Tuesday, October 18, 2016

GSEs and the Election

I know little more than most of you—and probably a lot less—when the issue is what are the positions or intentions of Donald Trump or Hillary Clinton on the questions surrounding Fannie Mae and Freddie Mac?

Before discussing where they might be, let me note something related.

Wrong Twice

Last July when the GOP assembled its presidential candidates, I suggested that Texan Rick Perry would be the easiest for Hillary Clinton to whip, since I just assumed she would be the D nominee and Perry wasn’t very sharp.

About a blog later, I changed my choice to Donald Trump, when I realized that he was serious about running for the post. Trump’s brashness and offensive personality I assumed/suggested would be very easy for Hillary to overcome or so I wrote. I was wrong, as events have shown. She may win, but....

I just never believed that Trump could win and the Republican Party would dip so low and embrace this flawed, openly pugnacious thin-skinned, egotistical billionaire, whose next touch with everyday Americans would be his first.

I underestimated his fans’ social and financial discontent and willingness to follow a carnival barker, making promises he could never keep.

Trump likely won’t prevail—but in this year, who knows—yet he’s is guaranteed like Godzilla to stomp and crush lots of people, personalities, historic institutions (think fair elections and the GOP), before he slinks back to the depths of Hell where he started.


Some will disagree, but I believe Hillary would be the better national leader

Hillary has flaws, they are display as we speak, but she is far superior to Donald Trump, who seems to respect nobody and nothing except himself and his own egotistical needs. Because of her experience and true passion, she would be a superior President, warts and all.

And that’s before I note that Trump’s buddy Putin is afraid of Hillary.

(No, Senator Kelly Ayotte (R-NH), Trump is not a worthy “role model” for our kids.)

Possible GSE Futures

First off, keep all eyes on the courts as an appeals panel reviews the very damaging Lamberth decision which said the federal government can do anything it wants to the GSEs and their shareholders.

Judge Margaret Sweeney’s lengthy deliberations in the Court of Claims still are meandering and likely will for another year. But she seems, justly, to be unhappy with the many government delays and obstacles it’s thrown in the way of process. Sweeney’s request for plaintiffs lawyers to review 60 new documents—a motion, surprise, the government is slow walking—indicates some hope for judicial relief in her court. But, her early moves while welcome, are not dispositive.

Turning to future GSE policy after the election. let me establish first off, that I could be 180 degrees away from where ultimately they will fall on the support/oppose GSE continuum. But, I’ll still share my opinion.

The easy one to project on GSE matters I think is Donald Trump.

The GOP platform is filled with the standard ant-GSE rhetoric which seeks to demolish the GSEs and replace them with something which doesn’t involve the federal government standing so big in the mortgage market. (Good luck with that when Trump finds out his voters don’t want to be slaves to the big banks and like long term fixed rate financing. But that’s another story.)

Here’s where we get to conjecture.

Trump and his personal businesses likely depend a great deal of easy access to large commercial bank credit lines or loans. That would be easier to know if he ever made public his taxes, which he might do (NOT!) if he gets elected.

Ergo, to insure his children, who would handle his businesses if he gets elected--since he has refused to put his operation in a blind trust, as previous presidents--Trump would want Eric, Jr, and Ivanka to have similar access to the same bank credit windows, meaning Trump will back the banks 100% and seek an end to the GSEs.

Hillary is surrounded by people who have not been GSE friendly, like Gary Gensler and Gene Sperling, and therefore heavily will consider the Obama position on GSEs, which has been decidedly anti-Fannie and Freddie.

Also, the red light/green light regarding her Wall Street opinions sends some confusing signals about supporting the Street, which wants the GSEs out of the way so they can sop up that income with their big bank allies, no matter what the consumer impact might be.

However....the Black and Hispanic communities for the past 20 years have been very supportive of the two companies, when the latter focus on the GSEs and what they bring to aspiring minority mortgagors. That’s because Fannie and Freddie delivered when they could (before the Treasury/FHFA forced the GSEs to give up their management discretion on running their businesses).

