Sunday, December 8, 2019

Are the FHFA newbies birds of a negative feather?

Quack, Quack………

I am going to repeat something I did before, lead with a “news” story from Inside Mortgage Finance, which I suspect most readers didn’t see, to illustrate a point I make below.
Inside Mortgage Finance, Paul Muolo
“IN CASE YOU MISSED IT: The Federal Housing Finance Agency recently added two new members to its cohort of Cato Institute alumnae: Thaya Knight and Lydia Mashburn, who join Director Mark Calabria in the agency’s senior leadership team. Knight comes aboard as senior counsel for policy and regulation. She previously served as counsel to Securities and Exchange Commission chief Hester Peirce. Mashburn joins FHFA as deputy chief of staff. At Cato, she served as managing director of the institute’s Center for Monetary and Financial Alternatives. Prior to that, she was a member of the financial markets working group at the Mercatus Center at George Mason University. George Mason is Calabria’s alma mater.”

 "If it looks like a duck swims like a duck, quacks like a duck, then it probably is a duck."

I’ll fall back on this hackneyed explanation above of abductive reasoning to offer more insight into my opinion of Mark Calabria and his management of the Federal Housing Finance Agency (FHFA), the Fannie/Freddie regulator.
My thumbnail sketch of him—until proven otherwise—is he is a doctrinaire GOP agency head who has consumed the Conservative Kool-Aid and is uncomfortable, possibly opposed, to his primary mission (as per President Trump and Treasury Secretary Mnuchin, who are pretty tough foes to cross) to free the GSEs from “Conservatorship” and return them to privately-owned institutions, providing their superior securitization skills to investors in the nation’s secondary mortgage market.
To me, Calabria’s current slow-walking of all things-GSE reflects that. This shouldn’t be a three or four-year process, as he’s suggested.
There’s a big part of him which just appears reluctant to untether the GSEs, cutting their current chains. But it may just be inevitable because too many of his bosses predicted it and--finally--recent court decisions. (Thanks, Judge Sweeney.)
To people who understand the market dynamics, Fannie’s and Freddie’s mortgage market presence, efficiency, and underwriting guidelines support what primary market lenders—banks, mortgage bankers, non-bank lenders, credit unions, etc. (all the facilities where consumers go to get mortgages)—do best.
In my view, however--and less understood by many--is the GSEs' greatest value. In setting underwriting guidelines, i.e. “the rules of the mortgage road,” Fannie and Freddie act as a governor/decider, temptation restrainer on primary market lenders' temptation to go rogue and reintroduce very risky subprime loans through the system, which yield more money to that lender. 
Those loans largely are banned from GSE trading, but still can be originated if that lender is willing to keep those subprime loans on its own books and themselves assume the credit and interest rate risk those loans contain or sell them to a lesser angel.
Ironically, although few will admit it, I believe many bank execs  in operational roles support the GSEs for their competence, efficiency, and ability to generate revenue for commercial bank mortgage banking purposes.
I don’t know who else MC has hired to FHFA, but clearly, he is unhappy with resident folks he inherited and is seeking different skills.
At FHFA and for the Director, what are these new folks, Knight and Mashburn, going to do? Will MC elevate them to senior FHFA players? Is he going to bring in more, with similar backgrounds? Will deadwood FHFA incumbents—as some should-- feel the heat and get the message, “You are not giving the Boss what he wants, prepare to clean out your desks?” (I could offer MC some names of people he might “retired!”)
But my question is, if we are to ignore his management stumbles, his delaying tactics, and his efforts to stretch out the first GSE IPO (it would be nice if he postulated his required capital) and the fact that he hasn’t even brought in his touted Wall Street consultants—what jobs are these new folks (whom I don't know) going to perform??
Will they be in charge of throwing CATO and Mercaitus sand in the efficient GSE gears or the equivalent, which is where I think the Director would like to go?
Their backgrounds, Cato, Mercatus (founded by former SBC chair Phil Gramm and his wife Wendy, herself a conservative economist), etc., both are institutions which historically have displayed major animus and strong opposition to the concept of GSEs and certainly to Fannie and Freddie specifically. That doesn’t give me hope they new guys will be GSE-positive contributors.
Are they just hired ideological guns brought in to creatively scuttle future GSE operations and success?
If those new folks are to play some role in an evolving Fannie and Freddie, do either support the GSEs affordable housing mission, are they sensitive to the problems of minority mortgagors; do they believe that active GSE involvement means more homeowners and more jobs for those employed in affiliated industries, which is not usually the ken of conservatives??
There are a lot of ideological ducks walking around FHFA. Has that flight just grown?
It never hurts to read what smart GSE lawyers have said
Here is an excellent brief by GSE plaintiffs’ attorneys - submitted to SCOTUS--in response to the government’s false/misleading GSE narratives.

Judge Margaret Sweeney

Not ignoring Judge Sweeney's Friday decision, but, since I am "NAFL," I still am trying to figure out the parts and pieces; I will cover that in my next blog.

Maloni, 12-9-2019

Sunday, November 24, 2019

Craig Philips did pro-GSE folks a big favor; he deserves thanks

Why I liked and like Craig Phillips but never met him…

Before he came from Wall Street to Washington to work for Treasury Secretary Steven Mnuchin, word on the street was that Craig Philips was a “Good Dude,” smart, not an ideologue and knew the GSE business. Nice package!
He turned out to be all those things, as well as efficient. Phillips quickly put together for the Admin and the Secretary a viable plan to end the Conservatorship and quickly establish Fannie and Freddie as viable active mortgage market players consistent with their last several years under tight Federal Housing Finance Agency (FHFA) control.

These were the things Secretary Mnuchin had been predicting and promising and Philips provided the means for him to deliver.
But nothing in DC is easy when it comes to the GSEs.
A few months ago, Philips was asked to leave Treasury, not because he did bad work or sabotaged Mnuchin. It was because Craig Phillips --at some point in his professional life, before coming to the nation’s capital--generated some campaign funds for D presidential candidate Hilary Clinton.

I raise this about Craig Phillips—as a predicate—to posting an excellent background and informative article about Phillips, his plan, and perspective, written by Dennis Hollier of Inside Mortgage Finance, one of the best mortgage industry information sources.

Former Treasury Official Stands Up for GSE Shareholders

November 21, 2019
Dennis Hollier

Craig Phillips, the former Treasury official who served as Secretary Steven Mnuchin’s point man on housing issues until departing for the private sector in June, has come out in defense of Fannie Mae and Freddie Mac investors.

