Sunday, January 21, 2018

"Oh Stormy, oh Stormy, bring back our sunny days.....!"

Are there positive GSE times afoot??
Not sure, I’ll believe that when I see it

Mel Watt, Director of the Federal Housing Finance Agency (FHFA), the GSEs titular regulator (although most of the real power/direction/clout comes from the US Treasury) sent a dramatic letter to the Senate Banking Committee last Wednesday, endorsing a set of GSE reforms that sound very close to the Moellis (pronounced “MOLE-us”) plan and which—as the GSE scuttlebutt goes—will be reflected in the February debut of Corker-Warner 2.0 GSE legislation.

(Admin Bullshit alert!)

But, in the stop, go, red light, green light, confusing DC GSE world—when investors were hoping to hear a stunning full throated endorsement of Watt’s letter suggesting some collaboration--Treasury’s Craig Phillips spoke to Thursday to DC’s ‘Women in Housing Finance, generally endorsed some of Watt’s (surprising) recommendations, then added the standard gag producing convention, “But we want the Congress to pass meaningful reform, blah, blah, blah.”

For GSE supporters, Phillips really didn’t walk the walk and may not have even talked the talk.

Phillips absence of certainty, F&F praise, and other caveats were music to DC’s anti-GSE ears.

Those folks have no appreciation for Fannie and Freddie operations, their history, their post-Conservatorship success and current productivity (the two of them, handcuffed by the federal overseers, still are holding up the US mortgage market, which relies on the GSE underwriting standards to fend off big bank mortgage aberrance).

Few, if any,  Fannie/Freddie positives come from the Hill R’s, just the pols unexplained lust to screw over the GSEs and give the nation’s big banks even more power over mortgage markets and consumers.

Shortly after Phillips spoke, “Hill sources” (read behemoth banks and their sycophants) began dampening any hope over Watt’s letter and spinning “future Senate bills will put Fannie and Freddie in “receivership” and went medieval on the GSEs in a dozen different ways (but did not spank them with a Forbes Magazine”).

It’s times like this when I wish I could ask each Senate Banking Committee member exactly what it is about the GSEs they dislike (knowing that most of their concerns are folly and easily rebutted) and why they think anything they can conjure legislatively—once they put Uncle Sam on the hook for financial losses, as most of the new proposals do—is a dramatic, watershed improvement over exactly what Fannie and Freddie provide the nation now cheaper and more efficiently than the big banks??

(No fair using logic and rationality, Maloni!)

When you consider any federal legislation—especially one with lots of moving parts that massively uproots US mortgage markets--you have to crank in the inevitable drafting and implementation screw ups; the predictable greed as the financial buzzards seek parts of the GSE carcasses; the new rules, new players, chaos and uncertainty with anything Washington touches; plus giving the big banks even more market control—which they don’t merit or deserve—you wonder how thoughtful people can do that to a $10 Trillion market tranche of our economy?

The answer is most are not thoughtful or knowledgeable.

(In case anyone missed it the Fed has named a new financial regulatory czar to do away with all of those banks and regulations governing the banking world that it believes produce too much caution and consumer concerns.)

I also have to remind those who believe that thrusting the GSEs into “receivership” is the answer, ignore the fact that Administrations and Treasury Secretaries change, along with their policies.

If this GOP crew in both congressional chambers and the White House believe investors will flock to whatever their new mortgage guarantors are that replace Fannie and Freddie, the precedent of Trump stealing the capital and assets of the GSEs will dampen that enthusiasm if not scare the money guys far away.

I continue to believe this mid-term election year, when with all of the other craziness which can be put at the feet of President Trump and his Administration, is not the ideal time to try and euthanize the GSEs—especially when there is a $100 Billion in GSE warrant monetization or more there for Treasury’s taking if it chooses to keep the GSEs alive, even as privately owned utilities.

One last comment is that I don’t think Secretary Mnuchin knows what GSE things he wants to do or endorse, beyond the “happy talk” about working with the Hill.

If the Hill fails to enact legislation—as I suspect it will—then it’s up to him to do something or just further kick this mortgage can down the road.

Trump the SPP?

Even before the Stormy Daniels affair broke into the news, big time, at midweek, I was thinking how much Donald Trump’s presidential actions remind me of the celebrated “Swedish Penis Pump” (SPP).

Let’s see how far I can take my analogy?

Like the SPP, when confronted with opportunity, the agitated POTUS demands attention, gets red-faced, inflates himself above normal size, girds for a vigorous assault on whatever is in front of him, and then retires only to repeat the same operation the next time he is challenged.

