increase its head count by an aggressive 23 percent in fiscal year 2016 to 155 positions. The figures were contained in the FHFA’s new “Performance and Accountability Report.”  
Budget-wise, the FHFA is actually spending less money on personnel costs: $199.1 million in FY16 compared to $199.7 million for the year just ending. The OIG is spending more: $49.9 million in the New Year compared to $48.0 million.
Besides overseeing Fannie and Freddie, the FHFA has oversight authority on the common securitization platform and the Federal Home Loan Banks, the latter of which has posted growth of less than 1.0 percent over the past nine months.   
In a past audit, the OIG criticized the FHFA for lacking a “sufficient number of examiners.” In the new budget, the FHFA plans to increase its examinations head count to 275 from 248 in FY 2015."

The FHFA IG’s office’s main job is to report on the FHFA, finding things the regulator did or didn’t do, while overseeing the GSEs, which the IG thinks should not or should have happened.

Most IG’s and their reports are not worth a pot to spit in (you thought I was going to say something else!!). Well, they are not worth that either!

More FHFA IG staffers to look after more FHFA employees seems to be a circle that needs broken. But—as often is the case—who will stop them, since—join me now—“It’s only Fannie and Freddie!”

Since the two companies will pay for all of this overhead, the bean counters at OMB likely won’t balk. But, they should.

Our United States is Better Than This!!

A gaggle of 30 governors, all R’s except one, and most of the congressional Republicans oppose offering sanctuary to Syrian refugees, for fear of them possibly bringing “terrorism” to our shores?

Panicky, fearful people do strange things. This mass fear of immigrants—and calls to reject them--is one of them, especially when there are there are safeguards in place to filter out possible terrorists or those who would engage in terror.

But the mainly conservative elected officials working/using this scare line don’t want the public to understand that distinction, because it works better when the public is ignorant.

No, the new immigrant protections which exist might not be full proof measures, but they are present in sufficient strength to satisfy me—as a son of an immigrant and grandson of two sets of them, that our nation should not—in the face of the evil in the Middle East shut our doors to those seeking safety and deny the beauty and hope of this land to Syrian or other refugees.

To our national disgrace, we listened to these xenophobic frighteners before World War II with the St. Louis—when we turned away a ship with Jewish immigrants trying to escape Hitler--and later with Hungarian refuges escaping Russian retaliation for that country uprisings in the mid-1950’s and again to allies who fought with us in Viet Nam and Iraq.

The United States is far from perfect, but we are a better and braver than these political sycophants who want to seal out borders.

They are the same folks who preach patriotism and wave the flag but live few of the ideals which makes our nation unique favored.

My America doesn’t do the things they seek and I agree with President Obama and not the right wing crazies who are seeking personal and political gain on the backs and lives of ISIS victims.

Trump. Cruz, Carson, Rubio, and the other hate mongers seeking the GOP presidential nomination, plus their gubernatorial posse, need to reread those US and world history books they now are ignoring to get some votes.

I wish the many organized Christian churches and sects in our country look critically at what they are being told by these situational patriots and measure the call for exclusion from our shores against what their God believes and their Bible preaches.

What Others Are Saying

Presidential Corner

Who is headed where among GOP candidates?

Trump and George Will Square Off

Trump Has New Spokeswoman, Former Cruz Ally


Trump/Spokesperson says shutdown mosques


Just what is Donald Trump trying to do?? Will his new spokeswoman address this outrageous post?

Fannie and Freddie Corner

Scott Olson, in Housingwire, on F&F Future (I like the comments after what Scott wrote.)

Investors Unite urges rejection of DoJ Delaware Motion (also carries link to Judge Myron Steele’s comments this past week at IU event).


Are GSEs a timely investment or a never investment?
More Bethany


Maloni, 11-23-2015


joseph slechta said...

The E. Perry deal is big in my opinion, Bill. Thanks as always. No recco on stock buys, here.

Bill Maloni said...

Thanks JS--my stock advice, "buy low, sell high."Seriously, what moves the GSE's stock is politics not corporate performance. If you can assure me a friendly White House, willing to use its executive authority, creatively, or a court decision for the plaintiffs, I'll tell you which way to go!!