While it hardly has been dispositive, even in recent weeks and months, those two demographics through Black churches and more mainline community groups have engaged with FHFA and Treasury arguing to keep Fannie and Freddie operational and serving their communities and citizens.

Now, here’s where I head, again, for speculation and “maybes.”

If Hillary Clinton is elected on Nov. 8, owing to massive Black and Hispanic voter support and the political representatives of those organizations, plus the Congressmen/women and Senators who have largest numbers of those voters in their states and districts, urge President Clinton not to scuttle Fannie Mae and Freddie Mac, I think the GSE have some chance of surviving going forward.

I also think HRC may have a greater sensitivity and appreciation for homeownership than certainly Trump, and also some of the campaign apparatchiks around her.

Is the Right Recognizing the “Lamberth Threat?”

Once again, I am not sure how effective it will be with the courts, but the fact that the conservative Cato Institute filed an amicus brief challenging the “takings” from a Anthony Piszel, a Freddie Mac employee dismissed and denied benefits from his departure agreement, i.e. “golden parachute,” is a development worth considering.

Cato says the government overreached which indeed is the same the same principle with the “takings” lawsuits which most of the plaintiffs allege in their lawsuits.

It may mean bupkis (nothing), but it still represents a first entry on the broader GSE side for the “traditionalists.” Maybe there are more opportunities for them which could catch the attention of some GOP Senators and Members.

Maloni, 10-18-2016

Make sure you and your eligible family members are registered to vote and then go and vote. Take others who are registered but may need transportation or other help.


Unknown said...

Maxine Waters as head of the House Financial Services Committee? Probably a remote possibility but maybe an improvement on Jeb Hansearling?

The key here is that the Ds care a little bit about affordable housing and the GSEs. The Rs don't.

Anonymous said...

"Hillary is surrounded by people who have not been GSE friendly, like Gary Gensler and Gene Sperling, and therefore heavily will consider the Obama position on GSEs, which has been decidedly anti-Fannie and Freddie"

True and Correct.

Anonymous said...

Hi Bill
Is your reader "Matt Hill" the same one that was a plaintiff suing Price Waterhouse
and that today filed a voluntary dismissal for free???
If yes , can he explain us what is going on? Weird isn't it?

Bill Maloni said...

Wayne Olsen--

Right now, I just can't see the House flipping--despite the GOP scare talk--too many House R's.

While the Senate disparity is less, I don't see that chamber being D controlled either, if the latest info on the Senate races is accurate. D's may get to 48 or 49 seats, though.

Again, there always is an "screamer" which nobody sees coming, but it will be tough, meaning President Hillary Clinton will have to deal with a GOP Congress.


Anon--There likely are a few more that I didn't mention; but if the election goes the way I laid out, I think the Black and Hispanic Caucuses could influence her, since none of the GSE alternatives have the mortgage finance certainty that Fannie and Freddie can produce, if they are permitted only partially to revert to their old operations, i.e. more management controlled not Treasury operated.

Bill Maloni said...

Anon-I personally don't know "Matt Hill," except that I've gotten questions and comments from him and have seen his name in/on various GSE items.

But, he certainly could be that "plaintiff Matt Hill."

Anonymous said...

Bill, I like you and respect most of your opinions on your blog and such. But, please stop pushing hillary clinton - its embarrassing you and mocking your own stature.

Can honestly write that very few of the people i know would even consider her as a viable candidate; she is less qualified than the current occupier and see what a mess he's caused. Fact is at present, personally found no one; who'd people would consider "smart" even considering her. If you want a racist sexist elitist, that's criminally negligent as a co-conspirator and syndicate leader - you can have her. She's a laughing stock and a joke- pure comedy.

First Anon

Bill Maloni said...

First Anon--

It's not in my nature to fudge my support or not say why. I conceded she's not perfect, but the nation really is left only with two choices and Trump is as anathema to me as she is to you.

I dumped enough on Trump with detail why to me he is not presidential timber, so when I support someone, I try to make that case.

You should vote for whomever you think will do the best for you political and policy future. I still will take and answer your questions, if you vote for Trump.

