Monday, December 22, 2008

Wishes and Hopes for 2009

It’s the time of the year to bestow gifts and wishes on rich and poor, friend and foe, family and others. So here’s my list.

--For the American people—and therefore the world—I wish for a strong Obama presidency, a thoughtful and hardworking Congress, a revived and vibrant national economy providing many new jobs, accompanied by a rip roaring wild bull stock market, and serious work begun on a national health care system and major renewable energy sources.

--For Fannie Mae and Freddie Mac, I wish them powerful friends in high places, ideally a guy soon moving into 1600 Pennsylvania Avenue and others now sitting on Capitol Hill.

--For the nation's large commercial banks, which have received billions of taxpayers’ dollars from their “Uncle” Henry Paulson, I wish them some integrity, corporate conscience, and recognition that they now have a major obligation to their customers and the nation to start lending money, quickly.

--For the Detroit automakers, see previous Christmas wish and the need for car buyers to have access to financing.

--To Governor Rod Blagojevich, I hope he can secure a defense team with the combined skills of Abraham Lincoln, Perry Mason, Alan Dershowitz, F. Lee Bailey, and Johnnie Cochran, because G-Rod’s going to need them all and then some!

--To President Obama and his Cabinet, I wish that they enjoy the sustained and deep support from the American public and that their efforts produce peace and international prosperity which can come from bold United States leadership.

--For Angelina Jolie, I wish that she finally realizes her life long dream to go out with me.

--For the Pittsburgh Steelers, I wish for them the Super Bowl XLIII Championship, to go with the five others they’ve already won.

--I wish in 2009 that the McCarran-Ferguson Act, which cedes to the states regulatory control over the insurance industry, dies and is replaced by a national insurance regulatory regime. Consumers then can look forward to efficiency and lower product prices, which is not the case now. This development could also end the title insurance rip-off which costs new homebuyers $1500 to $2000 for the insurance with almost the lowest claim rate in the industry. (Digitize those local title and sales records and watch how quickly you lose the need for “title search” and even appraisal fees. The savings to homebuyers would be large!)

--In 2009, I hope former President George W. Bush remembers never to accept a hunting invitation from Dick Cheney.

--To the Pittsburgh Penguins, I wish them a Stanley Cup Championship to go with the two that the Marion Lemieux-led Pens won for the city and their fans in the early 90’s.

--For the AEI, Mike House, Peter Wallison, Charles Calomiris, Tom Stanton, and Bert Ely, and the other professional GSE irritants, I hope they can find another target for their rancorous energy, like global warming or world hunger, since Fannie Mae and Freddie Mac can’t carry them anymore.

--I hope the nation’s mortgage insurance companies—which owed their modern existence to the GSEs, but were so rabid with their overheated support of the campaign to kill off Fannie and Freddie—didn’t sow their own industrial demise with the effort. Too much of a good thing is bad! (See title insurance above!)

--For the editorial boards/writers of the Wall Street Journal and the Washington Post, I wish for a lifetime supply of kaopectate and lots reasons to use it!

--To Senator Dick Shelby (R-Ala.), I wish for the United Auto Workers to buy the house next door to his and then entertain the Senator, nightly, with continuous polka and yodeling contests. To aid that move into his neighborhood, the UAW should use the Shelby family title company to do their mortgage search. (To the UAW. I agree that yaks are totally acceptable neighborhood pets. Dick will love them!)

--To the senior Democrats of the House Financial Services and Senate Banking Committees, I wish for less acquiescence to Treasury officials, even in 2009 when they will represent the same party as the committee majorities. Lead don’t follow!

--To the Republican management of the Federal Housing Finance Agency, I wish you good luck in securing employment in 2009 in the fast food industry or at your friendly Wal-Mart store.

--To those investors who keep going “long” Fannie and Freddie, because they are so cheap, I wish and hope that you see and know more than I do about the two companies!

--For the Pittsburgh Pirates, I wish an end to their 15 consecutive losing seasons. Come on guys, it’s called “Major” League Baseball. Try playing some!!

--To Mr. Z, I wish that you stay a curmudgeon in 2009!

--To the Mortgage Bankers Association, I wish that you would drop the pretense and just merge with the American Bankers Association. It just a matter of time before it happens, anyway.

--To the National Association of Realtors (NAR) and the National Huilders Association (NAHB), I hope you never forget that you are the last commercial voices for homeownership and possibly the most powerful. Wear that mantle well and responsibly. Once again, don’t follow, lead!