Speaking midweek at a conference in Washington, the man widely credited as the author of the Treasury’s plan for housing-finance reform said the recap and release of the GSEs should “really respect the rights of the current shareholders.”

Phillips’ comments were couched in a how-we-got-here description of “the role of capital markets and the pesky nature of the existing shareholders.”

“When a company fails,” he said, “the capital structure is typically eliminated and there are no shares left. But when these companies were put into conservatorship, for a variety of reasons, the interests of the common stockholders and the preferred stockholders were not eliminated. So those shares continued to exist. They trade freely. It wasn’t a bailout or a sweetheart deal that got them there.”

The result, Phillips said, is an unusual circumstance where there are both historic shareholders who suffered catastrophic losses when the companies failed, and opportunistic investors who purchased the stocks at pennies on the dollar in the hopes of a windfall when the companies emerge from conservatorship.

The other oddity about the GSEs is that in conservatorship both the shareholders and the company leadership are essentially powerless. That leaves Fannie and Freddie under the control of the director of the Federal Housing Finance Agency, as conservator, and the secretary of the Treasury, through the terms of its preferred stock purchase agreements.

Phillips said legally there are two paths forward for the GSEs. If FHFA Director Mark Calabria decides the two entities cannot be saved, he can put them in receivership and liquidate them. “The other option,” Phillips said, “is simply to have them exit conservatorship, which is an act that the Treasury secretary and the FHFA director can decide to do when they want under the PSPAs.”

Calling receivership impractical, he said, “The companies should leave conservatorship, and these shareholders would continue to have their rights.”

The former Treasury official then sketched out what he called “the math of the situation.”

Noting that Fannie and Freddie are strong earners with reasonable returns on equity, he said, “I truly believe they can be fully recapitalized in four to five years, between retained earnings and raising shares from the public.”

That new capital could come in the form of an initial public offering or, more precisely, what Phillips called a “re-IPO,” a capital raise by a company that, like Fannie and Freddie, has been dormant for some time.

Phillips also reminded the audience that Treasury owns warrants to buy 80% of the common stock of the companies. That too, he said, will have to be accounted for in any recapitalization plan for the GSEs.

This complex mix — historic shareholders and speculators; common, junior preferred and senior preferred stocks; Treasury’s ownership of senior preferred stocks and warrants on the commons; and finally, multiple litigants fighting it out in court —makes any recap and release of Fannie and Freddie daunting.

Phillips suggested one way to proceed: Treasury should write down its senior preferred stocks.

“The government did put $190 billion into these companies,” he said. “But they’ve now received dividends in excess of $300 billion. That’s a pretty good private equity deal. Now, we just have to turn the page on how we got here.”

Phillips then offered a plan to move the net worth of Fannie and Freddie from negative to positive.

“I think the only way to square the circle and give shareholders appropriate treatment is to really respect the rights of the current shareholders,” he said. That means selling new shares without completely wiping out current common shareholders.

“The common shares would be substantially diluted by the exercise of the Treasury warrants options, but they would still exist,” Phillips said. “I think that a sensible path forward would also include an exchange of the junior preferred shares and the common shares to align their interests in the exercise.”

But these moves wouldn’t be sufficient to put Fannie and Freddie in the black again, Phillips acknowledged.

“We want a positive net worth,” he said. “Right now, we still have a negative net worth because of the bailout. But if the Treasury … writes down the senior preferred, that’s a big part of getting to zero.”

New GSE Mortgage Ceilings, accepted or limited?  Watch and wait?

FHFA has finished its annual loan survey of the size mortgages, which determines any changes, up or down, made to eligible loans the GSEs can fund in the coming year.
That percentage increase, derived from querying 1500 diverse lenders in size, location, and charter, historically, but not always, show larger loans financed than the previous year. Those new figures are made available to lenders for mortgages originated in the last three months of 2019 for GSE securitization and delivery on Jan. 1, 2020 (unless the agency has changed its process).

By indexing future GSE securitizations in this manner, the idea is to keep Fannie and Freddie serving the same percentage American mortgagors as they always have.

I mention this otherwise somnolent yearly review, to allow you to see if--this year--FHFA and Director Calabria will permit Fannie and Freddie to naturally increase their applicable mortgage ceilings, since FHFA has the discretion NOT to allow the ceilings to grow?

If Calabria is serious about his goal to “reduce the GSE footprint,” he may not let those loan values go up in 2020, meaning next year the GSEs will serve a smaller share of the mortgagors—despite the increase called for in the FHFA mechanism (put in place long before the current Director arrived).

His actions on that score will give a hint about how much he plans to impose himself and interfere with their business order.

Of course, that would be another negative sign to the very investors FHFA needs to capitalize future Fannie and Freddie activities.

Maloni, 11-25-2019

Sunday, November 17, 2019

Somebody's ringin' the bell; do me a favour, open the door and let 'em in, (Paul McCartney and "Wings")

The FHFA Director isn’t listening so I’ll try again

I wonder if it has occurred to Mark Calabria, the Federal Housing Finance Agency’s titular safety and soundness regulator, as well as the GSE Conservator, he’s the only one chattering, publicly, about the GSEs, Conservatorship, dates and deadlines, capital requirements, and “consent decrees,” drawing attention to matters for which he has no solid answers, just suggestions of possible relief and/or more turmoil.
Is Rome burning while Calabria fiddles or is he just channeling Dean Smith basketball (see below)????
Despite, solid earnings and tiny credit losses, common and preferred shares of both Fannie and Freddie seem to be drifting amid conjecture over what in Hades Calabria may be thinking/scheming since continuing to threaten prompt GSE relief (now saying Conservatorship for three or more years; excessive capital requirements; possible product limitations; caps on what they can pay their chosen talent).
These conflicting themes imbedded in his too frequent external remarks ain’t going to bring in a lot of new investors who--for the most part--only care about making money. They’ll just see more regulatory intrusion.
On the flip side, MC hasn’t even tried to discuss how his alterations will make our national mortgage finance system, which relies on the GSEs, fairer and more efficient and welcoming to all who qualify and can afford a mortgage.
See the House Banking Committee’s large racial minority membership and think about what are their priorities?
We now know the steps that need to be taken to get F and F out of conservatorship: (a) publish a final capital standard, (b) end the net worth sweep and eliminate Treasury's liquidation preference, and (c) negotiate a consent decree between FHFA and the companies which governs their operations between the time they are released from conservatorship and are able to fully meet their new capital standard (when they will become "free" companies, subject to FHFA regulation but not control). 
In part, all of the bureaucratic intrusions and action thresholds Calabria regularly discusses seem to be relative, leaning toward more GSE burdens not freedom, and solely in his/FHFA’s hands. 
Those include when he and his team (with or without chosen outside consultants) will produced the GSE capital standards crucial to ending Conservatorship. What the interim steps to earning that money and achieving those capital levels will entail, and who/what decides if F&F’s progress is sufficient????
Sensing the Director may find himself between a rock and a hard place, he’s now talking about “Fannie and Freddie and the FHFA establishing consent decrees,” by which FHFA/Calabria will determine what types of business the GSEs can do until they achieve capital Valhalla, a relative and judgmental phantom number solely decided by Calabria and his FHFA posse, who he clearly doesn’t consider up to the task.
"There will be a level of capital where we think it sufficient to let them out of conservatorship but are not adequately capitalized. During that, they will operate under a consent decree." 
FHFA's Mark Calabria