And, if he wins, I'll bitch and moan, but I'll accept it.

Do you think Trump voters do the same if Hillary wins?

Marco P. said...

I see on Trump's financial disclosure assets of (up to) $1,000,000 in Fannie Mae. While that might not be a fortune for Trump, is it possible that he has held some kind of stock in FNMA since before the net worth sweep? He doesn't seem like the type to shrug off the government seizing his assets without cause. Or if he acquired a stake in FNMA after the NWS, would that suggest he is betting on a release and recap? Or does he just have so much money he only vaguely knows he owns assets in the companies?

I think the motives of both candidates are much deeper than you're suggesting. Neither candidate has hinted about his/her plans for the GSE's, but I feel like the Trump campaign can use the latest stories (executive order concealing emails) to make the debate about more than the GSE's and shine a brighter light on their attempt to cover-up this story, which would be to the shareholder's benefit.

Michael Gatti said...

I find it interesting that both the GSE's and Hillary Clinton share some very similar
traits.Both have been scorned by the Republicans for years for various reasons which
have turned out to be unfounded. Both are the best options in the current climate of
politics and business. Finally, both have stood tall in the face of unending vitriol
and served America and its people as well as could be expected.

I look forward to President Clinton and the ongoing enterprise of The GSE's.

Hopefull?? Maybe. Optimistic?? Certainly.

John said...

Bill, love your blog but having been in law enforcement for 40 years I am of the opinion that Hillary is a criminal. Donald is a baffoon, but I will take that over a criminal every time.

Bill Maloni said...

Thanks for all of the commentary and input.

These three thoughtful messages are welcome and likely reflect what a lot of Americans are thinking.

Marco P. Thanks for the info and shame on me for not knowing that Trump may have GSE stock.
Yes, that might influence him, but--as you note--it's not a great amount and easily could be dumped/ignored if he wanted to endorse the bank-supported approach.

You are right (and I conceded) I don't have knowledge of where either candidate is on the GSE issues, but looking at what is publicly available, I offer my opinion.


Michael G.--I think we both are hopeful and optimistic, but I've been disappointed before in politics and politicians. (Both parties lie.)


John--Thanks for your ongoing GSE interest.

Where I sit is where I stand, but.. please explain the whole "she should be in jail" thing? I am not goin g to try and rebut you, just want it ladled up so I can consume it.

Is it because of her private email use or some perceived violations at the Foundation?

Before you answer, given your law enforcement experience, remember there is actual proven violations of law, but more allegations of what the masses think should be criminal violations? Thanks/Bill

(I have two nephews in active police service, one a Pennsylvania state trooper and the other a township police Captain.)

Anonymous said...


I think you could have made your argument without putting down either candidate. But, It is your blog and you can say what you want. Nobody is forced to read it.

I do find it disconcerting that Hillary has surrounded herself with people who are wall street/bank backers. A true Democrat would be looking to push more government oversight not less. and yes I know there would still be oversight. I think there is still a solid chance that the will be converted to a utility which would require approval from the government in rate and fee adjustments. As you said a lot of groups still want long term fixed rates. I am pretty sure any bank control would want adjustable rates.

The problem I have with republicans at this point is they want so bad to shut down fannie and freddie, that they are willing to ignore the constitutional rights of it's shareholders. I do believe if they are wound down, it doesn't end the legal battle. Shares will have to be bought out. It might be 2 a share or 20

Bill Maloni said...

Anon--We Democrats had that choice with Bernie Sanders, whom I didn't support because I felt the GOP would have ripped him to shreds over his desirable but unrealistic policy choices, unproductive Senate record, socialist past, not the least of which was celebrating his honeymoon in Moscow and lionizing Fidel and Che.

Even with the youthful support, I didn't think he could win or be an effective President.

You can raise the appointment principle you discuss regarding any presidential candidate. Where are they going to recruit the 4000 of so political appointees available to them.

I don't want another Scalia or Clarence Thomas on the SCOTUS.