(Note, none of this is a comment on DJT’s virility, hand size, or use of an SPP, just comparison of the SPP’s operational activation and Trump’s dealing with personal criticisms or perceived ego threats.)

I am sure you’ll tell me how close my comparison is or where I am off?

The Maloni Idea

Thanks to several of you who reached out to laud my suggestion of –someone—reviving the old report which Fannie Mae used to publish quarterly showing all of the mortgage finance activity (since and multifamily) in every congressional district and state in the nation.

I argued it would help Congress understand better what the GSEs do and see firsthand how much mortgage finance business they do “back home,” which is the piece of the nation all Senators and Member of Congress care about first.

The good news is that efforts have been made to find and implement the information—which can’t be done as easily or frequently as Fannie once did—but it can be done.

Stormy Daniels

OK, I know few of "the Donald's" tweet buddies will believe the a story, which first broke big in the Wall Street Journal, that 10 years ago, “Stormy Daniels”—an adult film star-- had a brief affair with Donald Trump (am I the only one who thinks Stormy looks “mannish”?) just months after Melania Trump, his third wife, gave birth to their son Barron?

Or maybe, they just won't care, remembering Candidate's Trump boast that he could shoot someone in the middle of New York City and not be blamed.

The WSJ story continues that one of Trump’s regular fix-it lawyers made a $130,000 payment to Ms. Daniels just a month before the 2016 presidential election to keep Stormy from going public with the sordid matter and possibly costing DJT the election.

Trump's self-admitted horniness and wanton pursuit of women—which he displayed during his adult life and which he bragged about before he decided to seek office-- is so Donald, including using his personal lawyer to hush the embarrassment (an MO he’s used all of his professional career) and then to deny everything that the Journal and now other media are writing (don’t miss the Forbes magazine spanking session).

(Publish the Steele dossier, publish the Stele dossier.)

I wonder what Melania thinks of her husband’s proclivities, but of course Sarah “Biscuit” Sanders told us that DJT never said, “Grab them by the P----!”

Oh, "Biscuit" also said Trump didn’t say “Shit Hole countries.” And, if you don’t believe her, ask Senators Tom Cotton (R-Ark.) and David Perdue (R-Ga.).

The GOP—hoping to ignore that it controls all three government units (not to mention the courts)--can try to call this weekend’s federal government shutdown whatever it wants, but the “Spanking Stormy Shutdown” has a nice ring to me because of the timing coincidence.

Our POTUS; the man who would be King

Lots of one year reviews of President Trump first 12 months in office. I won’t try to do that, but I will ask—for the doubters out there—can you remember any 12 month period in our history—save when we were involved in world wars--when living in the United States has featured more hostile, chaotic, unnerving, wracked by more presidential attacks on US institutions (FBI, CIA, science, race relations, immigration, his own political party etc. etc.) as well overseas friends and allies?

It seems clear to me—from his autocratic complaints—about our legal system, Congress, cultural and civic history, DJT would like to change so very much and laments his criticism doesn’t make it so. He seeks the power of kings or emperors and can't understand why its not his.

He generates quarrels and rows, perpetuates them, and then walks away looking for others to blame. I am sure he will be a Tweet-machine during the “shutdown,” scapegoating, and raising specious issues to hide his own "negotiating with jello" responsibility.

You cannot separate President Donald Trump from any malaise associated with these matters, plus dozens of others. Did I mention Healthcare, Russia, North Korea, genial comments about Neo-Nazis, racial/ethnic putdowns, and policy by tweets??

No, Trump is not a good politician, not well read, with little understanding of our country’s Constitution, history, and—apparently—not an effective political deal maker, no matter how much he praises himself.

He has fostered an unhealthy situation and as a nation we will suffer from his obstreperous nature and efforts to tear away any vestige of his immediate predecessor...

I believe our best hope is to vote out as many of Trump’s congressional acolytes as we can and hope we can halt some of the more destructive actions when he and his congressional pose soon try and destroy our Social Security, Medicare and other people programs—in the name of federal savings--to pay for his tax giveaways and infrastructure and military deficit spending.

Maloni, 1-21-2018

Thursday, January 11, 2018

I have an idea; it’s an old one, but a good one……..


GSE Relief: 
Could reviving this prohibited report get F & F some love, making them more desired, supported on the Hill??

"Congress needs reasons to want to keep Fannie Mae and Freddie Mac around and working…"

Fannie and Freddie always are on my mind.

