Monday, February 27, 2017

Sometimes a cigar is just a cigar

First they came for the Socialists, and I did not speak out—
because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out—
because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—
because I was not a Jew.

Then they came for me—and there was no one left to speak for me.

Martin Niemöller (1892–1984) was a prominent Protestant pastor who emerged as an outspoken public foe of Adolf Hitler and spent the last seven years of Nazi rule in concentration camps.

Benjamin Franklin: “We must, indeed, all hang together or, most assuredly, we shall all hang separately.”

Reviewing the Past GSE/Political Week

GSE Developments

I still am quite PO’d at last week’s Appeals Court opinion which sustained the Lamberth decision and remanded some lesser but still important questions. I hope the few remand requests supported by the judges will be met thoughtfully by Judge Lamberth or whomever.

But, I want—with no personal legal knowledge of what’s involved--plaintiffs (and their legal teams), simultaneously, to opt for a full Appeals Court review, i.e. “en banc,” and also a Supreme Court hearing, hoping the SCOTUS will take the case.

Plaintiffs have 45 days (so I am told by lawyer friends) to seek the “en banc” all judge court examination of the Millett-Ginsburg ruling.

To date, in several courts, the GSEs, their cases and lawyers already have been slaughtered as judicial sheep, so it’s time to shapeshift and continue the fight as wolves.

Better to go down as a predator rather than a lamb chop.

Again, I urge plaintiffs to go both routes—if that’s procedurally permissible—“en banc” review and a date with the Supreme Court. The talent exists among your/”our” lawyers to do both and plaintiffs’ resources should, too.

I am going to repeat myself because it figures into what most of us are thinking.

The Appeals Court decision was a major setback in more ways than one and we can’t pretend it wasn’t.

Judges Millett's and Ginsburg's ludicrous finding was a downer for the plaintiffs, and IMO slowed considerably any haste which Treasury Secretary Steve Mnuchin might have wanted to resolve quickly GSE matters—which aren’t going away.

But, with Mnuchin TV appearances after Tuesday’s court action, I sense WH movement on GSE matters got shoved “yugely” down the priority list and could be a 2018 or later event.

The Treasury Secretary’s references to speaking to sources on the Hill troubles me because no GOP committee leader, wants the GSEs resurrected…..quite the opposite.

Ergo, besides happy talk, I have no idea what the Treasury Secretary and those congressional leaders could agree on that’s positive re Fannie and Freddie.

My head and my heart tell me—unless Mnuchin does a surprising 180 degree turn and accelerates any remaining desire to act administratively--GSE matters will lose their place to other emerging other issues.

Again, I could be wrong. Secretary Mnuchin may surprise us; the GSE plaintiffs could seek a quick and successful “en banc” review; or Judge Margaret Sweeney could declare that she’s heard and seen enough defendant’s obstruction to decide on the legality for the 2012 Treasury “sweep,” which now has pushed more than $260 Billion into the Treasury’s General Fund.

Just to keep us centered, I’ll repeat why Fannie and Freddie can’t/shouldn’t be casually ignored.

--Housing is too important in our culture and our economy. The alternatives to Fannie and Freddie, as their adherents have learned, all suck and offer only greater big bank control and less consumer benefits. The proper blend of those desirable qualities are hallmarks of why the GSEs offer major benefits to the nation’s homebuyers, as well as the skein of mortgage professionals who rely on that process.

Nature and politics abhors a vacuum and the anti-GSE folks—especially with their congressional support--are better able to move into the space than us with their “let’s give it all to the banks” schemes.

Removing the handcuffs from Fannie and Freddie and moving toward a privately owned GSE utility is the correct move and also should produce economic and political bounty for the Trump Administration and the President who seems desperate for both not to mention public huzzahs.

--The Appeals Court decision and the underlying Lambert ruling, were horribly flawed and hopefully higher courts will see that, plus it’s a scary implication for all publicly owned businesses, if federal financial regulators can initiate and maintain brutal actions not subject to judicial review.

--There still are major court cases pending, most notably before Judge Margaret Sweeney in the court of Claims and the Jacobs-Hindes case in Delaware. Sweeney has been the most hospitable to plaintiff’s lawyers and has been treated most egregiously by the government’s legal team.