I wonder how much each day the HFHA Director worries about his largely inflated capital concerns (“more is always better”) balanced by how much he worries if the GSEs can attract enough new capital to have them perform their core function of providing sufficient financial support to meet the homeownership needs imbedded in the housing aspirations of those needing and wanting shelter and, importantly, are able to afford same?
I am certain the Director would say he hopes to achieve both. But, when will he wake up to the fact that in trying to shine for future employers, he simultaneously is slighting one of those propositions over the other??
If he demands too much capital and puts too many operational/regulatory hurdles on the GSEs, Calabria injures affordability and low-income housing production, plus he risks failure.
My near term advice to the Director is for him to take a long holiday away from the worries of work, maybe through New Year’s Eve, say nothing to anybody, and try and unscramble the confusion he’s created in seeking to please his several audiences.
Trying to ride too many horses will kill you professionally.
Speaking of future employers, Calabria is making the big banks happy, the more time he takes in his deliberations, the more time the GSE antagonists have for lightning and other bad things to strike Fannie Mae and Freddie Mac.
Still threatening for him—now with a request for SCOTUS consideration pending—are some tantalizing pesky GSE cases any of which supporting the plaintiffs could further upset Calabria’s “four corners”* stall/delay game. (For non-sports fans, see North Carolina’s legendary basketball coach Dean Smith, and before him West Virginia Tech’s Neal Baisi.)
Former Treasury executive, Craig Philips—before he was forced from his job (reportedly because the GOP discovered he once raised money for presidential candidate Hillary Clinton)—left Secretary Mnuchin and Calabria a GSE end-Conservatorship capital plug and play plan.
Again, I would suggest congressional Democrats seek a copy, if they don’t have one already—to see what such an “end to Conservatorship” model looks like. 

Good Government!!??

Until now, for most in the GSE world, the name “Judge Lamberth” has meant bad news, even though a major reason he issued such a flawed initial legal decision--which suggested that Fannie and Freddie were guilty of anything the government said—was because his honor and his court--were fed a steady diet of false and incomplete records by government attorneys.

Last week, Lambert struck back and ordered the Admin/Treasury to give to plaintiffs’ counsel reams of requested but previously withheld government documents which should strengthen plaintiffs’ ongoing cases against the government.
(Opinion linked below.)

Yay--for now—Judge Lamberth!

Maloni, 11-18-9019

Friday, November 8, 2019

Straighten up and quit slow walking what you know needs to be done

Message to FHFA’s Mark Calabria

Sunstroke victims will stagger; fan lines--waiting to get into sporting events--will stagger; to insure productivity management will stagger employee vacations; inebriated drunks will stagger, and Mark Calabria continues to stagger on his way—so he claims—to ending GSE Conservatorship.
The other day in one of his many industry fireside chats—invariably with  “kill the GSEs” crowd as his audience—the FHFA Director suggested he could release the GSEs from Conservatorship in 2021. (That's a few years more than Treasury Secretary Steve Mnuchin promised the world it would happen and nearly as long as the plan to do so—shaped by Craig Philips, who was asked to leave Treasury by mysterious forces—has sat completed in Mnuchin’s office.)
Calabria may or may not issue new capital regs or new comments, since the FHFA did this before he came on board.
He may or he may not bring in an outside capital consulting firm to do (for him) what he can’t find any other agency in government—including an amalgam  of his own 600 or so troops—design a reasonable Conservatorship-exit capital plan.
That’s so weird; you understand that FHFA is the repository of the past 11 years’ worth of voluminous and detailed GSE business records—following the agency’s recreation by the 2008 Housing and Economic Recovery Act in 2008 (HERA)--possessing minute examples of every Fannie and Freddie business line’s performance, profit and credit losses, i.e. raw material in establishing capital requirements. One would think that data would give the GSE regulatory agency a leg up on the task it can’t seem to perform?
(Or, Director Calabria, just could ask Tim Howard for his assistance and I’m certain Tim could do it in less than a month, including presentations to both the Fannie and Freddie boards.)
Back to the staggering Mark.
An aside: Can any of you lawyers out there tell me if the Director, who also is the GSE “Conservator,” violated any of his fiduciary responsibilities—Regulator or Conservator--when he bragged to the House Banking Committee he didn’t care if any of his actions caused existing GSE shareholders to go broke on his watch? 
Then I read in Bloomberg:
"Calabria says he is also keeping in mind that to raise enough capital to exit conservatorship, Fannie and Freddie need to be attractive to new investors. He said he is working with the companies to ensure new rules don’t hurt their return on equity and is also looking at cutting costs to help make them more profitable." 
Excuse me, Mr. too talkative Director, do you really believe exposing yourself--telling the financial world how tough you are and you don’t care if current Fannie and Freddie investors go broke--will be a confidence builder for those future GSE investors that you are wizened or competent enough to oversee the companies in which you want them to invest a future $50 Billion or $100 Billion of their clients’ money?? 
It’s not like they live in another galaxy and don’t read newspapers or consume electronic media. Let me help you sir with your self-identified tasks, by putting together useful “one and one” advice (both mentioned in this blog), from which you quickly should get “two,” as your answer. 
Number one! Do more hard work and less public speaking, because you tend to get carried away, spout the company cant and go off script when you get into Q&A. No matter which host audience you are trying to please you’ll piss off somebody. 
Number two. Saving money? Look at how your staff failed you in its inability to construct capital and other tools for the GSEs to exit from Conservatorship. 
Here's a two-fer, fire as many of those duds as you can, especially those “oldies” who have been hiding in the agency woodwork for years. That alone will earn your kudos on the Hill and downtown since it's not an action most regulators initiate, even though they all have enough internal human kindle on staff to start California size fires. 
Save money and cut through the FHFA ranks cleaning out all of the deadwood and log rollers. Since the GSEs pay all of the agency’s expenses that will save them (and you) a ton of money so you can hire some true financial service-knowledge workers and allow Fannie and Freddie to build capital faster, which you claim as a goal, too. 
Avoid the industry rubber chicken circuit, speaking to all of the conservative groups for which you want to shine. 
You should be trying to build up the GSEs, not tear them down. 
Oh and stop referring to the “Treasury Task Force” report, which was DOA. Better people than you have failed to make the FHA and HUD work better and more responsibly. 
Every time you bring up the “Report” and its specious and unworkable recommendations, you undercut your credibility. 
Anything else I can help with, Mr. C???