Also, I am a Democrat who doesn't like a lot of the party's Left Wing, so save me the do-gooders; I support a muscular foreign policy (which I think HRC does, too); when it comes to domestic policies, nobody is going to do anything for free and be successful, which is why I think the old Fannie and Freddie system sprinkled/shared enough rewards throughout the finance chain, including to mortgagors, to make it near ideal in concept. And most important, it stood against the big banks tendency to screw mortgage consumers.

The latter is a more subtle but apparently not well understood (although Bethany McLean nailed it in her last book). When lenders (big banks) have to abide by GSE underwriting guideline, the only generate lower risk product. They always can be more risky, but the banks then would ahve to keep those loans on their own books.

Markus said...

Im not american so my opinion here doesnt even matter.
For me its a wash from the GSE viewpoint.But as a european and with what has been said,I actually would prefer trump..yes its hard to say but I want americans/europeans to have good relations with Russia and China and not war. same for the middle East.
HRC talks like shes going into war already.also note Jill Stein quote which I also agree with, both are horrible.
anyway, I hope Im wrong and there wont be war.

Bill Maloni said...

Markus--Thanks for reading and certainly your opinion matters.

I am not sure that Donald Trump's business experience qualifies him to lead this nation, since I am not sure of the details of his business or his "success?" We see the golf courses and hear him brag but where is the proof that he has had hands on and what kind of tradeoffs has he been made, besides decrying overseas trade and then using overseas suppliers to forge his products and buildings?

He gives very outward indication of a man insistent on his own way and dismissing those who disagree or challenge him.

There is too much nuance and connectors to foreign policy for someone like that to lead this nation. I also think it's illustrative that 50 GOP foreign policy veterans (two of whom I know well) signed a letter disparaging his presidential aspirations, character, decision making, and opposing him.

I have a strong anti-Putin bias and think Trump's been conned by Russia's nods to his campaign.

Trump's actions in the third debate (his best until he refused to accept the election results) and in NYC last night do not suggest a thoughtful, calm, cool decision maker--but just the opposite.

Stay tuned and let me/us know what you think of the election results.

Anonymous said...

Are you a believer in God? In right and wrong? In good vs. evil? Just curious.

Bill Maloni said...

Anon--Rather discuss GSE issues and politics, frankly.

Anonymous said...

Interesting. Many of your previous posts you didn't want to discuss Politics?
You either believe or deny? Woa to those who call evil good and good evil. There is no gray area. We will all be accountable. Your written support for corruption, murder and anti God political positions could come home to roost. You should strongly concider what you are promoting, especially an Administration that has been and will continue to rob Shareholders. Before you go on about the Republican's position, which I am an Independent, Bush was very clear when he said F&F should continue to be a private Shareholder Company. It seems to me that any Government employee will vote Democratic, same as the African American community, regardless of their abuse is to themselves. Like you are under a curse. How you can write about the abusers yet continue to supply them in beyond comprehension. Yea, yea, yea, it's in the Courts. Point is it shouldn't even be in the Court.

Bill Maloni said...

Anon--I had a very lengthy response, left the house to go take my grandkids to the park and it disappeared when my PC shut down. So I am going to try and recreate it for you.

First off, you're wrong. EVERYTHING about the GSEs is politics. The court cases are a result of a political grab, first by the R's and then by the D's--seeking to satisfy their own priorities and avoid what's the best national mortgage finance system for the nation. I've blogged about those matters for the past nine

The GSE matters are small, insignificant sandbox play, despite the collective investments of shareholders.

Look around us and throughout the world and see how much inhumane treatment, violence, slaughter, sadistic actions, have been carried out by those claiming God is on their side.

I don't think religion or God has anything to do with Fannie and Freddie, because I am sure you'll find God-fearing people, as well as atheists or non-believers, on both sides of the question.

In that case, when the dust settles, someone who believes in God will be disappointed by the judicial or legislative resolution.

With that, I've tapped my spiritual well.

So, I look forward to you next GSE business/political question.

David said...

Trump has a close relationship with Icahn who had a substantial holding of GSE commons.

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