Hide the valuables and the feedstock, Congress is Back

 

Cats and Dogs 

Many Americans—who briefly experienced recent but fleeting contentment, wellbeing, and joy—probably didn’t connect those feelings with the fact Congress was out of session all of last week. But that bliss ends when both chambers return to DC tomorrow for their regular grappling/snarling sessions. Just take a ticket—they’re free—sit down and watch the one circus in the world where the participants primarily are just elephants and asses, all of which double as spectacle clowns.

They’ll grumble about Obamacare, immigration, the Ukraine, ISIS, Keystone Pipeline, funding the Department of Homeland Security (an issue which makes the R’s cringe as each chamber’s majority tries to stab each other in the procedural back), global warming, cutting IRS funding so the agency can’t pursue tax cheaters, and whatever else was on the front or editorial pages of the back home newspaper.

A general waste if time. But, here are some ideas for them to consider if they want to  do something with value.

 

GSE Stuff--Gretchen Morgenson’s Column

If I’m on the Hill, What Would I do….?

 

Gretchen Morgenson’s superb column, in the Feb. 15th Sunday NYT, detailing the government’s obfuscation and delay tactics in carrying out Judge Margaret Sweeney’s “discovery order,” continues to stimulate discussion. I was asked by one prominent reporter if anyone on the Hill has reacted to it or plans to utilize her work?

“I have no idea,” I told the gentleman, "wait until they return.".

But, if I was a member of either the House or Senate Banking Committee—or a staffer to same—especially if I was a “Newbie,” trying to establish my bona fides, I would think along these lines.

 

First, I would expand knowledge of the work.

I would send a “Dear Colleague” letter to the entire Senate or House (depending on the sender's position, since Hill letters seldom are sent across “to the other chamber”) or just to the members of my House or Senate Banking Committee, making sure they saw Ms. Morgenson’s work and calling their attention to what I believe is very unusual, evasive treatment of 3-6 year old government reports, memos, email, etc., the release of which the Obama Admin unconvincingly claims could bring markets crashing or some other fiscal/economic catastrophe. (Oh no, Fannie almost dropped its acceptable credit scores from 720 to 715 in 2009, thank God they waivered. Can you imagine the worldwide blowback?") 

I might then put Morgenson’s column in the Congressional Record—every Senator’s or House Member’s right--with an appropriate introductory statement, calling attention to the points she made and expanding Morgenson’s audience which might begin to question this rather bizarre  F&F government treatment. 

If I dropped it in the Record, I might also issue a press release noting my own actions. (Congressional truth: “He who tooteth not his own horn shall not have the same tooted.”) 

If I was a SBC or HBC member, I might call on my Chairman to formally look into these matters or……I might ask SBC Chairman Dick Shelby (R-Ala.) and/or HBC Chairman Jeb Hensarling (R-Tex.) to hold a hearing—with Treasury and Justice witnesses—to explain the rationale for their transparent obfuscation.

Are these Republicans too deferential to ask, “Is anyone downtown covering up the legal/political mistakes of prominent former Democrats or a few still present?

I mean, where is Reince Priebus, when you need him?

And, finally, I might ask my Chairman to demand the Administration send to the committee the documents, which Ms Morgenson identified, for committee oversight perusal.

(If I did the latter, I would issue a press release, telling the Capitol media and the western world what I had suggested to “the Chairman.”)

Judge Sweeney/DoJ discussion

Before everyone laughs and says, “Well it’s only Fannie and Freddie, so who cares,” I want to make sure people are aware of this exchange, three weeks ago,  between Judge Margaret Sweeney and Justice Department lawyers. (Thanks Glen Bradford for generating this.)

DOJ attorney confirmed in Judge Sweeney's court the independence of the GSE's.  "Our position is, yes, they are independent — independent companies"...


http://www.glenbradford.com/2015/02/fnma-court-transcription-from-last-session/

Excerpts from Jan 28, 2015
Judge Sweeney' court
Mr. Schwind, DOJ attorney

THE COURT: Okay. So, I don’t understand — it
sounds like you’re somehow trying to say that the — or
imply that the Government has been circumvented when the
Plaintiff seeks documents from — directly from Fannie
and Freddie, but how can you complain because you’re
saying that Freddie and Fannie are not components of the
United States Government, therefore, this case should be
dismissed? It sounds to me like you’re trying to have
it both ways, but perhaps I’m missing something. 

