Wednesday, February 22, 2017

Don’t Despair; Hope for GSE Friends

Today’s rushed and out of sequence blog is dedicated to all of those anxious and unhappy F&F investors—which initially included yours truly—smacked in the chops by the Appeals Court decision and Judge Ginsburg's apparent chameleon routine, changing from an intellectually GSE friend to foe—if any jurist could be labeled as such based on his hearing comments and questions.

Apparently, Ginsburg stepped to the dark side and—as I joked with a notable conservative GSE critic—Fannie friends have video and audio of someone who looks like Ginsburg “seeking asylum at the AEI headquarters and later GMU’s Mercatus Center mumbling that he wanted to immigrate to Russia!”

No truth to the rumor Judge Ginsburg has retained Mike Flynn and Paul Manafort to manage his safe transit “over there.”

Today, why should pro GSE folks and allies feel at any optimism?

Reason #1

First, housing can't be ignored and driven by available and well-priced mortgage financing—especially when it’s inclusive of all eligible borrowers—powers something like 20% of our national GNP.

That’s still what Fannie and Freddie do and better than all others, no matter what the NAR/MBA think.

People still will want homes, but the process could be more efficient, cheaper, and timely if some of the systemic shackles were removed.

So, it’s crucial for the United States to have builders, Realtors, lenders, borrowers on the same page and pooling their efforts to satisfy the business and social needs of everyone in that homeownership chain. It also drives the carpentry, painting, roofing, electrical, home furnishings, landscaping, housing emoluments dependent industries which employ tons of Americans and tons more when times are flush. That spells JOBS.

The Trump Administration likely understands that it doesn’t have to do very much to activate that pent up housing demand also triggering the jobs it promised during the campaign.

Reviving Fannie Mae and Freddie Mac—which it has the executive authority to do—to quickly produce a “Wham, Bam, thank you President Trump and Secretary Mnuchin” financial and economic boost, that also would be a major nod for President DJT’s “forgotten people” if they take some wraps off the GSEs.

Reason #2

The Appeals Court decision was “&^%#@* up!” May sound like a loser’s lament, but you don’t have to be a lawyer to see it.

(Read Judge Brown’s minority views to see why the above statement is accurate.)

https://www.cadc.uscourts.gov/internet/opinions.nsf/66A4E1FEF4BB8401852580CE005620C3/$file/14-5243-1662090.pdf

It was if the two majority judges (Millet and Ginsburg) made up their minds that the GSEs were the “Devil” (see Maloni’s inside the beltway “GSE Shit Wall” beliefs), and then looked for arguments to support that.

As my friend and superb lawyer Gwenn Hibbs pointed out, this decision had far reaching implications beyond the GSES and should make any investor think about buying into any financial services company if federal financial regulators truly have the latitude Lamberth and the Appeals court gave them to injure shareholders and take actions without any judicial review.

Ironically, President Trump’s immigration travel bans gets initially rejected by federal courts, but the Treasury/FHFA can do whatever it wants to Fannie and Freddie without any judicial review suggested/screamed the Appeals Court yesterday.

I suspect plaintiffs will seek a Supreme Court review unless there is an agreement between the Administration and investors within the next few weeks.



Reason #3

The remaining court cases, including the major one in Judge Margaret Sweeney’s Court of Claims, plus a few lesser ones, now are clearly in the hands of Trump executives in Treasury and the Department of Justice.

Judge Sweeney is going to rule on the 2012 Treasury “sweep,” and she potentially also holds Fannie’s and Freddie’s future in her judicial hands.

There are 11,000 orphan documents in Sweeney’s court still are seeking a “Daddy.” Will those Papas be Jack Lew/Eric Holder or Steve Mnuchin/Jeff Sessions?

Again, if the Trump Administration wants to saddle itself with Obama errors and mistakes, all it has to do is emulate the BHO stance on these matters and stonewall and obstruct.
If it doesn’t, it should distinguish itself and do something different.

