Sunday, November 26, 2017

What's On my Mind!



 
Caution, Caution Anti-GSE Forces



What goes around comes around, unless Donald Trump’s Administration is going to unbalance the world order and prevent those timely reoccurrences.

Former Fannie CFO Tim Howard believes the US mortgage finance system’s future is hazy--at best--if the federal government fails to address the GSE investor claims they were Shanghaied by the US Treasury, first in 2008’s “conservatorship” in demanding a 10% GSE repayment from them (banks only paid 5%) and then again in 2012, when the Treasury changed the settlement plan demanding every penny the GSEs earned going forward.

Treasury now has collected @$265 Billion from the two since 2013, for the $187 Billion infused.

As I have written on several occasion, I believe the current GSE mortgage reliant system—with a few alterations—is the most efficient and fairest (for the public, the lending industry, and its builder, Realtor, insurer components) of all the multiple “successor to the GSEs” options being pushed.

Not surprisingly the “kill the GSEs” sponsors and advocates mainly are the foremost financial interests and ideologues that covet Fannie’s and Freddie’s market position and revenue. (Psst. The “GSEs set the broader rules on loans banks sell the public. That fact chafes lenders.)

Howard’s Opinion

But, as Howard wrote to me, “A legislative reform plan that does not deal with the uncertainty surrounding the current lawsuits is going to face a challenge of getting the requisite amount of capital into the envisioned new system.”

“If Fannie’s and Freddie’s regulator legally can force them into conservatorship when they meet all of their regulatory capital requirements, then —once they return to profitability—seize all of their profits in perpetuity, why would potential investors in successor entities not fear that the same fates could befall them?

It would be shortsighted to ignore those possibilities for future mortgage market players if Fannie and Freddie do get offed with no relief for their investors.

If I was a surviving mortgage market player (or their friends/patrons), I would worry about their own coming “day in the barrel” (look up the old joke), when the inevitable inheritor to the Trump Administration and this Congress emerge.

Since, at some point—sooner or later-- there will be a successor to the current regime.

The next congressional/WH  political winner/winners easily could lust after the behemoth bank income and market position, just like the “Too Big to Fail” institutions and their political and industry toadies have pursued Fannie’s and Freddie’s for the past 25 years.

Will/Can WH Support the Rule of Law?

If the Trump Administration fails to support the “rule of law,” except when it can be twisted to support its non-mainstream policy choices—and screws GSE shareholders--where does that leave us as a law-abiding nation?

See the succinct answer the esteemed Professor Richard Epstein delivered to a recent financial forum on the issue of “takings.”


It’s relevant because our Constitution (remember it?) prohibits government takings.

Let’s Play “What If?”

When the political tides turn and the sides get switched, how lame will the TBTF banks sound saying, “It isn’t fair what the government is doing/did.” (That’s just what the GSE investors have been saying for years?) 


All of those banks and the bank allies hoping/trying to rally around the MBA or Milken “kill off Fannie and Freddie” legislation should remember one salient fact, despite their GSE ideological blindness. Nothing is forever.

If the Congress, trying to write legislation or the WH considering some new regulation--does not figure out how to mollify GSE investors, who have a variety of legitimate lawsuits against the US Treasury--the US could face monstrous mortgage system challenges, beyond the chaos, uncertainty, and delay in implementing future models in a $10 Trillion mortgage market.

The first will be Tim Howard’s, i.e. from where does any new mortgage money come?

Which rational investors will risk their dollars when a new Congress in 2018 or 2020 or a new Administration in 2020—either or both of which could be more progressive--decides the post Fannie and Freddie mortgage system sucks and works only for the big lenders but not for consumers?  

The Big Banks and their friends may argue Constitutional “takings,” but will sound foolish and tawdry when—because of their support—the government’s taking of hundreds of billions of Fannie and Freddie investor dollars got ignored.


A Future Admin and Congress?

Do you think President Cordray or Kamala Harris, or Senate Banking Committee Co-Chairs Sherrod Brown and Elizabeth Warren, let alone or Treasury Secretary William “Torch Them” Maloni, won’t use all of the GSE precedent the big bank and bank-lovers endorsed against the likes BoA, Wells, Citi, Goldman, et al.

The ABA, Financial Services Roundtable, Mortgage Bankers Association and other bankers wrote that playbook.

Hey big Bankers, want to see my financial regulatory “fastest draw in Washington D.C? Want to see it again, heh, heh?"

Be careful for what you wish and what standards you support.

If those who chose to ignore the Constitution and ideologically steamrolled GSE investors, there certainly will be future consequences for bank advocates.

Look around you at what’s happening (beyond Virginia and New Jersey politics) and see what "trends" may be trending?

Except for a shaky current GOP congressional majority and the souless and “just focus on me/DJT” administration, those abandoning GSE shareholders and expropriating their funds could be seeing their future, no matter what they call the mortgage entities they hope to dominate, once Fannie Mae and Freddie Mac are scuttled?