MR. SCHWIND: Well, Your Honor, we’re not trying to have it both ways. 

THE COURT: Okay.

MR. SCHWIND: We did not object to the document discovery from the GSEs. Our position is, yes, they are independent — independent companies

(A few moments later—)

THE COURT: Well, no, let’s be clear, then. I wasn’t focused — I wasn’t concerning myself at that
point with any — because these are third parties. I mean, it’s up to a third party to come in and complain
that they have been served with a document request. It’s not up to the United States Government to do that, and, in fact, it would lend credence to — and support to Plaintiffs’ position that, in fact, these third-party entities are controlled by the United States Government, because the Justice Department, who represents government agencies in Federal Court, is coming in to complain on their behalf.

MR. SCHWIND: Your Honor, we don’t control them, and with respect, we don’t think pointing out to the
Court that discovery directly from the GSEs and from the auditors exceeds what — not only what Plaintiffs asked for in limited discovery but what the Court has allowed.
We think we are allowed — we do have standing, essentially, to come in here and say that the discovery
that Plaintiffs seek exceeds what the Court has allowed... 

Maloni takeaways from the exchange

A few things worth noting here. One is the BS about “we don’t control them…”

Talk about situational ethics (also known as lying, “speaking with forked tongue,” or talking out of both sides of your mouth). It’s been affirmed time and again, that the FHFA (and likely Treasury behind the scenes) blesses every business decision Fannie and/or Freddie makes.

The two are not free and can't make their own market judgments, so maybe Lawyer Schwind was speaking narrowing about his Justice Department’s ties with F&F, but he surely couldn’t have been addressing the relationship between Treasury/FHFA and F&F.

Second and more politically compelling for free market Conservatives thinking, “Pish-tush, it’s only F&F.”   

If the Treasury is treating these two “independent” entities in this manner (pretending they’re private and control  themselves), it could chose to do the same to any other corporation/business, even ones nearer and dearer to the GOP’s heart. You know, companies that believe they are abuse-immune because they are not Fannie and Freddie? 

GSE Stuff--Earnings 

At the end of last week, Freddie and Fannie both announced their final fourth quarter 2014 earnings figures (see link below), which were lower in each instance because of losses on their derivative hedges, losses that will return to them in subsequent reporting periods. Both still had positive earnings and will sent “dividend” payments, as per usual, to the Treasury next month, adding to the $225 Billion already sent, and now exceeding by @$40 Billion the $187 Billion Treasury infused in them in 2008. 

http://www.wsj.com/articles/fannie-freddie-weak-earnings-raise-possibility-of-future-bailouts-1424463119 

With the permission of Inside Mortgage Finance publisher, Guy Cecala, and writer Paul Muolo, I am reprinting Muolo’s F&F earnings story.

By Paul Muolo pmuolo@imfpubs.com Fannie Mae and Freddie Mac late this week released fourth quarter results, reporting much lower profits and huge hits due to losses on their derivative positions. Not to make this too complicated, but the GSEs (and many other financial institutions) use derivatives to prevent large losses when interest rates unexpectedly take a sharp turn in either direction. And that’s exactly what happened in late December: the yield on the benchmark 10-year Treasury went south, heading toward the Equator. (Two weeks ago rates went north again, reversing the trend.) Freddie’s 4Q hit from derivatives was an ugly $3.4 billion, Fannie a milder $2.5 billion. But how can that be? Fannie’s book of business is $2.803 trillion, Freddie’s $1.663 trillion. Shouldn’t Fannie have a larger loss on derivatives than its little brother? Anyway, as the weekend approached some GSE watchers were taking note of the differential. But don’t expect any Congressional hearings on the topic. It would mean that our elected leaders would first have to understand hedging, derivatives, interest rate swaps and much more  that is, if they want to speak intelligently about the matter.  One theory is that either Freddie was being too conservative with its hedging or that Fannie wasn’t being conservative enough. One GSE watcher raised the issue of whether maybe Fannie was “flying naked” on some of its positions. In other words, it wasn’t hedging everything. Then again, what does it matter? If you listen to the explanations of Tim Mayopoulos of Fannie and Don Layton of Freddie you get the sense that a hedging loss in one quarter turns into a profit the next when rates rise. Right? Perhaps the most important issue raised during the GSE earnings calls this week was the capital “buffers” of the two. In 2018 the allowable buffer falls to zero dollars. Zilch. Nada. Hopefully by then, President Bush or President Clinton will have worked out a GSE reform deal with Congress…