Maloni, 11-8-2019

Late Friday News (from Peter Chapman):

Judge Lamberth released his opinion this afternoon and entered an order saying Treasury must produce the documents Fairholm's requested (or produce a privilege log identifying the documents it won't produce and the reasons why).  I suspect we get more documents showing Treasury/FHFA (pre-Calabria), and DOJ--in some part by each--lied to Lamberth and suggested the GSEs were in far worse financial condition than they actually were, facilitating the outrageous Treasury/FHFA treatment meted out to Fannie and Freddie.
Careful Director Calabria, if the Admin loses its fight over the constitutionality of FHFA and the CFPB, it ain't good for you, because now it's you saying that!!

Monday, October 28, 2019

"Jump Start?" Come on boys, fess up?

Who is getting what from who?

When I was an active Fannie lobbyist, the affordable housing crowd consistently would rally around and lend their numbers one to another on issues they all supported.
“If we didn’t hang together, we all could hang separately.”
Inherently, we all grasped Ben Franklin’s prescience and mortal warning.
 I am sure many don’t realize it but Mr. Franklin's words have graced the front page of every blog I’ve put out (at the top of the page).
That approach collectivity served the “housers” well and you often would see, pro-housing advocacy letters sent to Congress or the White House signed by 20 or more, prominent industry or social /social interest allies, indicating solidarity among those supporting the shelter needy.
But if the rumors from inside the community are true, something is amiss.
A cadre of spoilers, suddenly enthralled, again, with the work of ex-Senator Bob Corker (R-Tenn.) are trying to revive Corker’s failed approach to fixing Fannie and Freddie, his “Jump Start” legislative proposal.—which I think went down in Senate flames when its original GOP sponsors offered “no mandatory affordable housing support” in their bill—seem to be stirring the ashes and seeking revived support for it from current SBC Senators Senator Mark Warner (D-Va.), Mike Crapo (R-Id.), and others.
Someone in DC always is trying to take advantage of low-income interests and screw them.
The handy victims are presumed to be malleable, unsophisticated, and easy to con or fool, and—invariably—people of color, who have every right to feel marginalized when put through that wringer, again, this time by faux friends.
Happens all of the time but it is more heinous when some of the perpetrators have a history as low mod friends, activists, and advocates themselves. Then, it becomes a three-level game of “who is easiest to fool,” a contest where the rules keep changing.
At these stressful times, you will discover situational friends with their own personal agenda--who decide they can shuck the rest of their traditional allies--will tell Members of Congress and their staffs whatever they want about the issues they’re pitching because those Hill types don’t understand the substance let alone nuance behind the tales they are being fed.
The entire DC Fannie/Freddie GSE scene is confusing enough, with delayed Admin promises to end Conservatorships and various no-win campaigns backing old, losing GSE schemes touted by mainly bad guys threatened by Mnuchin and Calabria and the results of the Fifth Circuit Court.
For the past six months Treasury’s possessed a solid plan to achieve that transition, given impetus by a fresh a Fifth Circuit plaintiffs’ decision--which added political cover--and a new GSE regulator, stumbling as he may be and announcing, unrealistically, his lack of fear in “wiping out all GSE investors.”
Some of what I am describing in the previous paragraphs are continued efforts from the still- seeking-relevancy “fellow travelers” of yesteryear, Obama-ites Mark Zandi and Jim Parrott and their current posse, shilling for legislative ideas from former Senator Bob Corker (R-Tennessee) and his ex-staffer, former Countrywide trader, Milliken Institute, Ginnie Mae ship- jumping Michael Bright, who landed not at the top of Ginnie—since his nomination never got sufficient support—yet earlier this year was named CEO of the Structured Finance Industry Group.
Reportedly, other pro-Head Start advocates working the case are Mike Calhoun, prominent houser and President of CRL the, Corporation for Responsible Lending and Eric Stein, CRL alum and recent aide to Mel Watt (Mark Calabria’s Democrat predecessor). With Stein, reportedly, now headed to the Milken Institute.
The current story is the tricksters have been stirring up trouble among Hill denizens and low-income groups, trying to resurrect the old Corker “Jump Start” bill, and trigger a fights/ disunion between Calabria/FHFA (now the interim “good guys”) and those who read differently the affordable housing tea leaves.
I can’t begin to divine all of the conflicting agendas of these identified principals, but first off—fearful of the recent progress the White House has made, these new opponents seek anything which slows down ending Conservatorship. In their minds, delay is good.
Pretty crappy show of support for the other affordable housing interests—who root for Conservatorship to end, “right *&^%$#@ now!”
Not to mention stabbing in the back the Fannie and Freddie senior staff which have sent lots of corporate financial support CRL’s way ($$$).
People on both sides of the aisle and both sides of the Hill know—because of the wide ideological gap between the respective Financial Services committees—no GSE common legislation can emerge in this Congress.
So, the mischief-makers go for a procedural halt, any dispute to gum up the process.
Ending conservatorship sits on uncertain ground, which delay hurts.
Worse, matters easily could be vaulted into 2020, slowed down by the quadrennial election and then, tied up, over the anticipated D or R challenges to those results and/or any legal challenges to FHFA’s Constitutional viabilities.
A Democrat presidential victory wipes out current Treasury leadership and possibly FHFA, too, depends on a legal decision as to the constitutional viability of FHFA. 
But, why is CRL’s Mike Calhoun or anyone else in the low-mod housing community trying to frustrate the GSEs which just want to get back doing their previous excellent work in the neighborhoods?
What does he/CRL stand to gain?
Activists, question him; if he wants your support ask him to explain, exactly, why Bob Corker’s old legislation, never thoughtful or strategic, suddenly is? Be careful who you follow and for what you sign up. Make sure those “past friends”--who come a calling--hold your interests as high as they hold their own?