--We brag “the US is a nation of laws,” but GSE fans haven’t seen evidence of that in F&F cases to date. Lots of people who helped DJT become President Trump advocated for GSE resurrection, expecting the law to support them.

That should help at the margin, especially if/when his Treasury Secretary and Attorney General truly get involved.

But, in the GSE world, whenever things look the brightest, inevitably we get a visit from cartoonist Al Capp’s old friend, “Joe Btfsplk” who plays skunk at our GSE picnic and messes with/in our party punch.

(For you youngsters.)

Do you best to shoo Joe B. away!


Bye Administrative State and Hello What??
Joey Goebbels and “Goebbels” Bannon
Scary Parallels, No Matter How they Break

(The similarities concern me.)

Joseph Goebbels (1897-1945) was Adolph Hitler’s chief propagandist and even succeeded him as Chancellor, briefly, after Hitler and Eva Braun committed suicide; next day, Goebbels and spouse followed suit, taking their six children with them.

Goebbels was a major Hitler counsellor and thinker, shaping and driving the Fuhrer’s unbalanced behavior and anti-Semitic actions. He also enjoyed a reputation for cinematic expertise.

Steve Bannon, who seems to share Goebbels penchant for leather coats, was a very successful Wall Street guy, husband and father, independent movie producer, writer, former naval officer, major right wing voice at Breitbart News, and President Donald Trump’s most senior conservative thinker/strategist. Bannon also displays disdain, some might say hate, for minorities.

At last week’s Conservative Political Action Conference (CPAC) DC meeting, the nation heard Steve Bannon discuss his vision for the destabilization of America’s prevailing “Administrative State.” Like the POTUS,  Bannon’s aspirations were short on detail but his goal seemed clear.

(Now that he’s out of the official fascist closet with his personal (and to me, dangerous) ideology, black leathers and all, Mr. B now has earned my nickname of “Goebbels,” which I will attach to him evermore.)

I think it is ironic historically, that 74 years ago, in February, 1933, Adolph Hitler announced his foreign policy which was all about securing “living space” for his German master race and paced his rampage through Western Europe and Russia, killing millions and laying waste to nations, cultures, national borders, and dozens of ethnicities.

As per his CPAC performance and many of his previous activities, writing, and movies,  Goebbels Bannon is all about busting up US institutions with no idea what will follow, and apparently not worrying about the collateral damage to our democracy, since the goal is just the breakup. 

While Joey G was brutally anti-Jew, we know Bannon’s strong views on Mexican and Muslim immigrants and according to his ex-wife, Bannon didn’t want their twin daughters attending school with Jewish kids, claiming the Semites all were “whiny.”

I wonder if all Trump supporters believe in Goebbels Bannon’s dream of tearing down so many familiar societal walls in America, replacing them with what?

And if those hearty party followers don’t buy in, will they let anyone know?

I’m not ready to accept the GOP spin that most of those unhappy participants at congressional town hall meetings are not real constituents upset with the general weak-kneed behavior displayed by GOP Members of Congress and Senators.

The congressional lemming “follow the Republican leader over the cliff” performance is present. I guess one way to ignore those back home complaints is to pretend they are not real or somehow the agitation of “outsiders.”

But, sometimes a cigar is just a cigar and those criticisms just might represent legitimate voter outrage. We’ll know in two years when most MoC’s run for re-election.

However, as per Goebbels Bannon’s political prescription, it’s tough to hide the off key resumes of DoE’s Betsy DeVos, HUD’s Ben Carson, EPA’s Scott Pruitt, AG Jeff Sessions and Ag’s Rick Perry, Transportation’s Elaine Chao, etc. given their new careers. 

Each is a legitimate cabinet-level agency disrupter and implementer who fast could facilitate that Goebbels Bannon destruction process.

The Boss

This week, while continuing his attacks on the media, President Trump called for a huge military buildup and upgrading our nuclear arsenal to make sure we have more nukes than any other country. (I doubt that shakes up the North Korean leader who, likely just offed his brother, lots of other relatives and competitor close aides.)

Neither of those muscular POTUS campaign promises is objectionable on the surface, except I wonder where he is going to get the money? More deficit spending justified by he who promised to balance the budget, using the justification of what ….besides the need for the military industrial complex to general more revenue?

The Admin’s cash needs dovetail with the Steve Mnuchin unwise announcement, that tax reform will be the Admin’s major initiative this year.