What Others are Saying 

Memories, memories… Congressional Reference Service (CRS) GSE Thoughts in 2008

http://assets.opencrs.com/rpts/RS22916_20080715.pdf

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Wealth gap

http://money.cnn.com/2015/02/18/news/economy/wealth-blacks-whites-hispanics/index.html

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Excellent David Min article 

Professor David Min was one of the first commenters to detail the many flaws and holes in the Ed Pinto/Peter Wallison “research” claiming Fannie Mae did little but originate subprime loans in the 1990’s. Of course their definition of subprime never matched any standard definition and very few of the Fannie loans originated in the 90’s defaulted then or even in the following decade.

But that fact—as well as several other rebuttals from serious mortgage observers and government agencies--never has stopped the AEI pair from peddling the line.

In this very thoughtful article, Professor Min discusses the future of the nation’s mortgage finance system.

http://clsbluesky.law.columbia.edu/2015/02/18/the-future-of-the-federal-housing-system/

_______________________________________________________ 

NY Daily News

http://www.bgdailynews.com/opinion/letters_to_the_editor/government-needs-to-act-on-bailed-out-company-risks/article_13362054-051c-542e-8405-334afabeb0a5.html 

__________________________________________________________

Cato Institute (should we, dare we…)

http://www.cato.org/blog/we-decide-keep-fannie-mae-around 

__________________________________________________________

AG Holder seeking (some, any, all) mortgage bad guys?

Just when the Wall Street/PLS guys thought it was OK to come out of hiding, the AG speaks up!!

http://www.dailymail.co.uk/wires/reuters/article-2957575/U-S-identifying-individuals-prosecute-role-mortgage-crisis.html

_________________________________________________________ 

Longtime Republican Michael Smerconish reacts to  Obama criticism 

http://www.cnn.com/videos/tv/2015/02/21/smerconish-commentary-02212015.cnn

 

Maloni-2-23-2015 

2015 President’s Day edition, Yay GM

 

 

Thank you, NYT’s Gretchen Morgenson

If he listens, Hensarling Could Be a Star

 

Please read Gretchen Morgenson’s F&F column first, if you haven’t already. (Go ahead, read it again!)

http://mobile.nytimes.com/2015/02/15/business/after-the-housing-crisis-a-cash-flood-and-silence.html?referrer=&_r=1

 

It’s fabulous, simply fabulous.

Why is her column so good, since much of it has been written before by (the real) Tim Howard and more recently by Michael Krimminger and Mark Calabria, as well as law professor Richard Epstein?

Because her paper is the New York Times, it gets instant attention—the Sunday Times has well over two million readers--it has reach and could even appeal to some GOP traditionalists–like many in Congress—attracted by Ms. Morgenson GOP lineage. She once time was part of the GOP’s conservative wing working as Steve Forbes presidential campaign press secretary. 

More fabulous

I am not sure how many of those two plus million read Gretchen’s work read, but--because of her vast Times forum and its inherent credibility/integrity-- her column can spread this story in a way that the previous writers could never hope, no matter how eloquent they are/were.  

On a good week, I get 700 hits to my blog. TH717 gets four times or more of that. That ain’t close to GM’s foot print. Analogy: Think of me driving around DC with an “Eat at Joe’s” bumper sticker” and GM touting the same eatery on satellite radio and cable TV.