Maloni, 10-28-2019

Friday, October 18, 2019

One man’s opinion

FHFA = “Wasting Money Is Us!”

I am PO’d but not surprised.
The current GSE regulator (not OFHEO, the original one, born in 1992)—the Federal Housing Finance Agency or FHFA--has been around since 2008's Housing and Economic Recovery Act (HERA) 
It boasts some 600 or so employees.
There have been very few departures from this do-little-but-get-paid-a-lot agency. In researching something on FHFA’s website, I saw the various available rich-looking employee benefits, which makes clear why few people bugout, if they are not canned.
It’s another sinecure and with a track record, a lame one at that.
And now, Director Mark Calabria’s agency is seeking outside investment banking advice to consult on how to end  F&FConservatorship at the right capital levels, paying somewhere between $20 and $30 million dollars (more?) for that advice, according to Paul Muolo writing in Inside Mortgage Finance. 
In an email with Tim Howard I ruefully suggested Tim could do that job, start to finish in about 12 weeks, saving the GSEs a lot of money which could be put to needed capital.
Just what have those 600 people been doing for 11 years, if not studying how Fannie Mae and Freddie work and what they do?
We know FHFA cages as much customer information from the GSEs as it can and then reissues it in a variety of formats, pretending its original FHFA work.
Does anyone down there understand how their regulated entities operate and what capital protections are needed to make them safe performers in the international markets, where the sole GSEs assets-- being securitized, then bought and sold--are exemplary and highly liquid US single and multifamily mortgages?
Fannie and Freddie have achieved a highly enviable 10 year track record of minimal losses (not to mention scoring sterling “stress test” results which FHFA just published). How about how Fannie and Freddie each manage their growing low risk securities business, simultaneously, while shrinking their legacy higher risk portfolio businesses?
Seriously, how do FHFA workers spend their days? And what corporate understandings/intelligence have they gleaned from their past decade-plus of close supervision of the two mortgage giants?
If the answer is “not many,” then Fannie and Freddie—which cover all FHFA costs—are paying a lot of sloths to shuffle through the halls and spend time in their regulators break rooms.   
Don’t forget, either someone at FHFA  has been faking it or all of the prep the agency conducted for months and months before they issued its much-touted pre-Calabria GSE capital plan, which didn't seem to impress the new boss wasn’t worth very much. (Probably because it didn’t hurt the GSEs as much as some insiders wanted/hoped.) 
It is not quite like the President taking bows and saying “ISIS is defeated,” then flip-flopping and crafting a torturous rationale to let Turkey slaughter the US’s Kurdish friends/allies and turn loose upwards of 10,000 ISIS fighters to go back and rebuild a new a caliphate, drawing inane and ridiculous analogies out of sync with international political reality and the historic US role as an honest broker.
Oh and come stay at my hotel, do I have a room and board deal for you?? 
But Calabria didn’t do that, his boss did.
He just wants his staff to go back and work with his new consultant to establish the as close to correct set of capital numbers and circumstances to end Conservatorship.
So why not try and CUT the cost and seek Treasury's assistance or ask the Fed for help, don’t just spend another $30 million, coming from GSE coffers—just like the unneeded Common Securitization Platform, but not as expensive—which denied Fannie and Freddie some $600 million in possible capital, which was the unnecessary project CSP cost?
Bringing in outsiders has value but it also produces a variety of ways to throw sand in the gears of the goal to end Conservatorship, while creating delays and new hoops for the GSEs to run through. Whatever deadline the consultant gives, assume it will go longer and the same thing with whatever the initial cost will be. That’s why they call them consultants.
(Here’s a suggestion: Since the winning firm will have history in investment banking business, ask those competing for this new FHFA contract to take a fee “ haircut” (less money)  based on future profits the broader IB industry will earn when the GSEs start paying investment fees—under the new rules--to raise equity and to issue their MBS.)
The bad news here is this delay gives Mark Calabria more time to figure out where his and the agency’s self-interests are, as well as an excuses to thrust this whole exercise into a presidential election year politics--which likely will, now, feature impeachment issues--solely because the 600 employee agency which is supposed to know the most of Fannie Mae and Freddie Mac doesn’t and comes up short in more ways than just providing available staff parking spaces.
To test FHFA staff learning or GSE skills’ retention, maybe the GSEs should conduct tests of FHFA personnel on various elements of the GSE business and report those results to OMB and the two congressional Banking Committees to share who knows what and who is idling in place just waiting for their federal retirement dates.
And don’t forget the obvious, this drill delay also gives the many GSE mischief makers (whose hearts are not in turning the GSEs loose) more time to drive up GSE costs—including to higher bank like capital—and building in other product and mortgage ceiling impediments (as Calabria has been predicting for weeks as he runs around touting the flawed Treasury Report).
Leopards don’t change their spots!

Maloni, 10-18-2019

Sunday, October 6, 2019

Not much GSE content, but something quite important commanding your attention, if you are a voting citizen

Today’s blog is not a GSE blog, but something very much worth reading. It’s a column by Dana Milbank, which should help you make more sense as you seek to understand President Trump and his disturbing gyrations involving Ukraine and related subjects.

Briefly, on GSE matters, I also have to acknowledge that the Trump Administration has done more to free Fannie and Freddie from Conservatorship than 8 years of President Obama and his band of his WH and agency bloodsuckers, who first hoped to use Fannie and Freddie first as cash cows and then to turn their out of government careers into rewards for being anti-GSE.
Those “Democrat fellow travelers” are on the shortlist of people my late mother’s only living son (me!) hopes require Kaopectate every day for the rest of their lives.

The Milbank article is below.

Maloni, 10-6-2019

Wednesday, October 2, 2019

Such a deal??!! Fool me once, shame on me, fool me....

