A
Determined Chairman/Legislator;
Dick
Shelby Doesn’t Play to Lose
Several blogs ago, after he just pushed a banking
reform/GSE bill out of his committee on a straight party line vote-- when many
people were quick to say his legislation couldn’t survive in the Senate--I
warned readers not too underestimate the political and legislative acumen and
savvy of SBC Chairman Dick Shelby (R-Ala.),
Guess, again, this past week Shelby merely added all of
that SBC language to an appropriations bill funding the various federal
regulators.
For the banks, his bill raises the bank asset size which triggers greater
regulatory control on Systemically Important Financial Institutions (SIFI),
from the current $51 Billion to $499 Billion. In the mix, he also threw some
monkey wrenches into GSE operations for his buddy Sen. Bob Corker (R-Tenn.).
Shelby is labeled “wily” for a reason.
The same Senate has also decided to tap F&F as piggybanks
to pay for their highway construction bill, but who knows where that will land
in all of the wheeling and dealing with the House and Obama Administration.
The GOP Congress loves to hate the GSEs but needs F&F to
pay for their other policy foibles; ditto the White House.
Short term, with the Shelby approach, banks and bad guys
win again. Does any D Senator have the guts to stand up to “End Run” Shelby?
Did
Senate Just Keep F&F Alive For 4 More Years?
In another swat at the GSEs, the Senate last Wednesday
night voted to use 10 basis points of Fannie and Freddie g-fee income to fund
part of the Highway Bill.
So, the chamber with many GSE haters voted to keep the
“golden geese” alive for four more years, because they keep on giving. Yet, the
chamber’s actions had little to do with what is the best mortgage finance
system for the nation, professionals in the industry, or the American consumer.
They just needed a “pay for.”
Bottom line, if unchanged, that means the GSEs are
there to kick around for at least 48 more months. It also gives F&F supporters the
same time to rally around their operational strength and possibly build a
majority for recapitalizing the mortgage giants, thus removing the self-imposed
GSE “Sword of Damocles” over the systems which the pols in both parties claim they want.
But, after all the back and forth, who knows which of these
anti-GSE provisions survive or wind up on the congressional cutting room floor,
along with how much of F&F?
The Washington Post
editorialized against the Senate highway bill and its revenue sources—arguing for a gas
tax and against cutting Fed bank fees--but could not bring itself to include
the GSE fees in their complaint. So, predictable.
It’s clear to me that the GSEs best hopes are in the myriad
“HERA/Third Amendment” court cases, which seem to produce positive vibes each
week, but no definitive win, yet, for plaintiffs against the government. Come
on, federal judges, do your stuff.
Kneecapping
Candidate Hillary With F&F
David Fiderer has been predicting for months that the GOP
presidential attack campaign against Hillary Clinton—assuming she gets the D nomination—will
include various allegations that Bill Clinton and other Democrats supported
Fannie Mae and since the hard Right suggests the GSEs caused the 2008 financial
meltdown, therefore Hillary is responsible.*
Not surprisingly, this agenda leaps out of an editorial
published July 20, in the Washington Times blaming F&F
and—surprise!—ignoring the $2.7 Trillion in poorly underwritten and woefully rated
“private label securities,” which Wall Street issued under their own corporate
names and which failed at three times the level of GSE mortgage backed
securities.
The GOP also has and will blame the toothless Community Reinvestment
Act (CRA) for forcing the “sniff, sniff,”
poor TBTF and other banks to lend to those with low incomes or the otherwise unworthy.
Bullshit, since none of that bank subprime garbage was
extended to meet any regulatory goals. It was financial institution greed--shared by all of the designer participants--
plain and simple.
Here what the Federal Reserve Board said about the CRA
connection to the 2008 economic Armageddon.
With their own mortgage backed bonds, the banks, seeking
huge revenue returns, thought they could do what F&F were doing but lacked—or
chose not to develop--the GSE’s discipline, quality underwriting, due
diligence, and guaranty strength and the bank mortgage bond failures prove
that.
Where do the R’s think most of that “bank TARP” money
went??
But, as the Washington Times displayed, those facts won’t
stop GSE critics from distorting, falsifying, and twisting the truth about any
Democrat, presidential candidate or not, who they attack.
The sorry bank private label security (PLS) history cannot
be buried from public view.
That story needs repeated and amplified often enough–making
it more visible so voters better know the role the big financial institutions
played leading up to the 2008 disaster.
As Fiderer often laments, once people consider the Right’s “Big Lie”--which blames the GSEs--they never drop it, no matter
how overwhelming the contrary reality.
(*But---------One
long time GSE observer argues that the GOP’s plans to assail presidential
candidate HRC, using F&F as a bludgeon, is the main reason President Obama
will order a recapitalization of the two before this year ends, so she doesn’t
have to fight this fight next year.
It’s
an argument I understand, but—if he did--it would be an uncharacteristic dose
of BHO realpolitik. And, Obama just may not play his part and do what makes
great practical and political sense for Hillary, his party, and the nation’s
home buying consumers.)
