Reid Wants
Schumer to Succeed Him
In announcing his plans to retire when his current term
ends in 2016, Sen. Minority Leader Harry Reid (D-Nev.) would like Chuck Schumer
(D-NY), currently a member of the Senate Banking Committee to replace him as Senate
Democrat party leader.
Newspaper reports are that the job is Schumer’s unless he
suddenly decides he doesn’t want it, but his recent actions since the Reid
announcement—suggest New York’s senior Senator will have a clear field, when
the time comes.
Good choice for Harry and the D’s, but in anticipation of
Schumer either being Majority or Minority Leader, US and international
networks/media likely will have to start now ordering new cameras to insure
they have enough prisms to cover Schumer in full bloom.
Safety
Warning, "Look Out!”
It’s an old comment, but still accurate line, "The surest
way to injure yourself on Capitol Hill is to get between Schumer and a media camera."
That won’t change!
(Also, Shhh, keep it to yourself, Senator Schumer--who
supports the FHFA-blessed 3% down mortgages and reviving the rental fund--believes that F&F already have repaid the federal government what they owe
the taxpayers.)
http://www.schumer.senate.gov/newsroom/press-releases/schumer-applauds-fhfa-director-mel-watt-for-ordering-the-capitalization-of-the-national-housing-trust-fund
NYT
Article on Wallison Draws Response
Several people told me they sent letters to the New York Times
editor, commenting or criticizing the feature story the paper did on the AEI’s
Peter Wallison.
Here is one which got printed last week by the newspaper.
FCIC Chair on Cause of 2008 Financial
Crisis
MARCH 27, 2015
To the Editor:
There is a reason
that Peter Wallison’s “passion” to rewrite the history of the 2008 financial
crisis is a “lonely quest” (“A Crusader Against the
Common View of the Financial Crisis,” by William D. Cohan, Street Scene column, nytimes.com, March 12). The evidence presented by
the Financial Crisis Inquiry
Commission contradicts
his revisionist view of the crisis. All nine of his fellow commissioners — five
Democrats, three Republicans and one independent — rejected his theory that
government housing policies were the primary cause of the crisis.
The data shows
that Fannie Mae and Freddie Mac followed, rather than led, Wall Street in
expanding subprime lending. Delinquency rates for loans purchased or
securitized by Fannie and Freddie were dramatically lower than for mortgages
securitized by Wall Street. And Fannie and Freddie mortgage securities, with
their implicit government backing, undisputedly did not cause the losses that
cascaded through the big Wall Street financial firms.
PHIL ANGELIDES
Chairman
Financial
Crisis Inquiry Commission
Sacramento
There have been
a lengthy list of rebuttals to the Peter Wallison research (most of that data
provided by Wallison’s AEI colleague Ed Pinto, who once worked at Fannie but
was dismissed), in which the pair claim, in the 1990’s, Fannie Mae bought
largely subprime mortgages and that led to the 2008 financial meltdown.
Their
suggestion has been dismantled by exemplary loan performance of those 1990’s books
of business (loan purchases/securitizations), not only through the 1990’s but
into the next century, too.
However, no
matter who (David Fiderer, David Min, Paul Krugman, Joe Nocera, Alan Binder,
the Fed, the FCIC staff report) the conservative Right—especially in the
Congress and at the WSJ—perpetuates the Wallison myth.
Why would PW’s
opinion prevail over that of the head of the Financial Inquiry Commission President
Obama created to examine that major financial and economic malaise and report
to the American people its cause and elements???
Beating up F&F is standard GOP fare but, at some
point, these would be policy makers have to acknowledge how much damage—without
employing any aspect of F or F—the major banks and investments banks produced
with their poorly underwritten, falsely rated, and quick to fail $2.7 Trillion
in private label securities, issued between 2005 and 2007 and sold throughout
the world.
Policy Forum
Tuesday,
April 7, 2015 12:00PM
*“Featuring Peter J. Wallison, Arthur F. Burns Fellow in Financial Policy Studies, American Enterprise Institute; and John C. Weicher, Director, Center for Housing and Financial Markets, Hudson Institute. Moderated by Mark A. Calabria, Director, And Financial Regulation Studies, Cato Institute."