Le plus ça change, plus c'est la même chose

Yes, I have one…too!!
My cover has been blown and now everyone wants to use my top secret listening and transcribing device (I nicknamed it “Big Ear” and "Little Transcript)).
I’ve used this unique tool to propel my career as an “ace” GSE commentator and, now, it has been outed by those White House clowns advising President Trump, opening him to all sorts of political grief.
It's partly my BAD, I never should have permitted this POTUS to borrow the contraption when he was calling Ukraine, the Saudis, and Russia. I’ve been using mine for years to listen and never got caught “researching” politicians in the nation’s capital. I don’t employ it often, but often enough to maintain my GSE primacy chops!
Then, Huzzah! After two visits last month to the nation’s last remaining Radio Shack, they torqued mine up. What I have now allows me to capture what my subjects are thinking before they say or write it.
That’s why I appear so casually prescient when describing what any individual truly has on his/her mind before they utter it, especially the anti-GSE crowd.
For instance, this weekend Big Ear picked up some juicy morsels from what FHFA Director Mark Calabria’s was thinking before Treasury announced on Monday new mandatory capital deals with both Fannie and Freddie.
Anyway, here are some of MC’s weekend thoughts. 

Zippity doo-dah, zippity…I can’t wait for Monday and those letters go out binding them to yet unwritten to our "other conditions."
It’s all set, Mnuchin has stepped back on GSE issues and I stepped up. Zippity doo-dah. I need to practice what I’ll say to my fans and the others.
Let’s see? Here, here, get them while you can. They may be lightly scratched and dinged—yet we still will call them Fannie Mae and Freddie Mac--they still will be in the mortgage business, but I have a few changes in mind because of which they must signup before I let them apply their skills and talents to supporting America’s low, moderate, and middle income families eligible to qualify for reliable GSEs mortgage loans.
But, don’t ask me for details, as I need to add more scuffs and nicks to them while I can. Just wait until you leap at those first few GSE public offerings of entities, which won’t look just like today’s version—let alone the pre-2008 version. (Weren’t those spiraling down somewhere?)
Let’s face it, despite my breezy language to those naïfs on the Senate Banking Committee, who approved my nomination, I really have little liking nor respect for the GSEs. I know I begged to get a regulatory job with the Trump Admin—anything to get away from Pence-- and my big bank buddies insured me that any damage I can do to Fannie and Freddie will be appreciated (and rewarded) by those same GSE critics and opponents. I know Steve Mnuchin and the POTUS want the GSEs put back in the hands of private ownership (that’s you Mr. and Mrs. Investor). But, yak, gag, barf, whoever heard of a government agency with shareholders??
Yes, they are efficient and better run than the banks. Yes, they stunned everyone in DC, including me, when they paid back more than $310 Billion for Hank Paulson’s 2008 $190 Billion gift and then strapped and carried on their shoulders the nation’s entire conventional residential (non-FHA/VA) mortgage markets, single and multi-family.
But, B.F.D!
Unless I try now to cripple the GSEs, when given this opportunity, who will push them out of the government’s door and hobble them enough so that they can’t still help millions of mortgagors going forward, plus set their new investors up to make billions?? Best of all, with Mnuchin’s help, I’ll make sure Fannie’s and Freddie’s execs will have to comply with all of the “sand in the gears” bells and whistles Kudlow and I placed in the Treasury Report before anything real happens with ending “Conservatorship.” Plus we can snap the regulatory whip going forward to make sure they stay in line.
How can those schmucks stop me or say “no,” I’m their regulator and the Conservator!!
Thankfully, I anticipated this first “public step” to satisfy my longtime goals and helped load up the Treasury’s “Report to Congress” with just the right mix of major new internal costs and delay procedures to achieve my real objectives, had Treasury—with my humble assistance-- demand the GSEs sign up to cooperate on those steps, so nobody can say the Trump Administration blackmailed the GSEs. (I 'll love my new powers and  additional staff  I’ll get out of the deal, because there it is right in the Treasury Report. Screw you Fed, OCC, and FDIC!) How did my big bank buddies put it when I got this job, “Don’t be inconsistent? You need to keep trying to help your friends and destroy our enemies!
”Yep, this Boy Scout is large, in charge, and walking tall! That’s why I insist my FHFA team call me “Buford Pusser!” (Let them look him up!)
Soon I can shrink Fannie’s and Freddie’s size, impact, and foodprint, with nobody in Congress saying “boo,” because they don’t really care or understand the myriad mortgage or capital issues and players running the game today. Some will gripe about “low-income goals,” but Hell the banks don’t want that business anyway so I can give in and make them 50% of the GSEs total annual business, which they were back in the 90’s.
Working on a package of bank-like capital requirements, too, despite the fact I know F&F don’t look or operate as banks will drive up the GSE cost of doing business. And, I can easily hide behind “safety and soundness” concerns, when I explain, With the GSEs, since so many in this town have no idea about the role of capital, one never can have too much capital. (It’s not my job to worry about consumer mortgage costs which obviously will go up.)
And—to my great joy-- it will cost F&F even more when we tell the world the net $120 Billion or so the GSEs have paid back since 2013, on top of the original $190 Billion, just isn’t enough to repay the nation for its GSE support since 2008 and they have to pay us an “exit fee.” Hot damn, that will cause a few sphincters to tighten up!
I hope those Lefties don’t give me any sass about trying to offset those costs by trying to monetize the reverse value the GSEs represented for their liquidity role post-2008 which produced huge affordable mortgage volumes without generating any losses (which—duh-- was how the GSEs paid back all of that money to the taxpayers).
But, as I believe, there will be nobody making that GSE case nor any other when we force them to “negotiate.” There won’t be any give-and-take in those meetings, just us giving them orders and Fannie and Freddie taking them.

(Don't you love the way my targets think in highlights and punctuation marks! WRM)

Maloni, 10-2-2019

Tuesday, September 17, 2019

What good is he if he just fans the fires of ignorance?

Calabria is a Sycophant

In terms of a bountiful and rich GSE communications opportunities, the past several days were fabulous.

Last week—give or take a day--provided three major GSE moments.

First there was the publication of the underwhelming, very disappointing and crudely cut and pasted GSE Treasury Report, which I hoped was going to unveil all the Admin demands to free the GSE’s from Conservatorship, but it didn’t, leaving more questions than answers; followed a few days later by the Senate Banking Committee appearances—coordinated to explain the GSE report, by witnesses Treasury Secretary Steve Mnuchin, HUD Secretary Ben Carson, and the new GSE regulator Mark Calabria, Director of the Federal Housing Finance Agency (FHFA).

BUT, right smack dab in the middle—manna drops from Heaven, possibly surprising to everyone, except for the Admin officials who likely got tipped by insiders to the timing and content of the report—the Fifth Circuit Court issued a decision which favored two key points for the plaintiffs (GSE investors) in the Collins case.

The Fifth found that FHFA’s structure--set out in the 2008 Housing and Economic Recovery Act (HERA)--was not constitutional and the agency overstepped its authority instituting the 2012 net worth sweep.

