Monday, April 10, 2017

Bad News/Good News for President Trump

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.

GSE Commentary; DJT and Russia

I’ve heard from GSE allies and friends concerned about my growing negativity on GSE legal or possible Trump Administration progress.

That’s an accurate assessment of what I’ve been writing and also reflects what I think I am seeing, specifically my thesis has been the infamous “GSE Shit Wall” –or Tim Howard’s “financial establishment”--will preclude DC policy makers from ever making a decision supporting the GSEs or their shareholders, save some ersatz calls that are halfhearted but ineffectual, i.e. “Yes your rights were violated but you don’t get any damages.”

The friends claim;

“No Maloni, you are ignoring the inherent value (and difference) between preferred stock and common stock and the fact that Judges Millett-Ginsburg in their negative appeals decision, which most of us hate, specifically did ask Judge Lamberth—or whomever picks up these still unanswered legal questions—to closely examine American contract law, which my GSE friends believe might contain the seeds of a GSE settlement and hope for a future mortgage finance system with major roles for the GSEs.

That rendition may be a little more than the judges asked, but the Appeals opinion did tell Lamberth to go back and look specifically at that preferred matter since his original decision didn’t reflect that analysis.

(Although the “Maloni Devil theory” concurs--just like Judge Lamberth argues--unless barred by the SCOTUS or the Trump Administration--the government will do whatever it wants to GSE interests and nobody will say boo.)

Excuse me, but at the mention of Judge Millett and Judge Ginsburg, I must invoke the ancient Maloni family curse: “May those two jurists, for the rest of their lives, require kaopectate daily for their stomach distress.”

I can’t/won’t try and make the case for common versus preferred GSE securities, because I’m not smart enough, but will merely point out that because of the “preferred contract” there is a difference. 
In an email to me, here is what my friends argue and I think they are right. 
(A) GSE shareholders say that Fannie, Freddie, FHFA and Treasury have breached their contracts.  Those contracts are the prospectuses under which the GSEs made their pitch to potential investors and the corporate documents under which those securities were issued.  In America, contracts are important, and parties are expected to honor their contractual obligations even when it's inconvenient.  

(B) After reviewing Judge Lamberth's decision, the D.C. Circuit says Judge Lamberth improperly ignored and needs to review GSE shareholders' contract-based claims.  Specifically, the D.C. Circuit says Judge Lamberth needs to think about investors' liquidation preference and dividend rights buried in the contracts under which the securities were issued.  

(C) There is some confusion in the marketplace today about whether GSE investors' contractual rights travel with a security as it changes hands or whether those rights mutate as securities are bought and sold in the secondary market.  The U.S. Supreme Court has clearly said multiple times that an investor's bundle of rights is fixed when a security is issued and don't expand or contract based on the identity of the current holder.  All GSE security holders are equal.  The time at which a GSE security traded hands and the price paid for a GSE security is irrelevant.  

(D) The D.C. Circuit says that Judge Lamberth was incorrect when he said shareholders' claims are not ripe.  That's an important point no other court has squarely addressed.  Judge Sweeney should find that instructive as the takings litigation proceeds in her court.  


The President's Up and Down Week

First off, I want to apologize to anyone who will be offended with my examination, below, of a certain rumor currently circulating “inside the Beltway” about Russian intelligence services, the President Trump, and Mrs. Trump. 

I discuss it because the information is not new but it answers a few questions I had, initially, when these same matters were raised by others but seemed to disappear amid the hoopla of the Republican primary campaign and DJT’s win.

If close to accurate, this information would explain a lot, i.e. DJT's  long time Kremlin investment goals, as well as President Trump’s Russian infatuation, his near unfathomable Russian toadying, and Vlad P bromance.

Again, the operative word here is rumor—it all could be nonsense--but when this story touches certifiable details, some perspective gets added.

The narrative is kind of a reverse “Russian honey trap” using sex and related matters, likely embarrassing photos, plus inarguable evidence of wrong doing, as well as fears of exposure in the face of blackmail/coercion.

As explained to me midweek: US security services, likely the FBI, reaping their electronic surveillance activities have evidence Russia possesses and threatened to detail evidence showing First Lady Melania Trump was in the country illegally--before her  wedding to DJT--and engaged in disreputable employment that will not be found on any First Baptist Church Ladies Club list of acceptable vocational options for young ladies, even when they are beautiful and came from Eastern Europe (Slovenia) or not.

