Tuesday, March 13, 2018

GSEs and that damn hotel in California

Welcome to the Hotel California……..

Stacked in my car CD player, right now (even after—parked in my driveway--the vehicle was rifled by a thief who got my roll of quarters because I don’t know how to use my cell phone for parking meters) is “The Eagle Greatest Hits,” along with my CDs featuring the most famous R&B groups of the 60’s and 70’s, Drifters, Temptations, Four Tops, etc.

The Eagles monumental hit “Hotel California” is the GH’s album’s first cut.

It’s a song that has as many “I swear to God” interpretative connotations as there are suggesters, all musing about the meanings in this anthem to the Left Coast, drugs, Hollywood and the entertainment industry. (Editorial Confession: my youngest son is employed in LA as an animator on “Cosmos,” a network science show aimed at the entire family.)
The most accurate explanation I find comes from a long-lost interview with original Eagles founders Glenn Fry and Don Henley who said the “California” story is about the wild and hyperactive, swashbuckling and uncontrolled LA music scene/industry, which gobbled up and signed new acts right and left used/abused and then kicked them to the curb with barely a thank you or compensation for their original and occasionally successful efforts.

The most haunting line about Hotel California is, “You can enter anytime but you can never leave.”

That line was used last week, again, this time in court, by an appeals Judge hearing the Collins GSE case to analogize the federal government conservatorship requirements and Fannie’s and Freddie’s inability to escape them, no matter how good the plaintiffs’ legal arguments or how successful is the GSE operations.

The irony here—given my belief that no federal judge will rule for the GSE plaintiffs unless and until the Trump Administration (Mnuchin and the POTUS) indicates its desire that the GSEs remain functioning and in control of entrepreneurial managers as well as their private shareholders (even in “utility mode”).

The judge who made the seer like observation about the trapped mortgage providers/guarantors is one of a troika of jurists who could bust the GSEs out of that evil hotel, but I doubt ill it will occur, until something like the triggering mortgage market signal is indicated by those who control our government.
Regarding the latter possibilities, as I’ve stated so often, it falls on Mnuchin and FHFA Director Watt—more the former and less the latter—to drive an executive/regulatory action to free the GSEs and return then to real functionality, keeping their earnings and building capital.

Mnuchin’s Future? No worse than other cabinet officials, but….

But, just this week a slight shadow crept over that wished for but not quickly realized hope—as Secretary of State Rex Tillerson just found out today and Gary Cohn learned a week ago.

Cabinet status in the Trump Administration is not a long term sinecure (are you listening Betsy DeVos, Ben Carson, Steve Pruitt, Kellyanne, et al).

Mnuchin by all reports is OK with DJT, says the right things about the GSEs, but he is not a favorite on Capitol Hill (see his outrageous exchange with Rep, Maxine Waters (D-Cal.) where he clearly tried to fill his non responses with not-on-point formal oration intended to run through the allotted five minutes each Member gets to ask questions. The 300 seconds also includes a witness's answers. If you prattle, intentionally, as SM did, you choose “run the procedural clock” disrespecting your questioner.

Added to his dournessindividual lack of appeal/winning personality, the Treasury Secretary’s Scottish actress/model wife, Louise Linton--has displayed qualities which are the equivalent of “nails scratching on a DC blackboard,” with her bragging mention of the couple’s financial success, major tax requirements, her designer clothing, and  Marie Antoinette approach to DC life.

Unfortunately, those things matters for cabinet, if your goal is to keep your job and not to wind up on Trump’s bad guy list (Tillerson, Cohn, AG Sessions?).

Bottom line, will Secretary Mnuchin be around/last long enough to rescue the GSEs? Hoping so.

Speaking of Gary Cohn….

When Gary Cohn walked out of the White House’s top economic job over his dispute with the POTUS over Trump’s demand to impose steel and aluminum tariffs, and Cohn’s concerns over starting a trade war, the name of Larry Kudlow, TV talent and former Bush Treasury officials was named as a possible replacement. That noise has increased in DC.

Initially, I took to my small group of GSE friends and mentioned my opinion why I thought Kudlow would not be good for Fannie and Freddie, remembering his comments and op-eds over the years, suggesting he was not a GSE fan.

However, I was corrected by some GSE graybeards, whom I respect, pointing out Kudlow has strongly suggested that GSE shareholders have been treated unfairly/poorly, as well as Kudlow being a major fan of Josh Rosner, a pro-GSE stalwart for the past several years.

If Kudlow gets Cohn’s job, I am rooting for the graybeards!!

Pennsylvania’s 18th Congressional District

By the time most of you read this, we’ll know if Conor Lamb—33 year old ex-Marine and former assistant US Attorney, plus Democrat candidate for Congress in today’s March Special Election—has prevailed against his GOP opponent and pulled off a stunning political upset.