Both matters were remanded to the lower court for reconsideration.

(The 2012 aggrandizement of all future Fannie and Freddie revenues, the NWS or Net Worth Sweep, which to date has produced $310 Billion going to the Treasury,  not preserved for protective capital or dividends for shareholders was called into question by the Fifth.)

But, unless someone knows what and when the internally competing Administration interests will do in response to the decision, the logical questions everyone has-- not just investors--have no Treasury/FHFA provided answers, yet.

But, like it or not, this all appears to be a 2020 issue, unless another shoe drops or Treasury seeks a settlement, since other litigants may rise to challenge the government in related matters.

This is a good reason for us all to “stop, look, and listen,” as they used to advise us public school students in the 1950’s (and that was before they showed us how to “duck and cover under our desks,” in case incoming Soviet nuclear bombs were soon to drop).

A Brief Blog Look Back 

In my previous blog, I chose BIGLY to call in question the Treasury’s choppy, written-by-a- committee report on its still very vague plans (lots of intent but no action or schedule discussed) to free Fannie and Freddie from their 11 years in servitude, otherwise called “Conservatorship” and what I believed was Calabria’s feckless role as the GSEs safety and soundness regulator but simultaneously a would-be executioner.

Before I get into what PO’d me the most about Mark Calabria’s Senate hearing performance, I must note I don’t believe the Trump execs working on the ”end Conservatorship”  task have their collective hearts in the exercise, because that action alone, i.e. freeing Fannie and Freddie from Conservatorship, violates what many  GSE-critics have been saying/seeking for years—and it’s their guys (with a little help from the court(s)—whose DNA will be all over the “free them” rules/requirements.

Last year, Steve Mnuchin brought into his Treasury shop Wall Street’s Craig Phillips largely to draw up Treasury’s plan ending Conservatorship.

Phillips completed his work months ago, then he was pushed out of Treasury. I don’t know why or by who but Kudlow and Calabria, or his Hill buddies, are my prime villains.

Early on, I relished/enjoyed going after Mark Calabria for what I considered his two-face treatment of the GSEs, while delivering his spiel about ending Conservatorship and returning them to full private ownership.

My response was “haff kaff, harumpph!.”  

(For you kids or seniors who don’t remember--kudos to the character Major Amos B. Hoople of “Our Boarding House,” daily and Sunday comics fame. “HKH” was his go to phrase when he was spinning to other renters or blusteringly trying to fake his way through matters he really didn’t understand.)

Calabria's Errors and lack of honesty

A few things also angered me about Calabria’s many public appearances.

He took over his job as if he was coming into a mortgage penal colony, carrying a whip and a gun and somehow believing he had to cage these snarling systemic mortgage beasts. He showed no respect for his job or the institutions.

Naturally, engaging in “Bureaucracy 101,” he first asked Congress for more resources, staff, and authority.

Conveniently, Calabria also ignored GSE abuse at the hands of previous GOP and Democrat Treasury Departments, Congress, the media, and other ideological foes, as well as his own agency personnel.

Since donning his FHFA hat, I never once saw him once given the GSEs credit or kudos for what they’ve achieved over the past 11 years during the harrows of Conservatorship; no good words about the companies or their workforces and what they have produced, like—when times were tough--hoisting the national mortgage system on their shoulders and carrying it, ensuring a constant flow of mortgage liquidity throughout the nation to qualifying families.

Two weeks ago, he did limit some pay to senior GSE execs.

He showed no understanding or appreciation of them generating over $305 Billion in earnings, with all of it going to Treasury via his agency’s 2012 sweep, when it aggrandized all future GSE income.

The Fifth Circuit said the FHFA--now, his agency--violated the law with that action.

He could NOT see or praise, after their hands were virtually tied in 2008’s Conservatorship, when it was alleged both had “failed business models” and  were swirling down the industry’s commode.

Paulson’s Treasury officials, followed by Obama Democrats did the same, building the myth the GSEs were hopeless/helpless. 

But together Fannie and Freddie fooled them all and turned around their financial performances.

That action was aided when those same time-limited regulatory accounting tricks began reversing themselves.

The GSEs suddenly started to make massive returns from new business, along with the self-reversing phony bookkeeping ploys adding to GSE revenue.

Fannie’s and Freddie’s business books, lost their red tinge and turned black under girding the GSEs dramatic financial return, where they’ve been for the past several years.

But Nada recognition from Calabria.

He has spent a lot of time vilifying the GSE and announcing what he hopes to do to them and take away from them, that he forgot—a rookie regulator error—that you can’t talk about taking away valuable pieces of the GSEs and otherwise limiting them under your rule and then try to sell the investing public into putting their money into marginal or partially wrecked mortgage vehicles. And, Mr. Director, if you don’t quickly settle with GSE shareholders, what investors will want to put their money into any other scheme Calabria supports to replace the GSEs, if the record isn't cleared of recent past Treasury/FHFA financial theft.

Mark, choose a Mulligan, try a do-over.

Cheer and cherish Fannie and Freddie and hope the billions of dollars you hope they’ll attract whenever you free them—becomes the much needed capital you keep lamenting they don’t have. Remember, it’s the same investing public hearing your bleating complaints and shortcomings who must provide that needed investment capital/protection.

Do you want to project that Fannie and Freddie are gilt-edged or wobbly needing your fine hands/mind????

Try and connect your behaviors, man, and see how one undercuts the other?

Keep your personal ideological GSE dislike and lack of respect hidden in your closet

With your deeds and words, do all you can to make the world want to own the GSEs, which then makes your’s and the Admin’s job much easier. 

That includes stopping trying to weigh them down with unneeded capital (less GSE revenue means less for new investors); selling Treasury’s 79% piece of the two indicating your support for their future as privately owned institutions and adding that deficit-reducing Amount to Treasury coffers; belay the lower their loan limits and stopping them from issuing certain single and multifamily mortgage products, again big downer to those folks you want to invest hundreds of billions.

Back to your wimpy performance before Senate Banking. For my readers to see for themselves, below is a verbatim transcript with Calabria and Senator John Kennedy (R-La.), a clearly GSE-misinformed solon, ranting and making up scenarios which easily you could have corrected and educated him, but in doing so, you would have had to straighten him out and also laud some Democrats who helped drive super beneficial  systemic risk-reducing mortgage market changes before Donald Trump was elected.