Remember the GOP presidential primary flack over exactly when Melania Knauss Trump, first arrived to work on our shores? But, with scant evidence beyond Donald Trump’s say so, all were assured by his attorneys was she was here legally.

The rumor—after a few modeling jobs—is Miss Knauss opted to become a professional “female escort,” which is how she met “the Donald,” at a time when he was the talk of NYC with flamboyant bachelor ways always surrounded by attractive young women.

With these provocative rumors, I go back to what’s already appeared. During the GOP primary, the New York Post printed some sultry photos of Melania Knauss, who as we know later would marry Donald J. Trump, give birth to their son Barron Trump and now is our current First Lady.

Did Donald Trump’s pre-presidential life--his desire to conduct major business in Russia—his Manhattan high living and womanizing allow Vladimir Putin and his spy network to bag themselves an orange haired “Manchurian Candidate” and use that intelligence eventually to extort DJT’s cooperation and abuse NATO, our European allies, and more?

That script is very Russian and very Putin.

Could all of DJT’s accusations of “fake news,” media hate talk, Tweets commanding his fans not to trust the major newspapers and networks, be a gigantic anticipatory spin 
For when this story—or other more revealing or humiliating Russian connections disadvantaging our nation--hit the news?

President Trump proudly brags he could shoot someone in the middle of NYC and still would be supported by the American people and exonerated in the courts.

Two congressional investigations, one DoJ/FBI, and microscopic press interest , eventually, will dismiss or provide support for these possibilities. 

If the Russians have or are trying to blackmail the POTUS, President Trump may get his chance to prove his theory of political invulnerability, although he, Sean Spicer, Kellyanne “Conwoman,” and Fox will label it all “false news,” no matter what sources verify it.


Yay H.R. McMaster

Wonder what Steve “Goebbels” Bannon did to PO the President and allow H.R. McMaster, his new Director of National Security, to dump “Goebbels” from that intelligence cast?

Whatever it was it must have been harrowing for SGB to get dropped like a hot rock, reportedly with a nudge from first son-in-law Jared “Bartholomew Cubbins” Kushner (because of his many policy hats).

I want “Goebbels” and his cabal of angry “nationalists”  to keep running afoul of McMaster, Kushner, and first daughter Ivanka.

In an old “addition by subtraction” scenario, President Trump’s White House would gain stature and character, if Bannon and his ideological pug uglies were bounced from his staff.

I hope there is some substance to this late breaking Sunday news story.

More Caught in the Russian Snare?

We have Mike Flynn gone for lying to VP Pence over Flynn’s Russian dealings and back channel discussions with Kremlin spies. Flynn still is reported to be seeking testimony immunity.

We have Attorney General Jeff Sessions recusing himself from the Justice Department’s Trump/Russia investigation.  And last week we saw Chairman of the House Intelligence Committee Devin Nunes (R-Cal), step aside, under ugly clouds for his House collegial deceit and abdicating his congressional responsibilities by nakedly cooperating with the guy he is supposed to investigate.

With the President still insisting that there are no Russian issues here, political or strategic, a lot of heavy hitter Republican bigshots have been rendered hors de combat on the sidelines.

I’ll remind you—and repeat—what was said last week, when Jason Chaffetz (R-Utah) suggested, about Flynn (paraphrasing), “When you seek immunity, it’s probably because you committed a crime.”

Forty five years ago….

Most of you reading this blog, likely, weren’t adults during the Richard Nixon denouement. Most didn’t live in Washington DC or work on the Hill, as I did reading the Washington Post and other media,  which had one Nixon aide or another confirm with on the record or off the record quotes that President Nixon was guilty of high crimes and misdemeanors related both to the Watergate DNC headquarters burglary but more significantly in the White House cover-up, for which Nixon later was impeached.

As the Congress, the media, the Administration, courts, and the nation today, work its way through this political and legal Russian quagmire, remember we have been lied to before, grossly, and that includes Bill Clinton, too.

And once one inside person starts talking, you soon see a flood, i.e. rats leaving a sinking ship.

Yay DJT, Twice

Before closing on this blog segment, let me confound and shock some of you by, legitimately, praising President Trump over his muscular response to the Syrian gas attacks. I was very critical of President Obama, i.e. "red lines and all" for talking a lot about Syria and other hot spots but doing little or nothing.

DJT’s military move—and what I expect will be others—provides him with greater diplomatic and strategic options than just imploring Russia and Iran--which he did before the cruise missile attacks--to rein in Assad.

Of possibly of greater value to the nation,  I also welcome the President (finally) using the attack to accept responsibility for his position and ownership of these military steps and associated domestic action.