Remember

Anything done legislatively can be undone by a new D-controlled or just progressive Congress and that includes passing new laws which expand previous SCOTUS decisions and, in effect, overturn those high court verdicts.

Be careful--when you bet your federal banking charters and back extreme legislative or regulatory action--the same fate won’t happen to you.

It could.


My latest letter to the Washington Post, unprinted by the newspaper

President Donald Trump says:

"A pedophile is a better Senate choice than a liberal Democrat.”

and

"I believe President Putin that Russia did not interfere with our elections.”

“When hearing him say these things, what else do the American people need to conclude that Donald Trump-- and his acquiescent congressional allies—have failed to represent the best interests of the American people?”

Wm. R. Maloni

Russia Had/Has Leverage Pressure over Trump??



Why the GOP Tax Bill Deserves Senate Defeat: It’s a fraud built on a Lie: Our kids will pay for this corporate giveaway, which will not and never has produced the GOP–predicted historical gains (NYT-Editorial)

https://www.nytimes.com/2017/11/25/opinion/sunday/the-republican-tax-on-the-future.html?rref=collection%2Fsectioncollection%2Fopinion-editorials&action=click&contentCollection=editorials&region=stream&module=stream_unit&version=latest&contentPlacement=2&pgtype=sectionfront



Maloni, 11-26-2017

14 comments:

Bill Maloni said...

I forgot to suggest blog readers send their Senators and Congressman/woman some communication indicating if you are opposed to the GOP tax bill because it can't possibly produce what the advocates claim based on a ton of historical data; it can produce richer companies buying back stock or declaring larger dividends, but seldom investing in people (new workers), plants or paying their employees more. (Why should they, if they are working nwo for much less??)

The President and his congressional supporters are stealing money from the Treasury, the same as if they walked into main building, at 1500 Pennsylvania Avenue, and pulled a gun on the first employee they see and demanded cash!

We and our progeny will pay for their lies and larceny.

Ron Haight said...

Thanks for another important point, Bill. People forget that fighting expropriation was a cornerstone of the American Revolution and goes back to the Magna Carta. The people behind the gse killing conspiracy are typical next quarter thinkers, not considering the long term consequences.

Bill Maloni said...

Thanks, Ron--

But, it's the rare Washington interest that thinks "long term."

I hope they will, but--if not--I hope you and I are around to witness their "day in the barrel."

Bill Maloni said...

Even Mark Zandi has xcomed out against this tax cut.

See his column from "Yahoo."

https://finance.yahoo.com/news/worst-time-deficit-financed-tax-cuts-134224626.html

What some people overlook, if the result is a squeeze on home prices is the "lost equity" those homeowners will feel when their properties are not worth what they were before the many proposed real estate (MID and SALT() tax changes.

If you ask most people their "net worth," they'll include liquid assets, other investments, and think what they can get from selling their houses over what they owe or paid. That current equity likely will go south, post tax bill.

Anonymous said...

Did President Trump "really" say that about electing a Liberal, or are you printing lies? If he did, send a reference and many will move over to your side. You are becoming very dishonest. You know very well who created the NWS and who's Treasury stole most of the money. But you print to deceive readers. Basically you are a lier. A liberal ideology that gets in the way of common sense. Shame, shame on you.

pink_slips said...

"If the Congress, trying to write legislation, or the WH considering some new regulation--does not figure out how to mollify GSE investors..." No need to fuss if they don't give me back my retirement, America won't be around that much longer without the rule of law. You guys got your bug out bags all ready?

Bill Maloni said...

Anon--OK, I shorthanded his position, but how do your analyze his comments?

So here's the situation in Alabama you have Moore versus Jones.

Six women who don't know one another have come out saying he tried to seduce/molest them or otherwise encourage sex when they all were teenagers, some as young as 14. His co-workers claim he hung out a shopping malls and places where teenage girls frequent.

Would you leave him alone with your sister, daughter, niece, or young sister??

Now, here's what the President--whose hands are not clean relative to being sexually aggressive with women--said about the race.


(Photo: Alex Brandon, AP)
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President Trump on Sunday doubled down on his insistence that a Democrat shouldn't win Alabama's Senate seat, once again appearing to back controversial Republican Roy Moore.

"The last thing we need in Alabama and the U.S. Senate is a Schumer/Pelosi puppet who is WEAK on Crime, WEAK on the Border, Bad for our Military and our great Vets, Bad for our 2nd Amendment, AND WANTS TO RAISES TAXES TO THE SKY," Trump tweeted. Doug "Jones would be a disaster!"

Now, where does that leave the Alabama voters (and you)?
Jones and ex-DA or Judge Moore who history has been challenged by several sources (the initial news stories had plenty of substantive backup support.)