Tax reform could produce simplicity, which would be nice, but not  grand revenue.

If there are 200 lobbyists armed and ready to kill the GSEs, there are 2000 or more registered lobbyists-- and hundreds more for the asking--equally armed and ready to kill, expand, distort, or preserve their paymasters’ various tax exclusions for which they’ve worked for years and years to get and keep.

Major tax reform is not a leisurely back nine at Mira Lago and any presumed disappearance of tax breaks—without replacement tax bennies--will be fought mightily including by many Republicans.

Or as Louisiana’s legendary Sen. Russell Long, historic tax legislation pass master, once opined, “The Senators all say, don’t tax you, don’t tax me, tax the fellow behind the tree!”

There is a reason why our Tax Code is so snarled and tangled and it largely is about little addition here and amendment there, most were misidentified intentionally as revenue raisers, or revenue neutral, which add up to hundreds perhaps thousands of interests not paying their fair share of federal taxes necessary to do all of those things President DJT wants to do, build our defense forces, a Wall separating us from Mexican, a $Trillion for infrastructure spending, and reduce federal taxes for individuals and corporations alike.

DJT’s tax/budget numbers won’t/don’t add up, never have and never will. I fear the result may be the moneyed interests just tapping the US Treasury for their own balance sheets and share price increases, employing misleading 10 year revenue predictions calling any success “deficit neutral.”

(I’ll be curious to see next month what 10 year revenue number the first DJT Budget has for the GSEs.)

Psst. The future is unknowable and nobody accurately can project tax spending and revenue 10 years into the future. Official Washington never has and never will.

That doesn’t stop the OMB, CBO, and bunches of other three and four letter federal sources from doing it. But their revenue and spending prediction miss far more than hit. (Think about all of these weapons systems you read about and their spiraling upward costs?)

And, that’s a bipartisan comment. Democrats and Republicans both engage in that BS math.

President Trump could be the successful  exception but I don’t think tax reform—despite Sean Spicer’s and Kellyanne Conway’s cheerleading--is a near term political winner, just as I didn’t think  President Obama should have pursued “Obamacare” as his first major legislative initiative.

Obama used up a lot of political capital, didn’t sell it well, got only Democrat votes, and didn’t root it in enough of a political foundation to keep it protected from GOP attacks and now, likely, major legislative changes. (Although some of the congressional town hall meetings maybe making the majority congressional think twice about that partisan legislative surgery.)

My blog advice then to President Obama and now to President Trump, is first seek a major national infrastructure effort. Go for smart projects which are needed and not substitutes for already planned private spending.

That’s low hanging political fruit.

Trump could get bipartisan support in every congressional district where municipal repair is necessary, allow the public (voters) to see new bricks and mortar rising before their eyes, produce some of the jobs DJT seeks, and bank some political support which he can use down the road for your other priorities (like the GSEs???).

Maloni, 2-27-2017


Emmily said...

great insight.

Bill Maloni said...

Thank you beautiful, wonderful Emmily!

My first comment this week and it's delightful.

Heading for the rifle range first and bomb shelter, next, before the Goebbels Bannon folks read it and react.

Sean said...

Can they file BOTH an en-banc appeal AND a Supreme Court request - or are they only allowed to file one OR the other??

Bill Maloni said...

Sean--I asked that, too, and got an incomplete answer. My blog suggestion was a "more the merrier, more is better" observation than anything else.

The sense I got from my source was plaintiffs would do both,i.e. en banc and SCOTUS, but sequentially, unless they got some sort of positive signal from the WH/Treasury.

Lawyers out there, feel free to weigh in.

Bill Maloni said...

Sean--I see you asked Tim Howard your question, which is perfectly fine with me and shows your good judgment (although Tim wasn't my source).

Anonymous said...


DJT and his team including Mnuchin should not directly interfere in FHFA Director/Conservator functioning and also it is not the correct way to do.

Hank and Obama administration clearly violated the laws by directly influencing FHFA Director/Conservator besides the violation of investor's trust in expropriating assets of private shareholders companies. This is the main reason why their attorneys fought so hard to keep the matters related to private shareholder companies hidden from the public as well as shareholders.

It is the duty of FHFA Director/Conservator to follow the rule of law without any undue influence from outsiders. Currently both FHFA Director and FHFA conservators are in gross violation of their duties. Judge Brown articulates very clearly these violations in her opinion. Judge Brown's opinion will go in to history as one the best opinions written in protecting the integrity of the nation. Probably the opinion of the majority will go as one of the worst.