"After more than six years and dozens of books and journal articles on the subject, the causes of the 2008 financial crisis continue to be hotly debated, perhaps none more so than the role of federal housing policy — specifically that of Fannie Mae, Freddie Mac and the Community Reinvestment Act. Most experts agree that the increase in the number of loans that required a low down payment, little documentation, and low borrower credit fueled the subprime boom and bust. But what caused lending and underwriting standards to deteriorate so dramatically? Did Wall Street greed drive the demand for subprime lending, or did federal mandates lead the charge?”
*“Featuring Peter J. Wallison, Arthur F. Burns Fellow in Financial Policy Studies, American Enterprise Institute; and John C. Weicher, Director, Center for Housing and Financial Markets, Hudson Institute. Moderated by Mark A. Calabria, Director, And Financial Regulation Studies, Cato Institute."
"After more than six years and dozens of books and journal articles on the subject, the causes of the 2008 financial crisis continue to be hotly debated, perhaps none more so than the role of federal housing policy — specifically that of Fannie Mae, Freddie Mac and the Community Reinvestment Act. Most experts agree that the increase in the number of loans that required a low down payment, little documentation, and low borrower credit fueled the subprime boom and bust. But what caused lending and underwriting standards to deteriorate so dramatically? Did Wall Street greed drive the demand for subprime lending, or did federal mandates lead the charge?”
Let’s see, what
are the chances of the Angelides letter getting mentioned or reviewed on April
7, at the above Cato event?
(*Cato Institute event promotional material.)
Corker (R-Tenn.), Blackburn (R-Tenn.)
Want to Keep F&F $$$ from Treasury
But their
reasons might differ?
Last week, Rep.
Marsha Blackburn (R-Tenn.), a member of the HBC introduced legislation that
would direct Fannie and Freddie to create reserve funds, if they get into future
financial difficulties.
Here is a Politico
link to her bill’s introduction.
I
never am sure what motives are at work here with this and other ideas like it.
Of course there is an element of ideology involved. But—giving Ms Blackburn the
benefit of the doubt-- she’ll understand that what she wants is to preserve the
enterprise capital and there are easier ways to do that.
Congresswoman
Blackburn’s bill drew praise from Tim Pagliara, head of Investors Unite, a
F&F shareholders group. Revenue kept inside Fannie and Freddie, no matter
the mechanism, must be labeled “capital” and is a positive for investors.
As
I wrote last week about Senate proposals to limit Treasury’s use of F&F
earnings, congressional advocates just should join and support leaving all
F&F money—over loses and administrative costs--with the two and they’ll have
no options but to cover future losses with current/future revenue just like
other financial service companies.
______________________________________________
Phantom Sen. Corker
Bill?
Last
week, Senator’s Corker’s legislative and communications staff circulated a memo
suggesting Corker (R-Tenn.) would seek to attach legislation to the Senate
Budget Resolution—since approved in the
Senate--to
create something called a “revenue neutral F&F fund,” presumably to keep
the money out of Treasury’s hands (which many Conservatives argue should not be
used for other federal spending or deficit reduction).
Corker
and reported co-sponsors also want to prohibit Treasury form selling the
government’s F&F senior preferred stock without congressional approval.
There
was the obligatory media coverage (small) and the usual chattering over what
Corker’s objectives were. I’ll leave that to the junior Senator from Tennessee
to explain.
As
I completed the blog, it appears as if Corker had not offered his proposal.
Although it later could be added to September spending bill, depending on
Corker’s motives.
The
early mention also generated discussion as to whether language attached to a
budget proposals—since those documents are not signed by the President--would be
binding or not binding on the White House, which has resorted to using its
executive authority for a number of issues, not involving the GSEs.
Final
GSE Word From “the” Chairman?
However,
the most definitive macro comment on GSE
matters came from Dick Shelby (R-Ala.), the Senate Banking Committee Chairman,
who declared no GSE reform legislation would go through Congress this session, which
has been the conventional wisdom for weeks.
March 25, 2015 10:26AM ET |
Bloomberg Government
(Bloomberg) -- The leader of the
Senate Banking Committee said he’d rather leave Fannie Mae and Freddie Mac in U.S. conservatorship than pass a bill
that includes explicit government support for the housing market.
The comments Wednesday from Richard Shelby, an Alabama Republican, were the clearest indication yet
that Congress probably will leave the mortgage-finance companies under federal
control for at least the next two years as lawmakers struggle to agree on the
structure of a new housing-finance system.
