tag:blogger.com,1999:blog-940142538364421402.post601665604024462134..comments2024-03-02T02:30:55.592-08:00Comments on Bill Maloni's GSE Blog: The Volcker RuleBill Malonihttp://www.blogger.com/profile/17459277100798719104noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-940142538364421402.post-16090052335468732192010-02-14T08:32:20.246-08:002010-02-14T08:32:20.246-08:00"College assignment??"
Wait, I thought ..."College assignment??"<br /><br />Wait, I thought that ended for me when the last of my sons graduated in 2009.<br /><br />"Anonymous," If you are writing about the large comemrcial banks, make sure you spell "scumsucker" correctly!<br /><br />(Send me an "Anonymous" copy of your paper.)Bill Malonihttps://www.blogger.com/profile/17459277100798719104noreply@blogger.comtag:blogger.com,1999:blog-940142538364421402.post-71343403932200766062010-02-13T14:55:32.593-08:002010-02-13T14:55:32.593-08:00Amiable post and this fill someone in on helped me...Amiable post and this fill someone in on helped me alot in my college assignement. Thank you for your information.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-940142538364421402.post-89749027874502418372010-02-10T09:34:36.394-08:002010-02-10T09:34:36.394-08:00Wow, those two questions and comments give me a lo...Wow, those two questions and comments give me a lot of groubnd to cover. So, here goes:<br /><br />Paulson:<br /><br />He clearly did--just a few weeks after hearing about the Russian overture to the Chionese--take over Fannie and Freddie, which is what the Russians sought.<br /><br />One question is did the Russians, as Bloomberg reported, dump $70 Billion of GSE securities (presumably bonds) before the Secretary acted or not? It sounds like the Chinese didn't.<br /><br />That is an intriguing question which the two Banking Committees might want to investigate.<br /><br />Giving the Russians the greatest benefit of the doubt--despite my mother's family warnings--it may be that they saw an inevitability of takeover that others couldn't divine and wanted to accelerate it. But, I am probabaly being too fair to the bastards.<br /><br />The shape of the future mortgage market...I suspect that there are not 10 people on Capitol Hill--including Senators, Members, and their staffs--who can relate/understand the issues raised by the "American Securitization Conference, as documented by "Anoymous."<br /><br /><br />That's not a putdown, that's the reality of Congress, which is one reasons why I've been trying to implore thsoe folks to learn and understand what's at stake.<br /><br />I am almost certain that if you could honestly survery the House Banking Committee 75% of them or more would have negative things to say about the former GSEs, but not be able to give you cogent fact-based reasons for their views.<br /><br />I believe a very chastened F&F, with their new managements, if told by the Treasury/Administration,"Get back to business;" charge what you need to charge; limit your portfolio growth; make sure that 40% of your business serves the "targeted audiences," and and get the US real estate market working, a real estate financing reversal and market revival would be accomplished in a matter fo months.<br />certainly by the end of 2010.<br /><br />But, too many people and interests seem to want abuse the dead awhile longer, then try and gerrymander some new system which would take years to set up--and still may not work--after months of preening for re-election.<br /><br />All of this rather than a simple remake of that which we have and which worked.<br /><br />New isn't necessarily better than old. <br /><br />Look at the system's shortcomings and fix those. It isn't a mystery.<br /><br />Keep the mortgage structure/function you have and produce better regulation and better managers (which may already be in place) and limit months of ditehring and political hot air.Bill Malonihttps://www.blogger.com/profile/17459277100798719104noreply@blogger.comtag:blogger.com,1999:blog-940142538364421402.post-51743229379259162692010-02-10T07:00:38.147-08:002010-02-10T07:00:38.147-08:00After attending the Amercian Securitization Conf, ...After attending the Amercian Securitization Conf, it's hard to imagine reform that isn't a version of a mortgage utility. The current GSE infrastructure is enormously complex. Most panelists saw no private label sponsorship anytime soon. And all agreed mtg rates would be over 150 bps higher w/o govt sponsorship. <br /><br />And nobody saw housing prices posting gains for years to come-- most debated when prices would stabilize. Further, the FHA only recently stopped making stupid loans that are not likely to be repaid, as evidenced by their loss rates ON LOANS SINCE 2008 ! What Republican will sign up for a GNMA like govt ownership with