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.)

Staggering?

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!!