Sean said...


I'm covering all bases on this question as I had a hard time trying to find an answer on Google. Thanks for your input! Glad to see one court does not preclude the other.


Bill Maloni said...


But, until you get a federal judge to support your "gross violations" contention (to which I subscribe) the Paulson/DeMarco, Geithner/Lew interference has been established judicially as OK.

All I can do is cite my DC experience to suggest these judges, all--including the ones in the hustings--have been heavily influenced by "GSE Shit Wall," which GSE opponents have skillfully erected and maintained.

Either that or we, as GSE advocates, are dead wrong or we need some help to make the point, i.e. DJT Admin muscling a satisfactory resolution.

But, keep your faith in the courts. If you are right and it happens, I'll salute them and you.



No they don't. But there likely are factors of time, resources, and maintaining the attention of the principals, who are underwriting this expensive exercise and meeting with obstacles like the pending wash Post editorial cheering last week's decision. (That's up on the Google GSE blog, now.)

Anonymous said...


When courts hold Gov to very low standards and citizens to very high standards, then Gov will win all the time. In addition the laws are written in such ambiguous ways, laws can be interpreted in any away judges want, aided by labyrinth of case laws. In such a system English words lose their regular meaning. The legal system has become rule of GIGO (garbage in garbage out) rather than rule of law.

One would wonder, why does appeals court opinion needs hundreds of pages to explain just few questions of law (i.e. without any facts or motives)?

Bill Maloni said...


I don't have an answer for that, but as I try to explain certain contemporary events to my very smart and with-it 94 year old aunt, most explanations are just what you think they are, just cunningly wrapped with dense designer paper.

That's a long winded answer, but courts (Judges) confuse length with substance and some believe it underscores their personal importance as "blacksmiths at the forge of democracy." Bullshit.

The more they put add to support their incorrect or tarnished answers, the more apparent it is that "the Emperor/Judge isn't wearing any clothes" or in this case, the judges were naked and wrong.

I heard from someone today bitching about the appeals decision and saying he was there at the original hearing and heard Ginsburg's comments and questions, which took a totally different perspective from Ginsburg's decision.. He then suggested, "Someone got to him."

Ergo all the added verbiage to imply he had facts and law on his side.

Think of all of the myriad unflattering lawyer jokes, based on some reality and then remember all judges are lawyers.

Anonymous said...

Thanks for honest answer that many avoid with the fear that it may offend the powers.

Another question for you which bothers most of the FnF investors.
Almost everyone gets this wrong and it appears even Tim got this wrong.
What are the “Net” Funds Received from Treasury through SPSPA?
Are the below numbers correct?

Here is the FHFA authentic source for this number.

Page 9:

Summary of Funds Transferred (as of December 31, 2012)
“Net” Funds Received from Treasury $84.7B + $47.5B = $132.2B

FNMA: “Net” Funds Received from Treasury $84.7B
FMCC: “Net” Funds Received from Treasury $47.5B

Total FNMA and FMCC “Net” Funds Received from Treasury $132.2B

Bill Maloni said...


Tim doesn't get many things wrong. I suspect he employed numbers that most of the world uses, rather than diluting his with his caveats as opposed to published figures.

The disparity is how the Treasury and others (mainly GSE foes) calculate the amount given to the GSEs in 2008 and the fact that chunks of the early money was for F&F to pay Treasury the exorbitant 10% dividend for use of the money (which neither company needed, i.e. why would you have to borrow from taxpayers when each had hundreds of billions of very saleable MBS and loans in their portfolios). Note, just after 2008, the Treasury/FHFA made the GSEs begin sell off their portfolios because of "risk."

Now, my understanding is that your lower amount (@132 Billion) is correct, but as long as Uncle Same carries it on the budget at $187.5 Billion, you/we won't win that argument---unless some future, court/judge or Treasury Secretary--employs that discrepant factor in a subsequent legal decision or negotiated settlement.

Anonymous said...

Thanks, FnF opponents want to use bigger number $187B to impress the ignorant crowd.
But Taxpayer's net exposure was $132B which is almost 2/3rd less.
As now return on this $132B investment is more than $132B. That is more than 100% return on investment if one applies $132B towards principle payments.