Jeb
Hensarling on 5th Anniversary of Dodd-Frank
House Banking Committee Chairman Jeb Hensarling (R-Tex.)
offered these banalities on the fifth anniversary of the Dodd-Frank
legislation, which banks strongly opposed, watered down in Congress, and then
sought to neuter during the regulatory process.
Really, Jeb?? Dodd-Frank caused banks to suddenly charge
for checking accounts? Why?
Banks have all enjoyed very healthy earnings since D-F
became law, still have engaged in unsavory and illegal acts, and certainly—if they
wanted—can afford to offer customers free checking (as well as umbrellas,
coffee pots, or other tchotchkes).
Chairman Hensarling, do you think the financial
institutions may be using D-F regulation as an excuse to jack up prices on
their products and services and cut back on any customer bennies?? It’s hardly
beneath them, as they’ve proved, little is.
In his remarks, Hensarling rails at big banks but most of
the legislation he champions hugely favors them and he still takes their
campaign contributions. That makes his comments Texas-sized “bull pucky!” (Hensarling emotes....!)
“Since
Dodd-Frank, the big banks have gotten bigger and the small banks are now
fewer. Today there are fewer community banks and credit unions serving
the needs of small businesses and families. Local financial institutions
tell us they can’t keep up with the sheer weight, volume and complexity of
Dodd-Frank’s regulations. In fact, because of Dodd-Frank, we’re losing on
average one community financial institution per day. It’s no wonder that
small business deaths outnumber small business births for the first time in 35
years.
It is also now more expensive for American companies to raise working capital that’s needed to grow and create jobs.
Services that we all once took for granted – like free checking – are being curtailed or eliminated because of Dodd-Frank. Before, 75 percent of banks offered free checking. Just two years after Dodd-Frank became law that number was cut almost in half.”
It is also now more expensive for American companies to raise working capital that’s needed to grow and create jobs.
Services that we all once took for granted – like free checking – are being curtailed or eliminated because of Dodd-Frank. Before, 75 percent of banks offered free checking. Just two years after Dodd-Frank became law that number was cut almost in half.”
Dodd-Frank became law five years ago and then it took a
while for his regulations to be issued, most of which the banks fought. But, through
this year, I count 157 bank failures since 2011, as the chart below clearly
shows.
Um, er, sir, Mr. Hensarling, that’s hardly one per 1835
days. I suspect to puff up your number and inflate your rhetoric you are trying
to count the 192 banks which failed in 2010; but virtually all of those were
history or soon to be, when the Congress passed the Dodd-Frank legislation. No
fair distorting, JH.
http://www.bankrate.com/finance/savings/map-of-failed-banks.aspx
Jeb also ranted about the GSEs but his only legislation on
the topic was to totally do away with F&F and let the TBTF banks control
the primary and secondary mortgage markets.
I guess he has forgotten or sublimated the sorry PLS
history of 7 years ago.
I’m sure it’s never occurred to him that maybe Fannie and
Freddie are needed to balance the banks’ strength and inclination to cut
corners with regard to mortgage lending, which—absent the GSEs—would be very
consumer unfriendly. But, I forgot, Jeb opposed the Consumer Finance Protection Board.
And
Now There Are Sixteen, With Kasich
I wonder which bottom six won’t make the GOP debates,
assuming nobody else decides to throw his hat into the ring.
My memories of John Kasich, then Chairman of the House Budget Committee when Fannie lobbied him, all are negative. Wasn’t interested in what
and where we did anything and was a regular irritant.
I remember just going around him, working with House GOP
leadership.
I asked in last week’s blog, who might be the 10 GOP
candidates in the first debate in August (two months from now)? Here the Washington Post takes a stab at who
those might be.
What
Others Are Saying
Harlan
Green in Huff Post rooting
for F&F plaintiffs.
_______________________________________________________
Friend
Bethany McLean gets it right in her 7-20 NYT op ed.
(I
also like the number of commenters who seem to have grasped that many in
Congress and government have been distorting the post 2008 GSE reality. Her new book--out in September--is well done.)
Glen
Bradford nails another one in his Seeking Alpha article.
__________________________________________________________
Who is
backing ($$$) which presidential candidates?
Tweet
from Politico’s Jon Prior, following
remarks from SBC ranking member Sen. Sherrod Brown (D-Ohio). (Guess he wasn’t watching Shelby in
Appropriations.)
Sen. Brown says 'bridge too far' on Fannie, Freddie
reform, still pushing talks for community bank reg relief http://politico.pro/1MlubJ0
____________________________________________________
Major trade groups opposes using F&F G-fee revenue for
other federal program costs, because it gores their ox, but you’ll see no
letter about Shelby’s anti-GSE legislation used as an amendment in the Appropriations
committee.
__________________________________________________________
Trump
Has GOP’s “Number”, Says E.J. Dionne
__________________________________________________________
Third
Party Trump, Third Party Trump, Third ….
Show those country club Republicans, Donald!
Oh--wee,
Let’s watch them R’s Fight
Alexandria
Petri identifies kindergarten bully behavior.
This
NYRT column is a desirable “yardstick” against which we should measure all candidates
for federal office, especially presidential competitors, whether Democrat or
Republican. Do they have vision?
Maloni,
7-27-2015