Maloni, 4-10-2017

(To the landsmen, best wishes, good health, and Peace on this Passover.)


Bill Maloni said...

Some Monday news of the Bannon-Kushner faceoff, as mentioned in the blog.

Emmily said...
This comment has been removed by the author.
Emmily said...

You are attacking the wrong persons. Bob Corker is the most corrupt and shameless senator ever. He is the major resistance to end NWS. Corker is the person we all should attack.

Emmily said...

CNN hates Trump so much

Bill Maloni said...

Emmily, I agree with you on Corker and I certainly haven't gone easy on him (or Warner).

Regarding President Trump, I established I would challenge him when I think he errors and praise him when he makes good decisions.

I did those things in this current blog and I long have advocated Trump/Mnuchin using the Admin's executive authority to preempt anything Congress might do, which--for the GSEs--invariably would be damaging.

So on this Admin and the GSEs, I think we are in sync. (If you are new to my blog, please read a few of the previous ones where I've advocated for aggressive Trump/Mnuchin actions via regulation to recap and release Fannie and Freddie.)

Emmily said...

Thanks, Bill!
Trump eventually will release GSEs but Corker wants to kill them where shareholders would get nothing. However, if they are released, shareholders would get something.

Bill Maloni said...


Corker and Warner both are alleged "GSE stock manipulators"--remember Corker's "sell short" advice on national TV--about whom ethical questions have been raised, but no reports yet from the somnambulant Senate Ethics Committee.

Find the "Rocky Top News" article--likely available on GSE Links--which discuss some of these specific matters.

Bill Maloni said...

To be fair:

The British "Daily Mail" newspaper settled with Melania Trump today, issuing an apology and paying $2.9 Million to her, over one of its stories last year, which mentioned much of the same as the "Inside the Beltway rumor" I commented on in my current blog.

Dan S said...

First time I've read your blog which is listed on "Fiderer on GSEs, etc." Thanks for your work on the cause to provide justice for GSE shareholders and concerned Americans who know it's desirable to preserve GSEs in their former incarnations. It remains to be seen whether the DJT administration's bulemic State Department can leverage DJT's belacosity to do something diplomatically to reduce the chance of new gas attacks on Syrian citizens or to generally improve the prospects for peace. One thought I can't agree with is the often-voiced critique of Obama for "doing nothing" after his red line was crossed. Au contraire, he attempted to get Congress to approve bombing and, lacking approval, succeeded in getting allies, Russia, Syria and the UN to agree to remove and destroy the Syrian stockpile of chemical weapons, which was done. That probably saving many lives. We'll see if DJT cab do anything truly effective to do anything similar, but I'm skeptical that his competence extends beyond blustery tweets and sword rattling. Originally long FNMAS at 3.00 but also trading. Will buy back some next week in the 5's, if available; daily stochastics oversold, but weekly still going down from overbought.

Bill Maloni said...

Dan-- Thanks for reading and commenting. My GSE blog is nine years old.

I've been on DJT's case--as my readers will attest--since the GOP primary campaign.

But, he's who we have, and I promised when I agreed with him I would say so, given all of things he's done and said with which I don't agree.

I am heartened by his apparent policy shifts, slowly back to the center (Syria, NATO, China, maybe Bannon, etc.) but until I see a lot more, I can't decide if it is real or episodic/opportunistic.

Having never been a pol, he's in over his head on lots of policy issues, now. But, good staff, can bail him there, if he utilizes them. He doesn't have enough, yet.

Unless all of his new American jobs are going to come from building domestic bomb shelters and producing "forever food and water supplies which can last in bunkers for two years," he should listen to the Chinese re North Korea, although it angers me to acknowledge it.


Despite Mnuchin's apparent support, the GSEs are running out of allies and opportunity. Unless the Trump Treasury moves with alacrity and soon, the issues will be swallowed in the congressional marshmallow process. But GSE advocates are behind the eight ball and in the crosshairs, plus lots of other negative metaphors I can't come up with now.

We are down to some longshot court cases and the aforementioned Treasury regulatory authority, which still would piss of a lot of Trump allies, but please the homebuying public and those who lose out when the big banks control the entire mortgage process.

The Congress will sound very bellicose on Fannie and Freddie but have no viable alternatives. But that won't stop its shrill accusations and demands to abolish the two.

The bottom line--for lots of reasons historically--is too many people believe the federal government can do whatever it wants to the GSEs, their shareholders, and allies, with impunity.

Keep reading.