Regularly, I consider schemes to reduce the height and depth of what I call the “DC GSE shit wall (SW),” the virulent sustained opposition which allows their commercial and ideological enemies to keep the GSEs in government bondage while perpetuating lies which allow many in Congress, when asked, to hide and/or deflect and prattle, “But, didn’t Fannie and Freddie… (fill in your favorite F&F mortgage history accusation or other fabricated  business sin).”


Major Aside: No federal office holder in the category above is more egregious than Sen. Bob Corker (R-Tenn.), the stock market playing, Wheeling and dealing former Chattanooga Mayor—who, as a presumably working US Senator, reportedly made numerous equity trades per day—and somehow (with the help of his friends, many of which had business before his Senate Banking Committee) went from “bigly” in debt to having net worth touching $100 Million (or more)??

Corker and his wingman Sen. Mark Warner regularly talk GSE crap and few people push back with any intensity and challenge their dismissive Fannie and Freddie perspective.

Hopefully and literally, Corker’s day in court should be coming. If he savaged the GSEs for personal financial reward—as some sources claim--he should face a special kind of Hell, as should anyone else in Congress who did the same. 

Back to my plans dispersing myopic GSE fog from DC.

F&F congressional doubt and opposition wasn’t always the way and--while it won’t be easy to dismantle that “GSE SW”—I think it is possible to plant the seeds to reverse some of the current misdirected hysteria.

Long ago, with a creative and spirited effort, Fannie Mae helped produce just the opposite, a first rate company reputation inside DC and on Capitol Hill. 

Most in Congress didn’t then—and don’t today--understand mortgages or care about Fannie and Freddie.

When they do display anything--because of the SW-- it’s more a smite and burn mindset. Most Hill types can’t give you a good explanation for their opinion, but they’ll give you a reason, something like….”But they’re Fannie and Freddie!”

However when I F&F dream, it’s about what possibly can become  GSE-ameliorating, rejuvenating, or even restorative, since a top end GSE cheer leading campaign--conducted by the Treasury with the support of this White House--likely won’t happen?

What would it take to start a congressional enlightenment? 

Pointed but simple education

As former Fannie Mae CEOs used to remind us, “With Fannie’s federal business charter and behind the scenes function, we need to give Congress both reasons to support us and want Fannie Mae (and Freddie Mac) around.”

With my GSE magic wand, I would return to those days when the GSEs would supply every Member of Congress and Senator with a simple schematic of how the primary and secondary mortgage markets work, and the respective roles played by borrowers, lenders, the GSEs, and mortgage investors. 

The statement also would report exclusively on the one piece of US geography every Senator and Member cares about—no matter their political persuasion--GSE business activity in their state or congressional district, i.e. delivering the goods or the bacon (in reality mortgage loans).

Give everyone in Congress an easy to read and understand graphically pleasing report showing in simple terms how much and what kind of mortgage business the GSEs are doing in their states and congressional districts.

Why go through all of these informational hoops?

As noted, Congress needs a selfish, parochial reason to want to keep the GSEs around and this self-explanatory information could be just that. 

It would show these Hill “jamokes” (Steve Bannon word?) just how much business the GSEs do “back home” and how their voters—not just home buyers--rely on Fannie and Freddie for mortgage finance help.

Most can’t see any evidence of Fannie o Freddie as part of their own congressional fabric, but it exists and in volume.

Admittedly when Fannie did this 15 years ago, they had larger portfolios and more loans ($$$) to display, but their combined $5 Trillion, today, in (largely) mortgage backed securities still gives them some market heft to display.

Fannie and Freddie don’t have far flung offices and employees in every state to pitch politicians on their value and good company citizenship. The GSEs are “wholesalers”—with mortgage lenders not individuals for customers--but their underwriting rules impact retail (primary market) lending and American consumers. 

The GSEs are obscure 

They have weird jokey nicknames and few people—even some in the business—know exactly how they operate, yet even with their federal handcuffs the GSEs still finance half or more of all the nation’s conventional mortgage loans (those not otherwise insured or guaranteed by the federal government) and therefore provide mortgage credit to families in every single congressional district or state. 

I think the resurrection of that regular business report would provide a local context regarding the GSEs value back home. It would allow elected public officials (federal, local and state) to see in their backyards where GSE financing occurs and how voluminous it is.

A little cognitive extrapolation, which GSE allies can provide and deliver since the GSEs can’t, would allow those community stakeholders to grasp firsthand how much Fannie and Freddie’s active financing means to their constituents, local lenders, Realtors, builders, and constituents whose jobs rely on the GSEs which finance half the conventional loans in the nation.

That GSE business activity suggests a lot of Fannie-Freddie driven local money and a lots of related jobs which most people never comprehend when thinking “Fannie and Freddie.”