Reason #4


Obviously related—and while I don’t know exactly who is friends with whom or who owns what--but if all of the rumors about major GSE investors having ties to DJT, Steve Mnuchin, John Paulson, Gary Cohn, Carl Icahn, etc. are accurate, I would think that this Administration would try mightily to do well for the American people--and good for their friends--by carrying through on Mnuchin’s desire to get the GSEs out of the government and back into private control, capitalized appropriately.

The well-schooled on mortgage finance and securities issues Treasury Secretary Mnuchin says he wants to get the GSEs out of government management and into private ownership doing what they have done best---and, time for a commercial--arguably better than all the rest of the big banks and amalgamated Frankenstein parts their opponents would wish in the GSEs place.

Give the GSE stallion its lead Mr. President and ride it to economic, social, and political success.

Yippee Kiyay, Mr. President, ride that horse!!!

Maloni, 2-22-2017





Monday, February 20, 2017

Happy Presidents' Day 2017



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.”


Good/Bad News 4Q GSE Earnings

I told you they would be healthy and very good (but likely not impact the stock price—which swings to different music), with Freddie earning $4.8 Billion in 4Q16, more than the $2.2 Billion it earned a year ago in the same period. Freddie Mac will send $4.5 Billion of that to the Treasury’s General Fund (unless someone in the new Admin holds up that dividend scheduled for March). 

Here’s Freddie’s Thursday earnings release.

http://www.freddiemac.com/investors/er/pdf/2016er-4q16_release.pdf


Fannie, which announced numbers a day later, topped Freddie and will send $5.5 Billion to Treasury next month, with the same pregnant caveat noted above.

Here’s Fannie’s Friday earnings release.


But the healthy totals beg the question I posed in last week’s blog and now other people are raising, given Steve Mnuchin’s statements.

Money, money, money, money…MON-AY

The Trump Administration, too, will need revenue and the GSE’s contributions ($10 Billion this quarter!) could look very appetizing to their OMB numbers crunchers (as they did to Obama’s).

Secretary Mnuchin’s in-the-works plan to release Fannie and Freddie from government control and return them in some substantive way to market operations and private ownership involves a lot more than ending the current lawsuits Treasury faces and working on a possible settlement (which likely takes money from the Treasury’s General Fund, near term).

One huge way to justify fully operational GSEs--which some quant should be able to monetize--is to “socialize the costs” of a GSE resurrection to counterbalance those who will claim breathing life into the GSEs will cost the taxpayers.

Calculate what a significantly unleashed Fannie and Freddie could mean in mortgage system operational improvements; increased consumer mortgage activity; greater federal tax revenues for GSEs, lenders and market participants; major increases in industry related jobs, which greater GSE activity generates; and the benefits of establishing a safer, sounder and more equitable mortgage finance model. (See Urban Institute’s latest report on disappearing Black homeownership opportunities.)

Added to these financial bennies are the major political socio-economic gains for the “forgotten man” (Trump campaign phrase) who DJT campaigned saying he would help and on whom I believe the Obama Admin’s GSE antics turned its back.

Those ignored  folks generally won’t see their super market costs go down when DJT threatens to build the Wall or when he argues with the media or Congress over Washington leaks or Russian his contacts. But making it easier for this politically important demographic group to buy a first house or refinance their current house, positively, would hit home (pun intended).

(With the possibility that GSE related expense could diminish the Treasury’s General Fund, I guess it’s a good thing DJT is bringing onboard all of these additional “Generals.” Groan! Sorry, couldn’t pass it up.)


Documents, Documents Everywhere…


Now that the courts have ordered the federal government to make more documents available to GSE plaintiffs’ lawyers--and some showing some truly sketchy actions by Obama White House/Treasury officials--the cases against the government look stronger and stronger.

There are around 11,000 government documents which still could be revealed, but how many would be needed for the Trump Administration to see they want to stay far away from this reeking legal and political albatross?