Republicans have thrown $10 million into this race for a House seat President Trump won by 20 points in 2016. If Lamb, whom I’ve met and support, can triumph, it will add to the recent election rejections of Trump and the Republicans, happening so far only at the state level. Now it’s a House of Representatives seat.

Conor Lamb is sharp witted, very bright, articulate and more conservative than most House D’s.

This is a white collar congressional seat, south and east of Pittsburgh, where Trump, twice, VP Pence, the notorious Kellyanne Conway, and other GOP bigwigs have crisscrossed to try and boost their lackluster candidate. The POTUS’s embarrassing 65 minute speech in suburban Pittsburgh last weekend, was filled with spurious comments, putdowns, and the usual Trump untruths about his performance as President.

As POLITICO observed, If Lamb wins, or even comes close, it will be a signal that Republicans are in danger even in districts where Trump was won handily in 2016, and raise Democratic hopes of capturing the House and Senate this fall. The race would also serve as a model for Democrats running in deep-red districts across the country.”

Maloni, 3-13-2018


Nancy said...

Thanks Bill...I enjoy your thoughts. What about water boarding expert Gina Haspel running the CIA? Also, Alex Jones' conspiracy theories seem to be catching up to him! There's a major defamation lawsuit filed in U.S. district court in Virginia against info wars and others which is seeking to stop them from launching fake character assassinations against innocent people. This behavior has caused death threats, confusion and vitriol. Nothing like projection regarding the fake news mantra used when people need to avoid the truth.

Back to Fannie and Freddie: After listening to plaintiff attorney Thompson in Fort Worth this week, I felt hopeful for about 45 minutes. He was methodical and concise... then I realized and doubted all of his efforts by thinking... no judge has the balls to take on the NWS which would take away Billions of dollars from Treasury. I mean, this decision could stop a child from getting cancer treatment, or it could stop the wall that Mexico is suppose to pay for and what judge would want to live with THAT??!! I never knew Trumputin was a socialist deep down inside. After all, he was a Democrat before he became an extreme right winger. Call me pessimistic but... I'm a long and strong 100% common shareholder and I've been through hell and back with these court cases starting with Lamberth who wouldn't even allow discovery! I like Sweeney but she's stalling us to death. If Fort Worth Texas judges see that this NWS is "hog wash" and theft has been occurring for almost a full decade, then I will join 100% preferred shareholder Glen Bradford on the beaches of Miami and listen to house music till I drop!

Bill Maloni said...

Nancy--Thanks for reading and writing.

I am rooting for you to have the sun and the sand...and no dropping for a long, long time.

As I've written more times than I care to note, "There is no logic in Washington politics, so don't waste your valuable (beach) time looking searching for it."

Rick said...

Sorry, Bill, but you misquoted the lyrics:

'You can check out any time you like,
But you can never leave',

which to me is even more applicable since the GSE's have repaid the principal and the 10% interest due in total, but the government's take is with the NWS they haven't paid back anything yet.

Now if this was an organized criminal activity you would think that the RICO statutes would apply for usury (CRIMINAL RICO:18 U.S.C. §§1961-1968 F. 2. The Unlawful Debt Must Be Incurred in Connection With the Business of Gambling or Lending Money at a Usurious Rate, [excerpt]......or the business of lending money or a thing of value at a rate usurious under State or Federal law, where the usurious rate is at least twice the enforceable rate.)

But since this was all rigged by hardworking 'honest' lawyers and politicians who insulated themselves from prosecution all bets are off.

You do a great job with your blog, always a good read, BTW.


Bill Maloni said...


You are correct, I blew it on the lyrics relying on my ancient memories, but I hope you appreciate the analogy. (You are not the only one who caught my error.)

BTW, Conor Lamb declared victory in his nail biting Special Election. Good/hopeful way for Western Pennsylvania and the nation to end the day.

Bill Maloni said...

Hello, Larry Kudlow!!!

GSE Dude said...

Bill a tangential question, but I couldn't think of a better source.

What ever happened to David Maxwell after he left Fannie Mae? I had hope to learn more about him after his legendary leadership in the 80's

Bill Maloni said...

David is happily retired and doing well.

He was an excellent college tennis player (Yale) and, now in his 80's and with two knee replacement surgeries, still plays doubles twice a week, winning a national seniors championship two years ago.

He and wife Joan still live in their original DC house near Fannie's "old" headquarters and--based on her six years as a pallliatice care chaplain--has written, "Soul Support: Spiritual Encounters at Life's End." Mrs. Maxwell authored two other books, previously.

GSE Dude said...

Thank you Bill. Glad David and his wife are doing very well