One needs to let the stakeholders including lawmakers know the correct numbers.

Bill Maloni said...


While I agree in principle, there are so many things that Congress, their staff, the media, GSE bad guys don't know, this is on that "correct them" list but not near the top.

It's a very tough slog educating people when most are disinclined to listen or believe. Been there, done that.

Through my blogs, responses to questions, daily emails, letters to the editor, comments to online articles, and other sites, I probably weekly send out two dozen of those clarifications, explanations, educational messages, and updates.

There's an old advertising rubric which states "customers" need to hear a message 18 times before they listen and become aware. Once doesn't do it.

Bill Maloni said...

Anon--Here is a very fair TV review of the current GSE situation, but I would not push this reporter on the difference between $187B and ther $130B.

Even though it's nearly $60B, for most it's a distinction without a difference for most.

Anonymous said...


There is blogger comment on WP using your "Martin Niemöller" qoute.

Please read and also write your comments.

Anonymous said...

"Even though it's nearly $60B, for most it's a distinction without a difference for most."

Bill, Thanks,

Nothing hurts FnF shareholders more than wrong facts from opponents.
If it requires requires repeating 18 times, then it worth repeating 100 times.

If FnF opponents repeat lies 100 times, then FnF shareholders should repeat truth 200 times.
There is strength in numbers that too when it is about truth..

Anonymous said...

Numbers and facts are very important when it comes court rooms battles and it is not any less important in any other situation.

Bill Maloni said...

Anon 1&2 (although you may be the same poster)--

I was not disputing the importance of "facts," merely the challenge of educating or reeducating on GSE issues the beasts in the DC forests.

I've been doing it for almost 35 years, 21 at Fannie and later as an advocate.

If you count the number of blogs I've put out, you get close to 500 (roughly 1.1 million words), when you add the media interviews, comments on the Net, comments to other articles correcting the kind of things you are discussing, conversations with media, Hill staff, allies and foes, you probably get 10 or more times that number.

I'm working it Dude(s) and I welcome your help and those you can convince to join the party.

Nobody is paying me to do this and I'll do it until six of my friends carry me by the handles (of my very inexpensive casket) to where my wife decides to cremate me and put my ashes for the kids and grandkids into some of those Safeway food containers.

Anonymous said...

Thanks for your efforts. There is a great satisfaction in fighting for some thing we believe in. You are doing a great job. Success is within the reach.

Bill Maloni said...


Thanks, but it helps when--deep down--you believe in what you advocate.

I've seen it, L lived it, I understand the motives of most of the parties involved, know the alternatives and feel very comfortable proclaiming a GSE system, which forces the nation's big banks to conform with F&F underwriting systems and standards, works best for everyone in the mortgage finance chain (builders, Realtors, lenders, and most of all consumers).

Bill Maloni said...

Anon (if you still are reading this blog for comments)--

See Tim Howard's blog answer today (3-2) about all of the GSE misinformation out there.

Michael Gatti said...

Good morning my friend. I was surprised to learn(from GSE LINKS today,podcast entry)that
our boy John Carney, who hasn't done much recently on WSJ is in fact an Editor for Breitbart
News, perhaps this was known to most but not myself. Do you think he might have negative
influence with Administration due to this affiliation.Your thoughts appreciated. Just a good
ole conspiracy theory to start the weekend. Take Care.

Bill Maloni said...


Thanks for writing.

When in doubt assume the worst..and plan accordingly.

I am sure Carney will have some anti-GSE influence with some in the Trump Admin, but--ironically--if the Trump Admin/Treasury moves on a GSE resolution, my first thought is that it will be some version of making Mnuchin's "release them appropriately capitalized," meaning it will be a systemic mortgage market decision not ideological based on Mnuchin's experience.

The opposition still will be there and doing whatever they can do to frustrate it, but that hasn't changed.

Note: With Tim Howard's approval, I answered a question on his blog, yesterday, suggesting too much is being made by fighting the business and political foes and all the positive GSE facts will work their way into the system and all will be well.

No, I don't think that is the case, for the reasons I've posted here and also yesterday in that response.

The good guys need to keep beating that drum because the opponents are massive and the mortgage system GSE alternatives they seek suck, because they all are variations on giving the primary and secondary mortgage markets to the nation's largest banks.

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