Ms. Morgenson is not a F&F-friend, but she has produced an enviable record of taking on the big banks over their numerous operational shortcomings, so she has stature.

Corporate investors throughout our country should be concerned, if the Obama Administration bent and broke laws to deal with a federal revenue deficit or employed the old F&F animus and showed its too often displayed political “numb nuts” propensity.

If the US Treasury blatantly can take from F&F investors, it can do the same to targeted others.

Without intending to do so, Ms. Morgenson also may have teed up a congressional opportunity that—without this glorious attention—may escape the Congress (and still may, if the Hill doesn’t see the totality of the issue and not just see some F&F impact).

Check back in below.

 

Jeb Hensarling’s Week

All week (before the GM column), I considered what GSE issues I was going to discuss in my “President’s Day blog,” and I kept tripping on stuff HBC Chairman Jeb Hensarling (R-Tex.) was doing.

The book sale 

There he was last Wednesday in a congressional hearing room, extolling a flawed Peter Wallison book (i.e., flawed research courtesy of Ed Pinto produces a flawed book). In his tome, Peter again tries to hoist the nation’s 2008 financial meltdown on the shoulders of Fannie Mae and Freddie Mac. I grow tired listing all of the sources who have rebutted his premise.

Maybe, as I am told they do with old jokes in prison, I’ll just give these refutations numbers and yelp out “15” (meaning the Fed staff, the FCIC staff/report, the Treasury, David Min, Paul Krugman, David Fiderer,  etc. etc....) the next time I see Peter’s thesis. 

In our last blog, we pointed out new Pete’s book and his current belief that sales have been held back by left wingers writing bad reviews about his newest tome. But as I suggested, maybe it isn’t political, maybe those folks just don’t like the book. 

A sidebar story to last Wednesday’s HBC hosted Wallison book event, was Peter’s answer when asked by a questioner, “If there was any virtue in F&F moving out of  conservatorship?” 

Peter Wallison: No, if we ever let them out of conservatorship, they would go back to the business that they were in before. I’m perfectly happy that government is taking all their profits, because it keeps them from gaining capital. If they had capital there would be tremendous pressure in Congress to release them. We have to come up with a new system, unfortunately we don’t know what such a system will look like. Once we come up with a new system, Fannie Mae and Freddie Mac will be gone. 

To me what leaped out is Wallison’s stated belief—and he’s been around DC and in and out of congressional offices/committees/hearings to understand the drill—that an Obama executive action to allow F&F to build capital from earnings would have bipartisan appeal and encourage the Congress to acquiesce to returning F&F to a more fulsome mortgage market role.

GSE fans, please hold that pregnant with possibility thought GSE fans, while I turn back to Jeb.

 

Rest of Week; HBC Report to Budget Committee

 

In a mid-week Committee markup of non-statutory language, Hensarling’s Committee Democrats attempted to amend the HBC prose headed to the House Budget Committee. (Each House committee sends one of these, offering a variety of opinions on issues in their respective committee’s jurisdiction.)

One proposal from John Carney (D-Del.) suggested the committee should note Treasury has been repaid by F&F, adding some “Mom and apple pie” mortgage market verbiage supporting the 30 year fixed rate financing.

 

Chairman Hensarling’s negative response was foreshadowed a few weeks previously when GOP HBC member Ed Royce (R-Cal.) struck the unusual pose of claiming that F&F haven’t repaid the federal government any money. Royce ignored the many media references to those actions, as well as verification in the President’s Budget the two have repaid @$225 Billion, at 2014’s end, after Treasury gave them $187.5 Billion in 2008. (The $225B was repaid in just two years, starting in 2012.) 

It must have been too threatening, too truthful, since the majority scuttled the Carney language and all other D proposals.  

How about SEC-register every T-bill/bond? 

After ignoring the F&F debt repayment history, Jeb  did lead his merry men and women, in the same committee exercised, to recommend Securities and Exchange Commission (SEC) rules--which apply to publicly traded US corporations--should also attach, as well, to the US Treasury’s debt raising bond activities!! 