Instead of telling Kennedy how well the GSEs did on the GSE stress test which your own agency conducted and published the germane results just a few weeks ago, how consistently each of them for the past 10 years have produced extremely low losses, have benefitted from the CFPB and QM mortgage market changes (before 2016) which prohibit PLS mortgage loans (with incomplete docs or no incomes)  coming into the GSE market (but still persisting among private banks), you fawningly and uncourageously punted and agreed with Kennedy suggesting the GSE mortgage market is not well.

Instead of disagreeing with Kennedy and, gently, saying he wasn’t describing today’s GSE mortgage market but one more than 11 years old, you nodded in agreement with him and never said a word about his mortgage market ignorance.

I'll let readers go through your exchange and decide how honest you were with Kennedy about the GSEs and about the oft-told GSE lies which you didn't try to correct.

Senate GSE Hearing (9-10-2019), total exchange between Mark Calabria and Sen John Kennedy (R-La.)

KENNEDY:  Thank you, Mr. Chairman. Mr. Director, as an American do you believe that I have a right to own a home even if I can't afford it?  
     CALABRIA:  I -- I think you have a right to own property, yes. Own a home, no. Whether you can afford it is -- opens up to whether you can actually buy that home. I mean it's -- it's the same in terms of view of the right to -- you have the right to drive a Mercedes. Whether you can afford or not's a separate question. So I'm not sure where you're going with the question, Senator. Be helpful for me to parse that out.  
     KENNEDY:  I just want to -- want to understand your philosophy. Do you -- do you -- do you think that as an American, if I can't afford a home I have a fundamental right to have other Americans subsidize me?  
     CALABRIA:  Thank you for the clarification. The short answer would be no.  
     KENNEDY:  OK. Yet, I think everybody on this -- this committee -- I think everybody on this panel believes we ought to do everything possible to make homes and mortgages affordable.  
     CALABRIA:  Absolutely.  
     KENNEDY:  OK. We can agree on that, right?  
     CALABRIA:  Absolutely. 100 percent.  
     KENNEDY:  Why would a lender make a loan without verifying income.  
     CALABRIA:  Agreed.  
     KENNEDY:  Why would they?  
     CALABRIA:  I think the only reason that lender would reduce due diligence like verifying income is because they can pass that risk along to someone else --  
     KENNEDY:  Yes.  
     CALABRIA:  -- like the taxpayer.  
     KENNEDY:  Yes. (Inaudible) because they can -- they can sell it (ph) to you guys.  
     CALABRIA:  Absolutely.  
     KENNEDY:  I mean, isn't that the fundamental problem here? How we got in trouble, was underwriting standards?  
     CALABRIA:  Absolutely. We are the ones holding the bag at the end of the day, after everybody else in the process has made money and walked away, it is the taxpayer holding the bag.  
     KENNEDY:  Well what have you done to fix that?  
     CALABRIA:  Well Senator, we've begun -- I guess tomorrow will mark 5 months on the job. We've already started doing a bunch of due diligence internally, try to make sure that we have the regulatory (inaudible) –  
     KENNEDY:  That wasn't a fair question. What did -- what did your predecessor do to fix that over 11 years?  
     CALABRIA:  I -- Senator, I think that to me, I'm looking at what needs to be done going forward. I -- obviously I would have preferred to inherited a different situation than I did but -- 
     KENNEDY:  Excuse me for interrupting, but you know, we're limited on time, Mr. Director. Have underwriting standards gotten any -- any more realistic?  
     CALABRIA:  They've gotten worse, not better. Certainly at the GSEs. We saw massive expansion the last two years, at least, where a whole lot of high -- high income -- high DTI loans were done that weren't previously being done. So underwriting standards have eroded.  
     KENNEDY:  Yes, that's what I thought.
  CALABRIA:  And it concerns me greatly.  
     KENNEDY:  Well, this is just one -- one point of view. This whole thing is a car wreck. It's a dumpster fire. We spent $190 billion of taxpayer money and we're in worse shape.  
     CALABRIA:  Agreed.  
     KENNEDY:  Now, here's what I think we ought to do. I'm not in love with every aspect of your plan, but I'd encourage you to get somebody to put it in the form of a bill if you haven't already, get it introduced and let's mark it up in this committee, Mr. Chairman and Mr. Ranking Member. Let's -- let's put it in front of the committee and let senators be senators, and let's try to put out the dumpster fire. What do we have to lose? I mean, how long have we been talking about that? Doing nothing is hard. You know why? You never know when you're finished.  
     CALABRIA:  Senator, I couldn't agree more.  
     KENNEDY:  Now, if that doesn't work -- and I'm not going to mislead you. It's going to kind of be like slamming -- trying to slam a revolving door, pass a bill through the Senate. I would encourage you, Mr. Director, to saddle up and go. Tell me what you can do with your administrative authority to put out this dumpster fire.  
     CALABRIA:  Well, the first thing we're hoping --  
     KENNEDY:  And by that I mean encouraging people to make loans to people who clearly can't afford to pay them back.  
     CALABRIA:  Senator, we will be de-risking the GSEs, particularly in the --  
     KENNEDY:  What does that mean?  
     CALABRIA:  That means that on one hand, if your leveraged 1,000 to one you can't make loans that are almost guaranteed to go bad, so we have to be able to improve the quality of the lending of the GSEs in a way that is sustainable, that doesn't end up -- I 100 percent agree. If we do nothing, this is going to end very badly and --  
     KENNEDY:  Well of course it is. We're going to have a recession at some point.  
     CALABRIA:  Absolutely.  
     KENNEDY:  What was the leverage ratio, Mr. Chairman? $0.19 for every $100?
     CRAPO:  That's what I understand.  
     CALABRIA:  1,000 to one at Fannie Mae.  
     KENNEDY:  Now let me say it again -- I got one second left. Let's put this bill in front of this committee, Mr. Chairman and Mr. Ranking Member, and let's see what we can do. I listened to Sherrod's (ph) comments. He made some good points. I don't agree with all of them, but I think we ought to flesh it out. But if we're not, let's just admit that Congress is just going to sit on it's ice cold lazy butt, do nothing and you need to get started trying to fix this car wreck, Mr. Director. Thank you, Mr. Chairman.

Why Senators seldom get smarter?
Because they are lied to, often by Administration witnesses (from both parties), and enjoy their smug ignorance.
Do you think anyone, on the Committee staff or his personal staff, will tell Sen. Kennedy how in the dark he is, or ask him how two companies can build capital when a series of Treasury officials have taken $310 Billion away from them at least $120 Billion now could be protective capital?
So much for ideological car wrecks and dumpster fires!!