Hopefully, it wouldn’t take this Treasury and this DoJ much time to realize matching any of the obfuscating Obama actions makes this case theirs.

I also hope the White House and Sweeney and Appeals Courts aren’t engaging in a legal/procedural “Alphonso and Gaston,” i.e. "you go first, no you go first” choreography.

*****************************************************************

Nit-picking, a few weeks ago, I offered up my personal perspective of how many senior government, congressional, and media officials, charged with knowing mortgage finance history and issues, just don’t, but continue to disregard facts or utter phrases they don't understand.

I was struck this past week, when Fed Chair Janet Yellen testified before Senate Banking Committee Chairman and its Chairman Mike Crapo (R-Idaho) kept claiming Fannie and Freddie were in “receivership.”

Uh, no Chairman Mike, “conservatorship,” is not “receivership.” There is a huge difference as you, a Brigham Young undergrad with a Harvard law degree, should know or your senior staff should have told you.

Yellen did Crapo a grand favor by ignoring his mistake, not correcting and embarrassing him.

Senator Crapo, here’s a reminder for you and your SBC staff.

Source: Value Plays, 2014 (An unattributed quote, the author of which I would like to give credit but can’t since I don’t know she or he!) discussing the difference between receivership and conservatorship.

The (Congress) absolutely could have put the Fannie Mae / Federal National Mortgage Association Fannie Me (OTCBB: FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB: FMCC)’s into receivership and liquidated them. They could have done it. The problem is they DIDN’T do it. They put them into conservatorship and by doing so by law have an obligation “to preserve the value of the assets for stakeholders”. What they then did with the 3rd Amendment is to begin to perform a de facto receivership on Fannie Mae and Freddie Mac’s by slowly liquidating them by transferring their wealth to the Treasury. That is a “no-no”.
Receivership and Conservatorship are two VERY different things. There are very different requirements of the Conservator and the Receiver. A receiver receives the assets to dispose of them, the conservator becomes a steward of the assets to preserve them. The two are not remotely related. What the gov’t did with the 3rd Amendment is turn a conservatorship into a receivership. They do not have the right to do that. THAT is that these lawsuits are about.
*********************************************************************************
Mark Calabria (memories, memories)
Some GSE-fan expressed concern when VP Mike Pence named CATO denizen Mark Calabria’s his new economist.

I won’t pretend to know what Calabria’s latest GSE views are, but some of you might remember this useful paper (available on the always reliable “GSE links”) that he co-authored two years ago.


Humbling (but great)  GSE news

Tim Howard told me he received 10,000 blog hits last week.

******************************************************************

The POTUS, Flynn, Etc.

What I don’t understand is why the President waited two and a half weeks to fire Mike Flynn (I mean ask for his resignation), when DJT knew Flynn had talked with the Russians on matters that weren’t Flynn’s responsibility.

To me, that is the major Flynn issue, with lying and changing his story to VP Pence and others, a secondary violation.

But, could Flynn—at DJT’s request-- have been talking to the Russians months ago, possibly discussing removal of the US economic sanctions in return for Putin’s help defeating Hillary Clinton?

Man, if I was Chairman of the House Oversight CommitteeJason Chaffetz (R-Utah), I would be all over that one like flies on Russian stink, like an alky on booze, a stallion on mares, or as he was on HRC on Benghazi!  

You get the picture.





I’ll yell, again, “Republicans in Congress, it’s the Russians.” Wake up, these are the guys--with cause-- you’ve hated for most of the past 70 years”

Their government’s intent hasn’t changed much.

When will it click with the GOP congressional leadership and rank and file?  Do all of your constituents trust the Russians and believe they only have goodwill in their hearts for their new orange-haired American friend in the White House?

So, what are you going to do about it?

This isn’t a new partisan theme for me, I badgered President Obama, John Kerry, and other Democrats about it often.