“It is only fair that our government should have to follow the high standards of transparency, accuracy and accountability required of our nation’s job-creating companies,” said the House Financial Services Committee spokesman. 

Now the politics here are a little ditzy, but Jeb and his colleagues must believe that it’s too easy for Treasury to issue debt, raising necessary money for government operations, so they want to consider tossing sand in the government’s debt activities and slow that process down (although I am not sure to what end). 

Falling into their laps……. 

But the best was yet to come for Chairman Hensarling—or others in Congress, if Jed doesn’t answer the bell—when Gretchen Morgenson handed them a massive political opportunity in her wonderful column this weekend. 

As seen/read above, Ms. Morgenson detailed how the Obama Treasury and Department of Justice have responded to the various lawsuits brought by GSE common and preferred stock holders.  

Those investors tend to believe that Treasury’s decision to significantly change the original 2008 F&F 10% dividend debt repayment rules—and instead sweep every penny the two earn-- violates the Constitution. The shareholders think it also exposes F&F to unnecessary risk, despite their recent business revenue gains, since nothing the two earn stays with them for critical capital protection. (Even some HBC Republicans expressed concern over that fact.) 

I written about this financial pillage, regularly, because the DoJ and Treasury tactics appear less about holding close sensitive financial business information/data but more about hiding senior government officials’ gaffs, political mistakes, or flawed financial calculations, starting when US Treasury officials likely aggrandized statutory power the Congress gave exclusively to the F&F regulator—the Federal Housing Finance Agency (FHFA)--and circumvented or broke the law to do so.

I believe the documents are being covered up or withheld because they reveal Treasury big-footing FHFA into giving over its exclusive F&F conservatorship authority to Treasury. Disclosure could moot that which followed, including the sweep, not to mention make some people look really stupid. 

S-o-o-o-o-o-o! 

Ms. Morgenson, doing more work in her column than most congressional committee staffs would do, helpfully has listed a raft of specific documents that the Obama Treasury has been withholding/hiding through claims of “executive privilege,” hypocritically suggesting the docs are so sensitive to the nation/world’s markets that disclosure--of these seven year old notes, emails, press releases, and memos--could cause financial/economic disaster. (Excuse me, but at this juncture, blog readers now may engage in spirited, hilarious, stomach busting, ridiculous laughter aimed at certain Obama officials!) 

Here is the capper for Jeb’s week. Wait for it, wait for it…. 

I would suggest Ms. Morgenson—in addition to highlighting a story which needs more harsh media scrutiny--presented a premiere opportunity for the House Banking Committee to see that new subpoena authority it bestowed on Chairman Hensarling.

 

They should insist he demands the Obama Admin Treasury/FHFA/F&F send those enumerated documents to his committee for its scrutiny, “right  #)&*$%# now.”  

 

(Cue the brass, the William Tell overture--Texas remember--and the Ride of the Valkyries.) 

Let the White House tussle with the “rootin-tootin” Chairman of the House Banking Committee, not just Federal Judge Margaret Sweeney, over reports and communications it claims are too sensitive/secret for our gentle ears. 

I hope people finally will see this Administration’s CYA antics and understand why many believe Obama and some of his cohorts have treated F&F like red headed step children. 

Jeb’s committee can opine if the Treasury played fast and loose with the laws in 2012, possibly breaking some, one, a few? 

Why would Jeb do it? 

Simple, so he can embarrass the same Jack Lew/US Treasury officials he’s trying to drill politically with his SEC threats. Likely they are same senior crew of advisors and officials hiding the F&F political and policy mistakes.

Since none of the said acts happened on Mel Watt’s turf, the House Banking Committee--the part which would care--wouldn’t be embarrassing their former colleague Mr. Watt, who still was a Committee member in 2012, not head of FHFA when said indiscretion occurred. (That honor belongs to Ed DeMarco.) 