that recent record? Congress can't "abolish' the GSEs with those risks. They may change the names but the heavily regulated utility model looks most likely to me. Regarding a portfolio (where I worked for many years), Congress will have to test whether the banks/insurers will keep fixed rate loans/MBS on their books without a much higher yield premium (FAS167 and the long duration doesn't make that very likely!). This issue is harder to quantify and therefore predict, so a reconstituted GSE is unlikely to have much of a portfolio, especially given right wing demonizing over the years. Funny, the balance sheet portfolios were not what created the vast majority of losses, yet over the years the right was targeted them but never said 'boo' about the MBS-- credit book. What do you think.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-940142538364421402.post-78578435149445735752010-02-09T20:25:19.063-08:002010-02-09T20:25:19.063-08:00Love your blog, Bill. Best info on what is going o...Love your blog, Bill. Best info on what is going on in GSE land! I wonder though, if there is more to it than meets the eye regarding next month's restructuring hearings. Also, don't you think our former Treasury Secretary showed great foresight in giving priority to the Chinese gov't claims on F&F over the shareholders, should he resume his Wall Street career?Norskyhttps://www.blogger.com/profile/07875780011726928159noreply@blogger.comtag:blogger.com,1999:blog-940142538364421402.post-50575704292607388242010-02-09T07:55:58.223-08:002010-02-09T07:55:58.223-08:00A couple of answers to matters for which I don'...A couple of answers to matters for which I don't have the exact details.<br /><br />In the context of reading about the Pualson book and his GSEs comments--before writing the last two blogs--someone noted that the Russians unloaded @$70 Billion of GSE securities shortly after failing to get the Chinese cooperation in their actions, which in turn were designed to force a US takeover, i.e. what Paulson did.<br /><br />Who knows who sold what to whom, since the debt owners and their trades are not public. It is interesting to me that Paulson mentions his discussions re the GSE action, post facto, with Chinese business friends.<br /><br />The short answer on the capital to asset ratio is "not now," but with a caveat.<br /><br />The numbers you mention are not far off from the roughly 40-1 capital ratio which both Fannie and Freddie operated with in their prime.<br /><br />Everything changed--and should have--with the 2007-2008 financial debacle.<br /><br />But, if you gradually increased the GSEs capital; worked on removing from their books the self-inflicted Alt A and PLS securities; and<br />made some alterations in the "housing goals" (the severity of have been underestimated by commentators), then I believe the two--or certainly one of them--could return to crucial market role they had. But, you also would need a far better and thoughtful regualtor, or just better people at FHFA.<br /><br />IMO, whatever steps are required in the preceding paragraphs--save the need for many politicians, in both parties, to swallow their words--are far less daunting than Barney Frank's "abolishing them" and designing an entire new mortgage fiannce system for the nation.<br /><br />The Chairman is a very smart guy but he's is taking on a Herculean task, Gordian knot, Aegeam stables, childhood obesity, Wall Street greed, and more here, in a congressional election year.<br /><br />I've been amazed at how easily people, who should know better, jumped on the demonization of the GSEs and our secondary mortgage market system.<br /><br />You don't have to be a F&F apologist to see that you had two weak CEOs, Mudd and Syron--making bad decisions(PLS subprime)--and 15 years of lame/conflicted regulation, which got usd to where we are today.<br /><br />Longer than you wanted, but that's what I think, ergo my congressional "baby and bath water" warning in yesterday's blog.Bill Malonihttps://www.blogger.com/profile/17459277100798719104noreply@blogger.comtag:blogger.com,1999:blog-940142538364421402.post-53365134666283815052010-02-08T21:50:20.197-08:002010-02-08T21:50:20.197-08:00Interesting points on Paulson's book "On ...Interesting points on Paulson's book "On the Brink”. What do you think was the Russian leadership's motive to convince their chinese counterpart in selling their Fannie Mae's paper? The Russians had already sold theirs few years before, Paulson's logic seems out of sequence. <br />The Fed has given the GSE's a short period of grace to "recognize" assets off the books, and reserve capital against potential losses. Do you think Fannie's reserve of $57 billion is adequate for a max exposure of $2.4 trillion? <br />-Blue AgentAnonymousnoreply@blogger.com