Why do you think a half dozen or more GOP Senators--who would love another Alabama vote for their agenda--oppose Moore or sitting him if he wins?

Part of me wants him to prevail so the GOP can be saddled with his albatross-ass through the 2018 midterms.
There, he's likely to do more damage to the "GOP brand" than any D's. (And with the distinct possibility, he'll make some move on/comment to some of the winsome young ladies who are all over the Hill offices, although they could be too old for him, since many are in their 20's and older.)

Do Senators do that? Do birds fly?

Check your history book and see why Lyndon Johnson warned both his daughters never to be alone in any room with Strom Thurmond.

Bill Maloni said...

Pink Slips--I have mine.

It's printed in "Canadian" and I have two James Bond's belt, with gold coins in them.

And, at the last moment, before I slip over the border, I will swallow this bag of diamonds I've collected just for the occasion. Oh, and bring my Saiga semi-auto shotgun and my 8-shot .357 revolver..

Bill Maloni said...

Hey, my friend Anon--

I just saw this about another Trump loyalist who thinks Judge Moore is a scumbag.

https://www.huffingtonpost.com/entry/trump-advisor-roy-moore-loser_us_5a1be2dbe4b0649480755e15?ncid=inblnkushpmg00000009

Anonymous said...

Yea, yea, yea. To you Liberals everyone is a scumbag. Look what the Clintons have done to women. WTF. And now women are coming out of the woodwork against everyone who is anyone. Even so called Civil Right Icons. lol
If Moore is guilty, then prosecutors should do their job. But you know very well how DC works. No one goes to jail. Either side. Never.
My view is that Liberals control the airwaves and Hollywood. And what do they promote? Guns. Violence. Disrespect to women amo about every sin known to man. They take the podium to lecture the folks between NY and LA. What a joke.
I am glad I called you out on your dishonest statement. It's a typical liberal strategy.

Bill Maloni said...

But Anon, I like you man--

Do you really believe DJT, when he says now, that the Hollywood tape--for which he admiited was real and for which apologized during the campaign--is a "fake?"

He's opening up all the old issues he lost and why?

In your guts, you must feel that Moore is guilty and some/all of those women are being honest.

Is a nation where the President publicly demeans (himself) and his every imagined enemy, i.e. people who disagree with him and speak against his policies, what you want for your current/future family?

What will you get from individual small tax cuts, which are temporary, and corporate tax cuts which are permanent? (Cohn said that middle income $1,000 savings will help you buy a car or something equivalent. Do you think billionaire Gary C's in touch with your needs?

Did you see the story, last week, when Gary Coan asked a DC meeting of CEOs how many would reinvest their future tax cuts in the economy and berated them because so few raised their hands??

That's business world reality, man, not this hokum about using their new revenue to give their employees higher pay or invest in new plants.

You can dislike liberals but does that mean you have to accept all of DJT's BS and lies??

I hope you and your family have a healthy happy Christmas and new year.

Bill Maloni said...

Anon--Last thought on Moore.

Do you think anyone in Alabama--one of the more backward states in the union (if it is in the Union)--is going to convict this guy for beign one of the boys.

Nobody will move on this "religious leader," based on the testimony on a group of women??

Anonymous said...

Couple of points.
You continually sidestep the Clinton question where all the acceptance of bad behavior started. Own it. It's real. In a sad way, when Bill deviled the Office, lied in the camera and perjured himself that set a new standard of how others that woukd follow could openly lie without consequences.
As for DJT, it is what it is. The people are discussed with corrupt career politicians. They hired a strongman. A fighter. With "Hope for Change". lol
As for Trump lies, do you think that by you being dishonest somehow justified it? I have read all your stuff, for the GSE's but you have been dishonest more then once I can say.
My main point, you know very well that it was your Liberal controlled Administration that created the NWS but somehow in your blog you wanted to blame that on Trump.

Bill Maloni said...

Anon--Bill Clinton's sexual behavior was just as revolting as Moore's or Trump's (see DJT's rep in NYC tabloids and before and between his three marriages).

But Bill Clinton isn't our President.

Also, please--as I suggested last night--I may sometimes get hyperbolic, but I have my historical facts pretty down pat. The GSEs may represent your financial investment, but they were my professional life for more than 20 years.

The GSEs have been targeted for demise/destruction ever since Reagan's Administration (I was there with Fannie at the time) and it was R Treasury Secretary Hank Paulson who turned the 2008 financial debacle into the justification charade to put the GSEs into Conservatorship and strangle them.

Yes, the Obama people--who I never stopped criticizing and still do for those still spreading poison--helped. But without the GOP predicate, in 2008, I doubt it would have shaken out the way you believe. Look at how many of the 2008-offending banks/IBs still are alive and growing with no sanctions applied.

Please read Tim Howard's "The Mortgage Wars" and get a better insight into what you want to discuss. It's inexpensive on Amazon or just get a copy at your local library.