--To the media chroniclers of Fannie Mae and Freddie Mac, several of which are writing books on the two companions and the economic meltdown. I wish that you successfully separate the truth from the lies and remember that the GSEs didn’t invent/design themselves, with their three-cornered statutory requirement to satisfy housing mission (55% of all of their business going to low-mod homeowners), shareholders, and safety and soundness regulators. That was Congress, reiterated again and again, from 1970 through last year.

--To all of those phony-baloney members of the House and Senate—who uttered those “Casablanca, gambling at Rick’s “ hypocritically hilarious comments about Fannie and Freddie making profits or helping too many poor people--I wish you’ll receive a prompt education and understand about the reality of the GSEs, so you will make some more thoughtful decisions in 2009.

(I hope your holiday gift of wisdom allows to realize that until Fannie and Freddie managers (not the long gone “scorned and evil Democrats”) in 2006 and 2007 succumbed to the need—wrongly—to buy toxic subprime and Alt A product, the companies did a fabulous job, i.e., just what Congress wanted them to do, carrying out their federal mission, supplying trillions of trillions of dollars in liquidity to America’s low, moderate and middle income homeowners. The two birthed and successfully managed a national secondary mortgage market, which now is missing from the mortgage finance system, and is part of the reason why housing still is suffering.)

--I wish that all of the GSEs critics come to realize that the GSE function is desperately needed and that the commercial banks, alone, can’t/won’t serve that “dedicated investor” role.

--I wish Shawn Donovan, the HUD Secretary-designate, a huge shovel and a sharp fat cutting knife, as he takes on the modern Aegean stables which are HUD.

--For Selma Hayak, I hope that she gives me at least a week to recover from my previously noted celebrity date, so that Ms. Hayak can have her much sought after evening with me.

--To my family and family’s family and to all of my friends, thanks for being there. I wish you all good health (which is most crucial), personal and professional success, and a ton of good wishes in 2009. Oh, and for myself, I wish for a typo-free 2009 blogging experience and some more grandchildren to go with our wonderful three we now have!

Maloni 12-22-2008

Thursday, December 18, 2008

A Dream Before Christmas!

After reading Christmas stories to my grandchildren and helping put them to bed, I sat back in my easy chair and looked at those old tales and slowly drifted off to sleep, perchance to dream of an Elves and Reindeer CALL TO ACTION!

Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz! Snow was swirling about the North Pole and the denizens were gathered and angrily shouting over one another.

“The large commercial banks are making a mockery of the American people and billions of taxpayers dollars they have been given—with no strings—by the Bush Administration, with the banks all but refusing do their part to stimulate the economy by lending that money to individuals, businesses, or other banks,” shouted Dancer!

“Presumably the Treasury and the Federal Reserve made these taxpayers funds available to the banks so they would lend that money in the markets they serve, break the nation’s credit logjam, and do their part to bringing an end to the economic slowdown gripping the United States,” screamed Foppie the elf intellectual.

“Instead the banks are holding onto this free money and arbitraging it or, worse, using it to pay higher dividends, larger salaries, or acquire other banks,” roared Dancer.

“Most people on earth, recently, have learned of a new form of protest and disdain, when an Iraqi journalist threw his shoes at President Bush, an Arab cultural gesture meant to suggest that, ‘You are not worth the dirt beneath my feet,’ ” pointed out Mrs. Claus, who always read the newspapers.

“I think we should take advantage of that new found understanding and turn it on the big banks, “ proclaimed Prancer.

“People should take their old shoes and just deliver them to the front of bank offices, all across the nation, as a protest against the banks for failing to do their part and NOT LENDING money to their individual and business customers, “ declared Rudolph.

“They should let the large banks know that their continued selfish, gluttonous, and piggish behavior makes them, in their eyes, the banks are ‘not worth the dirt beneath their feet,’ ” added Vixen.

“I hope folks don’t throw your shoes at anyone or at the bank offices, they just need to put them the front doors as a silent protest and reflection of their unhappiness with bank actions. If the banks are smart, they will take those collected shoes and donate them to local charities supporting those who need help. “Said Clarence, the oldest and wisest of the Elves.

“But when have the banks been smart?” asked Dancer

I awoke with a start. Was I dreaming. Did it happem, would it happen, could it happen. I don’t know, I guess we’ll find out!


A Holiday Wish for President-Elect Obama

My thanks to Mr. X—who has been a first hand witness to so many significant industry and regulatory events--for reminding me of this historic anecdote, which has so much parallel in today’s events.