Russian leaders have no interest in US success, its citizens, or its welfare, except what they can literally steal from it, squeeze out of it through their criminal behavior, or deliver pain and disruption to our national and international aspirations—and, to be very fair, all of that was Russian SOP long before Donald Trump was elected President last November.

So now Putin sends a spy ship to the waters off Connecticut, deploys a new land based cruise missile likely in a treaty violation, welcomes an Iranian General to Moscow—on whose hands we say there is “US military blood”—and whose visits there are forbidden by UN sanctions, and Russia continues to harass and dangerously buzz our airplanes and ships.

How will our new President—who chided Barack Obama over being too lenient/weak with our nation’s enemies—treat these Russian provocations??

If the President does nothing, he adds to the rumors that the Russians have damning (“blackmailing”?) material on Trump, Flynn and “others” in the Trump White House and inner circle.

(http://www.cnn.com/2017/02/10/politics/russia-dossier-update/?iid=ob_homepage_deskrecommended_pool)

Please don’t snicker and discount the old spy craft meme, “We have dirty pictures of you,” which Russian operatives regular used to blackmail visiting US diplomats, corporate executives or their employees, tourists, and western media methodically and premeditatedly caught by Russian security services on camera dallying with their Russian-supplied lovers.

The practice is called a “honey pot” trap.


What is Putin Holding Over Whom??

I think Putin and his thugs believe, they now have White House “hollow man,” who they can buy off with lies, intimidating threats, and possibly sugar, i.e.  green light emoluments for Trump Inc. investments in Mother Russia hotels, golf courses, ski resorts, etc. (“Quick, send Donny Jr. and/or Eric scampering to Russia, with a full Secret Service contingent, again, to conduct family business and spend taxpayers’ dollars, as Eric did recently in Uruguay!”)

That’s one Putin/Russian Mother I wish this Congress/White House would plow under and bury!!

To support President Trump, as well as the United States, I urge President Trump to give a speech in which he communicates with the American public/voters explaining what his presidential Russian aspirations are and how he hopes to achieve them.

That might clarify and mute some of the ugly things happening around him and being suggested about him and his Administration.

Please, just trust the American people, Mr. President, and share.

**********************************************
Please read Frida Ghitis….

…and Maureen Dowd




Maloni, 2-20-2017

Monday, February 13, 2017

Trump Admin: Look out, here come the Judge(s)



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.”




Some GSE Cats and Dogs, a Little DJT


--As predicted, more anti-GSE types are finding themselves in second tier policy positions and--at some point—that negatively could impact Trump GSE decisions. Unless, Steve Mnuchin—up for Senate approval this week (today?) as Treasury Secretary—puts his strong stamp on the Fannie/Freddie issue, with the President’s backing, and suggests all of the wannabes stay far away from his turf.

That won’t stop all GSE policy envy, but will force the amateurs and marginal players to the sidelines.

Most pro-GSE folks feel positive, if not euphoric, over recent events. But, as I’ve noted, don’t discount the bad guys, because there remains lots of them inside the Beltway, plus the majority of media.

When past troublemakers gather—now with new Admin titles and portfolios--it’s inevitable that they will try to galvanize and push some mischief, unless promptly spanked.

Some of these mini-chefs will want to add ingredients to Mnuchin’s GSE soup.

CATO’s Mark Calabria—who was a committee staffer for former Senator Phil Gramm (R-Texas) and current Senator Dick Shelby (R-Ala.), neither of whom were GSE friends when they were Senate Banking Committee chairmen--now will be VP Mike Pence’s chief economist.

Yes, Calabria has some GSE views but if they are contrary to Mnuchin’s, I expect the Treasury Secretary will prevail—but one never should say never, especially with the current Admin changing priorities, i.e. one China, two Chinas;  Japan the enemy, Abe the golf partner; Mexico will pay, US taxpayers now will pay for the “Wall.”