If Hensarling doesn’t want to undertake this task, others might consider it, maybe SBC Chairman Dick Shelby (R-Ala.) would or possibly Sen Sherrod Brown (D-Ohio) or Senate Finance Chair Orrin Hatch (R-Utah), Finance’s Chuck Grassley (R-Iowa) or even Sen. Pat Toomey (R-Pa.), just to name a few.  

If Jeb or any of these aforementioned public officials take up the cudgels, they should thank Gretchen Morgenson for providing a lighted path.

Thanks, Gretchen. 

 

What Others are Saying 

The President: Let’s send Castro up to testify, he’s ready, right, right, uh guys…..? (From Inside Mortgage Finance)

 

New HUD Secretary Comes Off as Ill-Prepared for Encounter with House Panel

By George Brooks

gbrooks@imfpubs.com

Department of Housing and Urban Development Secretary Julian Castro faced the wrath of the GOP majority during a House Financial Services Committee hearing this week on the state of the FHA, focusing in particular on the agency’s recent decision to cut annual mortgage insurance premiums.

While Castro may have been warned about stepping into the lion’s den, he appeared ill-prepared for the confrontation with Republicans, unable to answer basic questions such as FHA’s net income, overall delinquency rate and the serious delinquency rate for 2014.

Democrats, on the other hand, helped the embattled secretary regain his footing by expressing support for FHA’s efforts and putting perspective on some of FHA’s actions to strengthen the Mutual Mortgage Insurance Fund and help qualify more borrowers for FHA credit.

 

Josh Rosner in “Value Walk”

http://www.valuewalk.com/2015/02/fhfa-little-agency-hasnt/

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Fannie Mae earnings???

The Washington Post reports that GSE earnings could occur this coming Friday, 2-20-2015, although no firm dates ever are announced by F&F. So maybe 2014 4Q earnings this week or maybe not.

______________________________________________

Alcee and the “Dildo State”

Congressman Alcee Hastings (D-Fla.) colorfully disses Texas.

http://www.cnn.com/2015/02/05/politics/alcee-hastings-frozen-texas/index.html 

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Civil Rights letter

Several times I have mentioned, but not run a copy of the letter, supporting Fannie and Freddie, sent to FHFA by a number major civil rights groups. (See below.)

http://civilrightsdocs.info/pdf/housing/Leadership-Conference-FHFA-letter-11-19-14.pdf

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Washington, J. Adams, Jefferson, Monroe, J.Q. Adams and all the rest……... 

Happy Presidents’ Day!!

 

Maloni, 2-16-2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Feeling Snarly!!

 

 

Ladies, Gentlemen, Boys and Girls,

The AEI-HEN Circus is Back in Town

 

This is not Ringling Brothers but better, and it’s free.

It’s the AEI and Jeb Hensarling (R-Tex.) one ring extravaganza circus, where Jeb gets to endorse Peter Wallison’s latest thriller (yawn), how Fannie and Freddie ruined the financial world in 2008. (Psst. He's ignoring the past 6 years.) 

And this folks--er, excuse me young man, watch out for the elephant dung heap; ok now go into your seat—once again was  penned after PW’s underlying Ed Pinto research (I don't want to get freaky about this, but do most people remember that “Tonto” rode a spotted horse, also called a.....?)--who was “let go” by Fannie Mae many years ago—was and has been rejected by the Fed, the Treasury, the Federal Financial Inquiry Commission, and a host of financial columnists and writers, including prominent conservatives. 

Someone noted that Ed’s research—and therefore one might assume Peter’s book--has more tire tracks on it than I-95. Oh, wait, that was my observation. 

But Peter will be selling and Jeb will be affirming PW's accuracy, despite the fact that the HBC Chairman—in the last session of Congress--had a panel four ideologically diverse witnesses  before him  declare they were in agreement that F&F may have been a factor they did not cause that meltdown.

 

The promo for the event (honest and for real) says complementary copies of Peter’s book will be available. (I am assuming for free, but with the AEI you never know), but you might, repeat, might have to bring your own crayons. 