Shelby, speaking at a U.S. Chamber
of Commerce conference in Washington, said he opposes replacing Fannie Mae and
Freddie Mac with a system that includes a government guarantee for mortgages.
A
new report from the New York Federal Reserve Bank said the same about.
_________________________________________________________
Rosner and Stevens
I have no idea
what is the latest between MBA senior exec David Stevens and Josh Rosner; but
someone refuses to debate someone, in person or on Twitter, and the second
party has banished (or whatever is the term of art) the other dude form reading
his tweets.
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#CorkerWarner & #CrapoJohnson were crap. Now liars who said #GSE
reform req Cong slipped #Amendment805 into #Budget
to give market to banks
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FHFA: Enterprises
Run Business (Not!)
I've include the article from Inside Mortgage Finance’s
Paul Muolo just to bury the
phony FHFA line F&F managers control their day in and day out business
operations.
When you get 750 “coat pulls” from your regulator in a year,
telling you that you messed up big things and small things—strongly suggesting
you have marginal entrepreneurial discretion—it can’t be proclaimed, “You run your own business.”
|
By Paul Muolo
The Federal Housing Finance Agency
took 750 conservatorship “actions” against Fannie Mae and Freddie Mac last
year, including denials of non-delegated business activities, according to a
new report from the Inspector General of the agency.
The report, however, is light on
specifics. The IG notes that these actions include “conservatorship
directives to the enterprises to undertake actions related to strategic goals
and scoreboard objectives, conservatorship approvals” and other mandates.
The IG does not detail for the
public what a non-delegated activity might be, though it appears the
regulator has communicated this information to the boards of the GSEs through
“letters of instruction” (LOIs) not to engage in certain activities.
One LOI requested that Fannie and
Freddie first ask the agency for approval in regard to certain mortgage
servicing sales. Again, no specifics are provided.
Entitled “FHFA’s Conservatorships
of Fannie and Freddie Mac: A Long and Complicated Journey,” the report’s
central message appears to be that the FHFA is keeping a tight regulatory
grip on both mortgage giants. Fannie and Freddie were placed into
conservatorship in September 2008.
What Others Are
Saying
Charlie Krauthammer
handicaps GOP Presidential candidates.
http://www.washingtonpost.com/opinions/the-gop-racing-form-first-edition/2015/03/26/2c050b4c-d3cc-11e4-a62f-ee745911a4ff_story.html
_________________________________________________________
Judge Sweeney’s hearing room on Tuesday.
Keep an eye on Judge Sweeney’s
3-31, Tuesday, Claims Court status hearing on “Third Amendment discovery”
matters.
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Senator Ted Cruz (R-Tex.), with no noticeable increase in
his nose size, now supports Obamacare since it covers his family.
__________________________________________________________
Rep,
Peter King (R-NY) doesn’t like Ted Cruz
_________________________________________________________
If the Urban Institute’s resident
optimist, Jim Parrott, applied his GSE analysis to other seminal matters, he might also conclude there is congressional
consensus on Immigration, Tax Reform, and US military tactics in the Middle
East, opposition to voter registration restraints, and gun control support.
IS THERE A GSE REFORM CONSENSUS? — Jim Parrott in an Urban Institute op-ed: “It is easy
to be pessimistic about GSE reform these days. The effort to pass legislation
out of the Senate last year showed the subject to be remarkably complex … And
early signs are that this Congress won’t even bother to take it up in earnest,
making another concerted legislative effort unlikely until after the
presidential election. … There is, however, one cause for optimism: through the
effort in the Senate, a relatively broad, bipartisan consensus emerged on what
a future system should look like.
“The key parties agreed that the
nation’s housing finance system needs to provide broad access to affordable,
long-term, fixed-rate lending; that the private market should bear the lion’s
share of the credit risk; and that whatever risk the taxpayer bears must be
insulated behind significant private capital. While negotiations among the
like-minded eventually stumbled over how best to accomplish these objectives,
the broad alignment around what we were trying to solve for provides us with a
compelling framework for reform.” http://urbn.is/1EL6ab7
___________________________________________________________
John
Berlau, Competitive Enterprise
Happy Passover and happy Easter to all of
my friends and blog readers.
Peace, good health and love to you all, especially
the family of Carlos Falchi, a family friend, a sweetheart of a man, super
talented, who passed away much too young last week.
Maloni, 3-30-2015
Note: I am taking the next few weeks off and won’t publish a blog, unless something GSE
stupendous occurs.