******************************************************************

--It’s all good news that attorney Chuck Cooper’s chose not to join the new Administration as Solicitor General but remain in his law firm, where he has been a major tour de force, supreme intellect, and comprehensive voice representing GSE plaintiffs.

Had he taken that post, he would have had to recuse himself from any future cases involving the GSEs, but more significantly, the GSEs would have lost his experience, style and brains.

Also on the plus side, Cooper has some major Admin friends and his opinions will matter in some quarters.

******************************************************************

--GSE earnings this week (Fannie on Friday, but Freddie will follow quickly, if they don’t precede by a day) will produce more green stuff for the taxpayers and the Treasury’s General Fund.

Those positive numbers shouldn’t but might give a kick to the current upward trending stock prices, but Fannie’s and Freddie’s revenue capacity never has been an issue (except for some Obama Admin distortions). 

But investors and would-be investors should understand only WH/Treasury actions ending the “sweep” and freeing the GSEs from strict government control will signal a return the equitable, efficient mortgage finance machines all Americans need and deserve.

I won’t/can’t make earnings estimates, Tim Howard is better than me on that stuff, but it will be enough, unfortunately, to make some DJT people realize that they still will need money because their current plans—at least until they succeed in putting together a real set of trade policies and the crucial tax reform plan—will mean the dreaded deficit spending.

That same principle, albeit in reverse but not in effect, will apply to any financial settlement reached with GSE lawsuit plaintiffs. Previous dividends sent to Treasury/taxpayers will need to be sent from the General Fund to plaintiffs. Unless negotiators get super creative.

****************************************************************

You’ll know it when you see it and I won’t plug it, except to say, there soon will be a new GSE book out, written by a former Freddie Mac official—who I never met or heard about in her reported Freddie 20 years, and never heard her name in connection with shaping and Freddie policies, when I worked closely with so many Freddie execs from Leland Brendsel on down—but it already has attracted Right Wing praise.

It’s not surprising since, apparently, the author buys into the Pinto-Wallison view of GSE mortgage purchase, which claims Fannie’s 1990 books of business were 10 years’ worth of “subprime purchases,” but—unfortunately for them and blowing large holes in their tall tale—those excellent and non-subprime loans had credit loss rates of less than 4 basis points.

As David Fiderer would observe, “The Big Lie” continues.

******************************************************************

With all of the banker driven Dodd-Frank drivel, my observation is the only two features that have clicked are the Consumer Finance Protection Bureau (CFPB) and higher bank capital levels.  Effectiveness of the Volcker Rule, prohibiting inside dealing, has been spotty. Notice—despite all their bitching--banks still have made huge earnings over the past 10 years (while still paying massive fines for aberrant financial behavior, i.e. somewhere north of $150 Billion).

IMO, Everything else D-F has been nada, which is the result of bank lobbying the original legislation, later the regs, and quiescent federal financial regulators, who husband their regulated institutions. (Ironically, the only one that doesn’t foster the financial institutions it oversees is the FHFA.)


Some DJT Thoughts

Get over it. He’s our President for at least the next four years.

---The good news bad news about his constant tweets is, at least, we all know with his demeaning shout outs what he thinks that day (and who he is targeting).

Part of me doesn’t want him to stop because—absent normal filters—Donald Trump’s tweets are a transparent, an open window to his mindset.

Also, if he continues shotgun targeting so many individuals, groups, political interests, and institutions, he just might undercut his own support (think congressional allies) and not be able to carrying out some of his more bizarre agenda elements.

The POTUS may be energizing more Americans to get civically active and communicate with their Senators and Congressmen, as well as the media.

However, if I was advising him--on the theory that he won’t stop tweeting--I would urge him to record his “tweets” and then have Reince Priebus, Ivanka Trump, or Eric Kushner, rewrite the POTUS’s ideas and let DJT tweet them a day or two later.

******************************************************************

---I can understand why some Americans might get their fill of Massachusetts Senator Elizabeth Warren (D-Mass.), but I would urge DJT to stop demeaning her with the derogatory “Pocahontas” label, no matter what the history of it and his angle.