Psst. This is the book Peter claimed was blasted by Left wingers writing reviews on the Amazon book site; Pete maybe this folks just didn’t like or believe rehashed hash? 

 

(I can't take credit for the above artwork, borrowing it from another site, but I hope friend Peter appreciates its humor.)

 

Watt, a Disappointment Last Week? 

If I am wrong with this next few paragraphs, I am sure I’ll hear about it from those who read the blog. 

When asked last Wednesday about the possibility of the White House taking some aggressive action--via regulations, using the authority Watt months ago claimed it and he had  to change the “conservatorship” rules and let F&F hold onto more of their income, Mel did his best Mad Magazine “Alfred E. Neuman--“What me worry?” and said it wasn’t his job to raise this matter with the White House. 

It’s not your job, Mr. Watt?

 

Did you turn in your heart, brains, and political cajones when you took the F&F post?

Why isn’t it your responsibility Mr. Watt, who better?

Deep down, do you really believe that last year’s CWJC legislation, which the President keeps blathering about (and which most of your former CBC colleagues hate) is good for anyone but the big banks? Is it good for low and moderate income families; is it good for small lenders?

Think about what interests rose up last year when the bill came up for a vote in the Senate Banking Committee?

Honestly, I hoped for more from Mel Watt. I hoped this veteran 20-year congressional good guy, who had served on the Banking Committee and a senior member of the Congressional Black Caucus—who reportedly got his job through WH counsellor Valerie Jarrett because of those qualities—would step more and assert his gut instincts.

Others kept insisting that the Obama Administration is playing “possum” and will rise up, rectify past F&F conservatorship wrongs, and unleash the mortgage finance giants letting them return, partially, to the job they did pre-2004--before their quality managers were run out of government by ideological zealots--and since 2008. 

I Expect More From Watt 

Frankly, I hope in passing over Mark Zandi for a former black Congressman--who never came close to Zandi’s mortgage sophistication and knowledge—the GSEs were getting a new overseer who felt the pain in the minority community being cheated or denied homeownership chances by lenders seldom challenged by federal banking regulators. A man who would/will act on those faults. 

When he went before the  Hensarling (R-Tex.) HBC, didn’t Mr. Watt hear those congressional CBC voices espousing the many positives about the two entities he oversees and expressing their hope—on behalf of their constituents—that this Administration (as it has for most of the past six years) would stop “turtling” and eschew the GOP/big bank agenda to do away with F&F??

Let me make it simple, Mr. Director. Did you hear, with all of their deprecations, what those House Republicans were seeking, what type of mortgage finance system, controlled by which interests?

Well, it’s simple. You should be opposed to much of what they support. 

The “worst week in Washington”—a sobriquet given every Sunday by editors of the Wash Post “Outlook” section—IMO,  goes to Mel Watt, who during his HBC testimony the previous week, certainly didn’t produce a “Profile in Courage” and carried through this past week with the same “leave no tracks in wet mud” activity.

The good news is that Mel Watt has more time in town to reverse that image and urge the Admin to do the right thing. 

Please remember, Director Watt, and broadcast far and wide the F&F that exist today are far more secure than those 10 years ago, when they started to drift with new managers in charge.

 

	Jon Prior (@JonAPrior)
2/4/15, 12:11 PM On rebuilding GSE capital, Watt said he isn't aware of talks in Treasury to do so, says not his "responsibility to start that conversation.”

 

Ironist in Charge of Moving

Treasury, i.e. the American taxpayers, will benefit when Fannie sells their several buildings in an around DC and eventually move into what was the site of the Washington Post newspaper on DC’s 15^th Street,  after that structure gets demolished and a new Fannie home constructed.

Depending whether the buyer of the iconic Williamsburg style “3900 Wisconsin Avenue Fannie HQ” uses it as is or re-sells it after it has been  bulldozed (with some critics hoping Fannie’s charter would go with it), somehow the result will be multiple millions will go into the Treasury coffers.

Think about the incongruity, Mr. Bezos, the home city newspaper, once removed, will provide the new home for Fannie. The paper which trashed the company editorially every chance it got, even creating a few when  opportunities weren’t ponied up to them, now housing the “Houser.”