It’s 1993 and newly elected President Bill Clinton, who had just campaigned and won on, “It’s the economy, stupid” is meeting with his senior financial advisor—soon to be named Comptroller of the Currency--Gene Ludwig. Ludwig explains that more bank lending would stimulate the struggling economy but notes some minor justification for banks laying back and accumulating capital.

Clinton makes up his mind to an appropriate course of action and then goes on to convene two White House meetings--to which everyone who is anybody in financial services is invited—and his message is, “You God damned lenders will begin making loans to your customers and it is the job of you God damned regulators to make that they do!” (Mr. Z assures me that was the tenor or the exact words Clinton employed.)

President Bush (remember him) and Secretary Paulson won’t hold this meeting and President-elect Obama must, once he takes office.

Maloni 12-18-2008

Monday, December 15, 2008

“Hey Dawg. You got Soul!”

It’s all in the telling and in the video, but is it possible that this frustrated Iraqi journalist--who fired his size 9 Florsheim shoes at President Bush—is being condemned incorrectly? Maybe, he just was trying to praise President Bush for “W’s” ghetto humanity?

Or did the man really think that Bush was a heel?

Arab custom would indicate that the thrower was not happy with our President for the current state of his country, but then we aren’t either. Yet we don’t throw our clothing and accessories at the guy.

Well, when in Rome or when in Baghdad….

I don’t know about you, but I feel sorry for President Bush and hope that he stops taking global victory tours and just stays home. Possibly he could visit Texas multiple times and then show those videos in the countries he wanted to visit before he helicopters from the White House lawn on January 20.


Virginia, it’s the holiday season, right?

Have the large commercial banks—with their coffers full of Uncle Sam’s money--started lending to anyone, individuals, businesses, other banks, to help break up this credit logjam? Tell me sweetheart, what are they doing?

What? They are sitting on their assets?

Ho, ho ho. Don’t they know it’s soon Christmas and Chanukah?

Do you think the three bank regulatory kings, “Ben, John, and Paul” might suggest to their commercial bank minions, “Keep the frankincense and mir, but loosen up on the greenbacks and start circulating them the way you once did, by “L-E-N-D-I-N-G!”

Speaking of gift giving, I am sure that all of these financial services company execs, who lined up for their dole of federal wassail, are thanking their lucky stars that the Bush folks—as reported in today’s Washington Post—added a sentence in the final bailout legislation, to not force those poor souls to take compensation haircuts if their Uncle bails them out.

Where are my damn shoes when I need them and I mean the smelly sneakers??


Democratic biases aside, I have been very impressed with the Obama nominations and how the President-elect has carried himself during this “transition.”

He has chosen to surround himself with some very talented future cabinet appointments and senior staff, all of whom will be necessary to support this President as he tries to lead this nation out of a profound and very deep economic mess, not to mention a variety of other domestic challenges and the global issues facing us, as we fight two wars.

But, at my monthly poker game this week, I asked a GOP friend his opinion of Obama’s choices, his cabinet and top staff.

He said, “Oh you mean the old Clinton crowd? “

It’s not a new line, but it underscores a point—in a much different way--that I made several times in opposing the McCain presidency.

Had John McCain won the election, he would have turned too many of the same people or their clones who had served George Bush.

That would have been doubly tragic because McCain never showed the vision to change the GOP priorities which produced such carnage in Bush’s eight years.

“There is no moderate GOP talent pool,” I wrote and while some/many of the Obama nominations might have worked in past administrations, two things are different. Obama is in charge and setting the direction and tone and the instincts of most of the individuals Obama has named seem far more in concert with what America wants in its public officials than many of the conservative extremists/wing nuts who worked for President Bush.

Not every Republican appointee was out of the mainstream, but enough were to heavily color in the negative Bush’s two terms.


Alan “The Bear” Abelson

Barrons Alan Abelson seems “bearish” 12 months of the year and in every business cycle. He’s the Great Grizzly, a curmudgeon and says so, but he’s a fabulous writer.

You don’t have to read him for market advice, since his advice always seems to be some variation of, “Bad times are here or bad times are coming, so get out or stay out of the market.”

But, Alan Abelson is a superb writer and he should be read for his wit and observations of human behavior, garnered from decades of his work on and with Wall Street.

Of all of the stuff written about Governor Rob Blagoevich and his tawdry behavior, nothing was more clever than this line of Abelson’s:

“If it emerges that Mr. Blagoevich did proffer the seat to anyone with the itch to be a senator and the scratch to purchase it, he merely was following in the footsteps of his immediate predecessor, a Republican named George Ryan “

I am sorry, I find Abelson punning phrase just exquisite, like most of his column’s other petard hoistings!