Sounds small, but—trust me—I believe it’s a major first step in allowing politicians to see the GSEs in a different and more positive light ( probably that’s why Treasury/FHFA bans it).  

Obstacles to/for the “Maloni plan”

It's verboten!

FHFA/Treasury won’t let the GSEs share their information in that manner, because they claim it’s “lobbying,” which was banned in the 2008 Conservatorship action.

To this non-lawyer, depending on the day of the week or the institutional federal mood swings, some in government/on the Hill contend the GSEs are part of the federal establishment or they are not.

If they are, isn’t their business information owned by the taxpayers and don’t they and their elected congressional representatives have a right to see it???

Or maybe, getting it requires a Freedom of Information Act lawsuit to make available what Fannie Mae, in my era, once published every 90 days to allow people and policy makers to see/understand what the GSEs were producing “back home.”

Exactly what is the harm in that, what damage could it cause except to big bank marketing campaigns?

Whatever it takes, I think it would be the single most effective tool—short of the Treasury and the WH becoming major GSE advocates (ain’t gonna happen)—to clear the air of the many untruths that their opponents have used to turn Congress against Fannie and Freddie.

Let me repeat, the Congress needs a reason to support the GSEs and want to keep Fannie and Freddie around producing fair and consistent mortgage financing for American consumers (and also stiff-arming the big US banks and their allies).

That type of report represents a major first step in giving people who don’t know or understand the GSEs a reason to do both.

Accurate GSE information is very scary for their detractors

A renewal of the former practice—whether by their allies going to court to make it permissible-- would do more to help generally uninformed Senators and Members learn not only what the GSEs do, but what could/would be lost ”back home,” if they vote for the commercial euthanasia being plotted by Corker-Warner and their fellow travelers.

With that foundation of information, constituents and others could query their Senators and Congressmen/women, I then would ask them, “What is it you most fear with perpetuating Fannie and Freddie as shareholder owned entities (even in utility form)?”

The congressional inquisitors could point them to current GSE regulation—which is excessive-- but prohibits the GSEs from ever trafficking in subprime mortgage loans, a major source of the real estate mess 9 years ago.

(I would encourage these asking the question not to smirk when so many of them and their assistants admit, “I didn’t know that?”)

And, “yes,” dear reader, it is “all about the money” as well as who/what controls the secondary mortgage market, since the primary mortgage market already is largely bank-dominated.

Having solved that problem—in my next blog--I would then turn to that Trump dude so accurately and honestly profiled in Michael Wolff’s Fire and Fury?

Maloni, 1-11-2018

Go Steelers 

(I want one more Super Bowl win before I
go to the big mortgage trading desk in the sky.)

Friday, January 5, 2018

Get ready to r-u-m-b-l-e in 2018!!

GSE Outlook: cloudy, foggy, with rain, sun, or …!!

Staring at the entrails of this old GSE carcass, I am confused/bewildered as ever.

Fannie and Freddie may record $20 Billion (speculation this week from Inside Mortgage Finance, quoting a Keefe, Bruyette, Woods report) in annual revenue in 2018, minus whatever the tax changes wreak on them, but will be hassled by the usual suspects.

I have very smart friends, better GSE connected than I, who believe there is no way Congress--meaning Senators successfully can/will move against the GSEs legislatively.

My friends don’t believe the votes are there. 

Indeed, with Roy Moore (D-Ala) the GOP Senate chamber margin becomes tighter and doesn’t allow the R's too much room to turn the real estate mortgage market upside down, with any of the several schemes to put the big banks in control of the both the primary mortgage market as well as the secondary mortgage market, where the GSEs now hold rein.

As long as the GSEs secondary market underwriting rules govern what the big guys and their mortgage banking allies might want to introduce into the market, Fannie and Freddie can continue to frustrate that bank desire to “control.” One would think those lenders just would be happy making all that money, but that’s not how banks think!  More, I want more, give me more, gobble, snuff, and grunt!

As I wrote ending last year,  Senators Bob Corker (R-Tenn.) and Mark Warner (D-Va.) still will push their legislation to neuter the GSEs, keeping them alive as buttresses for the blood ghoul “new mortgage Guarantors” the two would create.

The C-W legislation also would add new federal bank guarantees for their Wall Street Frankensteins, which the TBTF  financial services industry giants and their ilk don’t  need but all want.

In spite of my friends’ assurances, I remain skeptical because the GSE opponents are working so hard and have major resources.

The bank advocates will continue to drive the false meme the GSEs were failures, have a bad business model, can’t raise their own capital, or work successfully on behalf of the American people.

