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).”

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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. 
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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.)



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