My one hope, when the Fannie finally move in, is that someone finds the article/column/editorial--which still hasn’t made it into the WashPost--telling their readers that federal Judge Richard Leon, in 2012, dismissed the “securities fraud” charges against former Fannie executives Frank Raines, Tim Howard, and LeAnne Spencer Garmon. 

It must be there somewhere, Mr. Bezos, it must be? I mean Fannie is a famous, if not infamous DC company, all the principals are local and certainly in the cases of Raines and Howard well known.  

So, I am sure you’ll agree it was newsworthy and probably just slipped into somebody’s “burn can,” by accident of course. 

Of course the Leon decisions screwed up the ongoing Post anti-GSE allegory but, hey, that couldn’t be the reason for this glaring now going on 3 year omission, could it Mr. B?

 

Washington Post Columnist, Charles Lane 

Lane produces op-ed columns for the Post and is regular guest on Fox News. Last week, CL wrote a piece lamenting how much the federal government (Democrats and Republicans) devotes (wastes?) supporting home ownership. As evidence, he pointed out that home ownership rates have stayed pretty stead near 64% for 20 years, despite a fault a vault to 69% in in 2005.  

He implied the nation needed a new perspective on home ownership and Washington was directing too much to support people who wish to buy homes noting the static the relatively static home ownership rates. 

His column produced this Maloni LTE response, which—naturally--the Post didn’t print. 

With his lament, today, about too much federal home ownership support, Charles Lane missed the bigger picture. 

Home building and home ownership are tied to about 17% of the nation's annual GNP, in dropping or lessening the federal support for people wishing to buy homes, that large job generating segment of our economy gets whacked, because the banks will pick up the slack. 

More important, why pick just on home ownership federal efforts? 

If Lane is lamenting the failure of the home ownership rate to return to the 2005 levels or just to grow--he needs reminded the nation has spent trillions on defense spending, but we still have wars and US military personnel coming home in body bags; the nation has spent trillions on public education and we still have non-perfuming school producing kids who can't read; the nation has spent trillions on healthcare and health research and we still have young and old dying from diseases we can’t totally cure. 

Should we all join the Tea Party, stop all of these outlays, plus many other worthwhile federal expenditures? 

One last point, if the issue only is home ownership and the federal government listens to Mr. Lane and gets out of the way, the logical recipient of the entire primary and secondary mortgage markets are the large commercial banks. 

This unworthy group, in 2005-2007--issued in their own names and labels (meaning no federal support of any kind)--and sold around the world, $2.7 trillion in poorly underwritten, falsely rated “private label mortgage backed securities" (PLS), which quickly failed making the US real estate deflation an international debacle.

Did I mention those same big banks—for a variety of transgressions-- have paid Uncle Sam more than $220 billion in federal financial regulatory fines in the past few years? 

Careful for what you wish, Mr. Lane.

 

Court Cases 

I confess that I don’t understand legal proceedings, overlapping jurisdictions, and such. 

To date, I’ve dismissed Judge Lamberth’s decision (now being appealed) that there is no judicial review of federal regulatory cases; cheered  Judge Sweeny ruling to muck through obvious Treasury and Department of Justice obfuscation of her “discovery ruling,” and last week saw Iowa Judge Robert Pratt punt—in essence—and buck the case back to Sweeney. 

Pratt said that while he didn’t agree with the plaintiffs, he also didn’t know much about Fannie Mae and Freddie Mac, which to me is a shockingly scary admission for any judge working on the subject. 

In reading about his proceedings, Pratt seemed very intellectually uncomfortable and didn’t want to consider/decide this case, which became the result. 

Looking for more Sweeney, until we hear about the Lamberth appeal. 

More Fiderer!

 

http://www.opednews.com/articles/Fannie-Freddie-and-the-Ri-by-David-Fiderer-Freddie-Mac_Housing_Insolvency_Meltdown-150207-203.html?show=votes#allcomments

 

 

 

Maloni, 2-9-2015