All falsehoods and dishonesty, but standard fare for this cabal.

Actually, to aid my readers--and the public--I should distill the bank fiction into the (understandable) 2018 Bank GSE Political Reality Pledge (BGPRP), i.e. pronounced BigPerp.

“Because of their history, success, positioning and consumer popularity of the %&$#@*&^ GSEs, we commercial banks cannot impose our will on the mortgage markets, plus--really--we covet the GSE revenue and their domination.

“We hope we have paid off enough of our congressional and think tank allies, finally, to blow up these public-friendly mortgage operations and get repaid for our anti-GSE campaign largesse, so help us, Wells Fargo.”

GSE investors

There appears to be some GSE investor movement away from common stock toward preferred shares. I am not smart enough to be able totally to dissect that move, but I imagine if something “good” happens for Fannie and Freddie both types of equities would benefit, albeit maybe not in the same multiples. But, up is up!

The Administration and the GSEs

Does the Trump WH/Treasury value the $100 Billion plus waiting for them on a silver platter, if they just exercise their 79.5% ownership warrants on Fannie and Freddie?

We’ll see. That’s a very attractive haul staring it in the face but as dozens have observed, it means keeping the GSEs alive and functioning as shareholder owned entities (which could mean in a “utility” mode).

If Treasury Secretary Steve Mnuchin is going to go this route, he may want to hasten his actions before the broader public sours on his massive tax effort and start turning on him.

But, 2018 is an election year for all House members and a third of the Senate, with retirements being announced weekly, it might be a politically lousy time—as I’ve written often—for the congressional GOP to try and scuttle/murder the mortgagor friendly GSEs and throw another major victory to the rapacious nation’s largest financial institutions.

Again, some in Congress will try but how hard will be dictated by what else is on their very full agenda; where the Treasury decides to land on the question; and even Donald Trump’s relationship with Senators and Congressmen.

The Courts and the GSEs

I’ll make this quick, so you all can get on to my DJT observations (sorry, Anon but I can’t pass without commenting on what he’s said/done the past few days)

The courts: Fuggedaboutit!!

Our President in this New Year…so far

Trump's bigger Nuke button??

Clearly, with the POTUS size does matter, whether it’s his inaugural crowd, his hands, or his US ”nuclear button,” which he assured the world is bigger than Kim Jong Un’s. (Maybe both just should drop trou and show us, to end this dangerous spat?)


BTW. Vice President Pence wants all Americans to know that he is ready—if called upon under the 25th Amendment—to lead our nation boldly into the 19th Century.

Steve Bannon

So, Steve Bannon—like the special prosecutor-cooperating Mike Flynn—was a low level staffer who had no major influence on Trump or the 2016 election, but just this week, with the released excerpt releases of Michael Wolfe’s new DJT book Bannon is a “liar who has lost his mind?”

The same Steve Bannon DJT brought into the WH as his chief strategist?

Bannon, the once and now again Breitbart guru, former Wall Streeter, movie producer, and author of dozens of hateful statements and advocacies about minorities--Bannon who seemed to appear in every WH photo op (always scruffy)—is suddenly Trump persona non grata, because he attacked the President, DJT's adult sons, as well as Jared and Ivanka or “Javanka.”

Maybe Bannon was right saying those DJT relatives should not be part of the White House and federal decision making?

But what about all of those other non-Trump families who Bannon figuratively poisoned or Bannon otherwise disrupted their lives with his hateful policy inclinations (and that barely includes Bannon’s campaigning for Roy Moore)??

SB doesn't deserve a pass for any of that. But Bannon and Trump both soon will understand, "When you lay down with dogs, you get up with fleas."

First Amendment? Which one is that?

Now Trump wants to ban the Michael Wolfe book, “Fire and Fury,” in which Bannon gets his mad off and is so critically quoted on Trump, his campaign, staff, and family dysfunction.

How ironic and laughable that a President who spent his election campaign and his first year in office insulting, demeaning, castigating, mocking, treating viciously various men and women, as well as ethnic groups and US institutions, now should want to stop publication of a book which mirrors his actions, satirizes, and impugns his motives, his success, and his and his team’s shock at winning the 2016 presidential election.

Guffaw, guffaw, guffaw.

The reason, IMO, that the President has looked so bad is that virtually all of his constant messes are self-inflicted,  he puts himself in horrible situations with his ridiculous statements and tweets.

My advice to DJT is he just should stay quiet and do his job, without daily commentary.

What’s a few hundred lies/deceptions?
But that just was last year……

Maloni, 1-5-2018