The Joys of Running a GSE!

These Purgatives are Good for the Market

Those little financial chickens continue to come home to roost and the nation is well served by it, as long as the process remains orderly and devoid of panic. It’s what’s supposed to happen when market participants make mistakes and then account for them, literally and figuratively.

The mortgage market is taking its lumps and it may take more, but that is a better process than hiding the errors and mistakes with “fireworks and bobble head doll giveaways” (a favorite ploy of losing major league baseball franchises).

Citi, Merrill, Bear Stearns, UBS and others will live on, either under their own names or taken over by a stronger entity and the public won’t suffer more than they have to date. Some Wall Street and banking jobs will be lost, but as long as that plays out in an orderly manner, relative to the broader economy it should be a minor hiccup.

The mortgage market will right itself in a year or so, with some property value losses, which won’t injure families who bought a house to live in, not as an investment toy.

Returning to a previous theme, though, still more needs to be done for the families trying to make survive and keep their homes while stuck in those upwardly adjusting subprime loans.

Finding those borrowers and insuring they are aware of their available options—and helping them exercise those opportunities--is the best thing that mortgage market professionals can do for the people trapped by those loans.

National Politics

Hillary versus Obama, Rudi versus Romney?

I speculated in an earlier blog that Senator Clinton would come on to wrest the Democratic nomination from Obama. I continue to believe that is what will happen. Right now, it looks like Giuliani may get the GOP nod over Mitt Romney.

But each could become the next President of the United States.

As you think about the next leader of the free world going nose to nose with Mahmoud Ahmadinejad, Vladimir Putin, or Hugo Chavez, which of those four do you think stands his/her ground best and can prevail in personal interactions with the other world leaders?

(Every time I write Ahmadinejad’s name, I think of SNL’s faux 2000 presidential debates with Will Ferrell’s “George W. Bush” character preening and proudly displaying how well he can enunciate the names of foreign leaders and begging to name more!!)

A national columnist this weekend went off on Hillary’s candidacy noting if she were elected, the nation also would get her husband, which the writer felt was a horrible precedent.

I think he is wrong. Who among us doesn’t like a bargain? The nation’s food stores seemed to have pioneered the BOGO or “buy one, get one” marketing, to great acclaim from the buying public. Part of me is enamored with the idea that Bill Clinton would be there as “first mister” to help President Hillary Clinton, if she indeed were elected.

I also think Hillary is smart enough to do things “her way,” not Bill’s if she disagrees with him. And, if Mr. Clinton--while Hillary was President--ever got out of line, in a way that most people assume he is prone to do, then I think she would divorce him (excuse me, “in a New York minute) and earn wide spread kudos for that action!

Hopefully, that step never becomes necessary and Bill Clinton just learns comfortably to stand in Hillary’s presidential shadow, if she becomes the nation’s choice. I think he could be an incredible resource.

Six degrees of Kevin Bacon

Retiring Time Warner CEO Dick Parsons (he’s staying as board chairman), NYSE’s John Thain, Black Rock’s Larry Fink, and John Sites all share a Fannie link (or two).

Parsons was on the Fannie board and Sites currently is a member.

Thain, Fink and Sites all are getting media attention as top candidates for current and pending vacancies at various Wall Street and commercial banking firms. The three also served stints on Fannie Mae’s National Advisory Council.

While I am sure that currently he has fourteen other business irons in the fire—as he usually does--those New York boards seeking a strong CEO shouldn’t look too far past Jim Johnson, former Fannie Chairman and CEO.

SEC Compliant, Goodbye!

Apropos of absolutely nothing, there continues to be rumors that once Fannie and Freddie make current their financial books (in the next few days/weeks), one or both of their top folks could be headed elsewhere.

Question, why would any sane businessman walk away from the joyful GSE executive experience of hanging with Hank, loafing with Lockie, bonding with Ben, howling with Howard and the Homebuilders, fooling Pfontenheimer, wooing Wall Street, rapping with the Realtors, chewing the fat with the credit unions, bowing to your board, fussing with FASB, empathizing with employees, gagging on GAP, jousting with the Journal, leaned on by lenders, moaning over “mission,” seething over ceilings, raging at the rating agencies, offending OFHEO, angsting with Angelo, yawning with Yingling, dueling with Dianne, clicking with the community bankers, hissing at HUD, being bullied by Barney, gabbing over goals, and mooned by the Mortgage Bankers?

Answer? Buller, Buller, class, class…?

Question of the Week?

As noted, Fannie is ready to file its quarterly reports with the SEC this week, thus becoming “SEC compliant.” Freddie, I am sure, will shortly follow suit.

What excuse will OFHEO’s Jim Lockhart, “I am the Lockinator,” use to deny these two companies relief from his twin political decisions to force them to hold 30% excess capital, beyond their statutory risk based formula, and to limit their portfolio purchases to some low number he cooked up with the other zealots.

Don’t hold your breath waiting!

Some people say that Lockie still is cheesed off at Dan Mudd and Dick Syron, because both wore white underwear after Labor Day, which is a fashion no-no in “Lockieland.” (No discussion of briefs or boxers.)

Reportedly, Two Gun still is raging that one of the GSE board members failed to bow “really low” to him, at a recent meeting.

He supposedly called both actions “typical GSE hubris.”

KnowhatImean?

Maloni 11-6-2007