The Perry thing is a bit strange, but the Fairholme lawyers must think he knows something more than Ms. McFarland.

Remember, a deposition is not a one way street; whatever he says is there for the defense to use as well.

Bill Maloni said...

OK, latest on Perry (as per Mr. Slechta's question above)---Where he fits.

Chris Roberts said...

On Barry Zigas, "Bipartisan Commission’s study which more than a year ago produced the recommendations that because the CorkerWarnerJohnson Crapo legislative approach. Translation: he’s vested in much of their findings."

And, Zigas continues with the kill-them-off, they-were-the-cause, receivership-in-5-years, do-not-recap-because-this-does-not-help-America, lets-keep-things-the-way-they-are.

It appears to me that the onion peeling (in reverse), should be:
We can't keep them as they are. There is a slow-bleed going on. The companies are trying to give away all risk (seemingly at any price) to reinsure themselves. Isn't THIS was CWJC wanted? And still, that ain't good enough.

Helping America has been about, and should always have been about:
1) Conserving the assets of GSEs and getting the most value for their assets. By continuing this bleed, the 10x (i.e. valuation on earnings) X-part goes down by the quarter.

When, not if, the NWS is un-done, the common warrants will not be worth what they could be.

2) Zigas and probably most of Congress has gotten used to the 'fact' that the companies were nationalized. Ahem, our friends at Fortune are setting that record straight. They ain't. The GSEs were not and are not theirs.

Like a house-squatter who hears the sirens coming up the road, the US government should high-tail it out the back-door and take whatever china and silver they can carry.

When the judges start on the US government officials, it will not be pretty.

The best thing that Zigas could do, to 'help common Americans' is to keep the mortgage market from being handed over to big banks... and by not working toward that end... he is an enemy of we, the shareholders, and to common Americans and a friend to Corker, Warner, all the has-been politicians who are lobbying for the big banks in Washington, DC.

Receivership in 5 year (when there is no other workable, affordable plan),
Acceding, by holding that they deserve to be in c-ship and not released goes back to somehow allowing GSEs were the cause.
And, if you are not for releasing them, then you are for killing them off.

That is how to unravel and unpack Zigas, and to some extent Calabria.

McLean, Rosner and Millstein all know that the answer remains with the GSEs - not some other system (untried and untested) which would be a gift of 50 to 100 BP on $5T balance to the big banks and a wealth transfer from the common American to this group.

Bill Maloni said...

I like your thinking Chris and you mention several people on my short "email list."

I don't want to put words in your mouth, but we also share a major frustration. It seems so clear to me that the GSEs were screwed and nobody in the WH or the Congress is doing anything now to help, quite the opposite. Largely, the Admin and the Hill, two sources of action, have been negative. (And you knwo the "facts" as well as I.)

I just had an exchange with a prominent guy on the other side (No David Stevens, not you!) and everything I threw at him, he fired back with his own history, arguments, explanations, and mainly obstruction--and he deeply believes all of it. But, it is a reality.

I am hoping Judge Sweeney is "smelling the coffee," her handling of the government opposition to "Egbert Perry's deposition" would suggest it, but until we get a clear and dispositive legal win, a decision going the other way is possible (which certainly will be appealed).

I don't want to sound like your weird Uncle--although it's what I do--virtually everybody in Washington is for sale or at least able to be "leased", if one marshalls the right facts and presents them compellingly.

With the GOP dominance in Congress, nothing soon will break through the "20 foot high Crap Wall," that F&F business and ideological opponents effectively created. It's happening slowly, but it own't happen tomorrow.

That's why the first major decision for the plaintiffs will force policy makers to consider the legal and constitutional carnage visited on the GSEs, by both parties.

Thanks for writing.

Bill Maloni said...

If you are fortunate enough to be with some/all of your loved ones on Thanksgiving Day, today, love and hug them all, big and small--even Aunt Brenda and Uncle Ralph.

The kids grow so fast and the adults seem to die off quickly. Don't be shy to show them--in whatever way is most comfortable for you--that you care deeply for those who move you that way.

If you don't, at some point you'll wish you had.