If you want respect you should give respect.

It‘s beneath a President to engage in that silly slander and it’s unlikely to earn him or his GOP colleagues--virtually all of whom will run, again, in two or four years--support from hostile female voters.

******************************************************************

--I want Secretary of Education, Betsy DeVos to visit as many public schools as she can. They all are not wastelands filled with slow or no-learning kids.

The more of those she sees and understands, hopefully, the better her judgment.

******************************************************************

---It’s tough to discern, but I hope President Trump gets smarter, faster about Russian motives, intent, and leadership. (He might also see Mike Flynn is over his head, likely panicked and lied to VP Pence and Steve Bannon—for now--is channeling Machiavelli, Catherine de Medici, Rasputin, and Joey Goebbels.)


Maloni, 2-13-2017

Monday, February 6, 2017

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.”



GSEs; Leaving DJT Alone for a Bit


Interesting past week for Fannie and Freddie and enough bizarre Trump events, comments, and actions that I’m largely leaving them alone, because I am certain each day/week will bring more examples of non-traditional and roguish behavior*. (See footnote at the blog’s end). Oh, and thank you federal judges.

Total odd lot: Part of me doesn’t think Trump press secretary Sean Spicer will last very long in his job. He needs a whole new wardrobe—and works for a President for whom clothes seen very important—SS doesn’t seem confident and his several faux pas probably suggest an early exist. Just saying’.

In case you missed Melissa McCarthy’s SNL Spicer send up.


Not quite as impactful for the world but very much worth discussing was the evolving GSE tableau, both in the political world, in the courts, and with the improved stock market performances on both F&F preferred and common.

Mandamus

Clearly, the legal highlight was the segmented impact of the Court of Appeals’ mandamus decision—largely, but not totally--rejecting the government’s legal maneuvering and affirming Judge Margaret Sweeney’s demand the federal government turn over 60 or so documents, heretofore withheld from plaintiffs’ counsel by the White House and Treasury Departments. The court said the federal government still can keep 8 docs shrouded.

This paves the way for those same plaintiffs’ counsel to see some @11,000 related documents also withheld by the Obama Administration, but now the purview of the Trump Treasury and Department of Justice.

As I—and others-- have said and written, few if any of those materials hold sensitive GSE business data, but certainly contain lots of embarrassing political information, if not records of outright law breaking.

One fact—(I notice weird things!)--in the still secreted items was the name “Michael Stegman” on many of those documents, suggesting to me that he was in the middle of much of that Obama skullduggery.

For those needing good GSE fantasy material—it all could come true (or not!)—read Wayne Olsen in Seeking Alpha.

http://seekingalpha.com/article/4042570-exiting-nationalization-ramp-roadmap-ending-expropriation-gse-equity-investors


The Mortgage Bankers Association

At the beginning of last week, the MBA—known also to some as the Corker-Warner industry support group, especially when it drags along the National Association of Realtors and the National Association of Homebuilders (which were not part of this exercise)--must have seen its shadow or the handwriting on the wall and disgorged its “new” plan for mortgage reform.

The new MBA plan to bollox the GSEs should not be confused with any number of similar previous efforts or political positions.

But, IMO, the folks at the MBA haven’t been honest brokers about the trade group’s—as opposed to the bulk of their individual members, IMO—views of the current GSEs moving forward as private owned entities and their new Task Force scheme reflects that.


I’ll try and keep my indictment to simple concepts.


Mortgage bankers—which just are mortgage “companies,” even those owned by a parent bank—need to sell every loan they originate to somebody, which is why Fannie and Freddie as a constant buyer/securitizer facilitate their sole business raison d’etre. 

I have no idea what the DJT Administration and Steve Mnuchin, the likely Treasury Secretary, have in mind when they talk about freeing the GSEs and letting Fannie and Freddie do much of what they’ve always done.

But, it should be a refreshing hope for the nation’s mortgage industry which for eight long years has been under the thumb of the Treasury and the Federal Housing Finance Agency (FHFA, the GSE regulator.

Nobody I’ve heard/read is talking about cloning pre-2008 or even 2004 F&F without making structural/operational changes. But the MBA insists—as it did when Obama still was in office— the Congress must be involved in any future plans.

Why? No surprise, it’s all about the money!

The MBA hopes Congress will throw enough legislative/ political sand in the GSE gears that certain big MBA lenders won’t have to face the efficiency and competition the GSEs produced in their pre-2005 halcyon days.

As I wrote in a comment last week, the MBA insisting the Hill shape future mortgage market plans is like General Custer demanding more Sioux meet him at the Little Big Horn.


Despite the MBA’s flowery language about prior congressional approval, keeping the GSEs, and/or producing multiple credit guarantors, don’t buy it.

The MBA hopes Congress will blow up any new Treasury plans permitting the GSEs to control conventional loan underwriting standards and stop PLS or harmful mortgage products from entering the nation’s conventional secondary mortgage market.

I believe that puts it in conflict with the majority of its members and certainly would-be American home buying consumers.

(For those wishing a less-belligerent analysis of the MBA proposals, see Tim Howard’s blog and the Jan. 31 MBA proposal answer he provides.)

Don’t worry, we’ll hear more from the MBA (and, personally, I am very happy to learn MBA’s President and CEO, David Stevens, is on the positive road back from major medical issues).

Mnuchin Approval

The Senate Finance Committee last week approved Steve Mnuchin nomination to be Secretary of Treasury, on a “party line vote.” His floor vote comes next.

In the past, when that phrase was used, it always meant the all in the prevailing majority party voted one way and the minority party another. In this case, the Senate Democrats didn’t even show up to vote, showing a combination of opposition, disdain for the process and the candidate.

Expect more of this guerilla political theater as the minority Democrats get used to the Trump Administration and its actions.

But with a scant three vote GOP margin, the President and Senate Majority Leader Mitch McConnell (R-Ky.) can’t afford too much running roughshod, unless they first overturn 200 plus years of time-honored Senate rules on what constitutes a majority.

CEA Comments

Gary Cohn, President Trump’s head of the Council of Economic Advisors (CEA), spoke about changes the DJT Admin hopes to make in financial services, i.e. wiping out parts of the “dreaded,” but largely toothless Dodd-Frank legislation, and noting that Steve Mnuchin has been working on GSE idea which he prioritizes and the White House hopes to implement quickly.

Again, I have no idea what those plans are but one thing I do admire is Mnuchin oft times repeated comfort with GSEs, securities, and mortgage finance issues, based on his 30 years of business experience. He’s telling people that he “knows his onions”—which is so refreshing.

Unless, you’ve been up close and witnessed it with your own eyes, ears, and brains—as I have--most Americans would be shocked at the number of people in positions of GSE policy and power, who know “squadoosh” or “bubkis” about their areas of responsibility.

That personal observation cuts across partisan, agency, WH, congressional, and media lines.

GSE Bad Guys

I wouldn’t be me if I didn’t identify some ongoing, personal concerns.

The traditional GSE bad guys, MBA notwithstanding, have been very quiet in the face of six weeks of Mnuchin/Cohn news stories, as if they are waiting to pounce and have plans to do so.

Once again, I could be wrong, but I doubt it. With court cases still to be decided (Lamberth Appeals Court, Delaware, and more from Judge Sweeney), Trump control of DoJ and Treasury, and a possible Administration effort—in some form--to revive Fannie and Freddie, it behooves GSE supporters to stay ready to oppose the inevitable outcry which positive GSE developments produce.


Maloni, 2-6-2017

*I am not ceasing critical Trump policy/personal comments, just trying to deliver less DJT outrage, which easily can be found in superior media and blogs, and offering more GSE stuff today.