Just so Fannie and Freddie and their fans don’t feel ignored, the “Houser of the Universe,” also known as FHFA Director Jim Lockhart. Told a Washington luncheon of the Women in Housing Finance that the US soon would have access to 4.5% home mortgages, with Fannie and Freddie playing a major role in financing them?

Really, Jim??

Exactly how do the late lamented GSEs borrow money that cheaply—even ignoring the 100 basis points the companies traditionally would add to the rate at which they borrowed to protect them over the loan’s life--without Uncle Sam’s stamp all over their debt?

It’s the US Treasury which is borrowing 10 year money for around 2.5 percent, not Fannie and Freddie. Or, do you have a double secret plan to turn that arrangement around? And if so, when are you going to tell us…...before you leave town in a few weeks, I hope?


Shawn Donovan

I don’t know Shawn Donovan, the New Yorker whom Barack Obama plans to name as HUD’s new secretary, but I hope, when Donovan was invited to serve, he asked the President-elect, “What was first prize?”

Just teasing.

HUD is the Aegean stables. It needs a massive clean up removing lots of dead wood, dead programs, and dead ideas. Try and restructure everything that moves, Mr. Donovan. It can only result in the department being more efficient.

A few of my friends who know and have worked with Donovan claim that he is “first rate and up to the job.”

I wish him nothing but the best in a post which grinds up top people.

Maloni 12-15-2008

Wednesday, December 10, 2008

“Quit Moaning, Start Loaning”

Many thanks to old friend the Alex Pollock at the AEI for reminding me of that old bromide, which was real advice once, given to a prominent financial institution in New England, that was complaining about market conditions and competition.

It’s the kind of advice one would hope that our Treasury Secretary, Comptroller of the Currency, and Fed Chairman would give some of those big banks, feasting at Uncle Sam’s table, while forcing force the banks to do their part and thaw our national credit freeze.

The Fed and GSE “Receivership?”

Why would the leadership at the Fed be pushing for GSE receivership, as has been rumored “around town” this week?

I realize that is the large commercial banks “wet dream,” but doesn’t BB have enough on his plate and isn’t the ultimate Fannie/Freddie fate—two largely dead entities in the Treasury’s garage—the responsibility of the Congress, so given by itself in this year’s GSE regulatory restructuring legislation?

Of course forcing Fannie and Freddie into receivership would do away with any evidence that the companies were prematurely put into “conservatorship,” but that thinking takes us into fantasy land, right?

A better reason to delay final interment of the now non-GSEs is that nobody has come up with a viable mortgage market replacement, which presumably is what the congressional charge, to themselves for calendar year 2009, is all about.

Memo to Obama Transition Team

Speaking of rumors, while the Obama has been spending plenty of time with the Treasury Department (as they should!), insiders are saying that not as much time has been spent at the "new" Federal Housing Finance Agency (FHFA), the old "OFHEO." Big mistake. Unless the “Obamas” know they are going to recommend dumping the new agency because there won’t be any “Fannie and Freddie” left to regulate, someone needs to remind the incoming Administration that this “Keystone Cops” gang has presided over a whole range of regulatory disasters.

As recently as yesterday at the Waxman oversight hearings, it was noted that the OFHEO/FHFA troops have occupied the GSE offices and been onsight observers of about four years of management decisions.

If, as some claim, that management decisions were disastrous, what’s that say about the OFHEO/FHFA people who watched and blessed them?

Also, personal note to John Podesta, many of the senior FHFA managers have been GSE-haters from day one. Those aren’t good credentials for federal overseers.

Thank You, Barrons and “Nat from Pittsburgh”

Now maybe we can get some thoughtful action from Hank Paulson and his troops. They’ve stiff armed Susan Bair and the FDIC over mortgagor relief. They stiff armed the Congress over the same and then---with their wall-to-wall discretion-- decided to give money to banks which seem intent on using it to buy other banks, increase dividends, pay bank officials more, or just arbitrage it in their Fed accounts.

God forbid those banks should decide to lend it to individuals, business, or even other banks!

But, now, now Barrons has come out in its current issue—via an article by Jonathan Laing (certainly no great fan of Fannie Mae and Freddie Mac)—and called on the Treasury to initiative a massive mortgage refinance effort, utilizing the aforementioned “late” GSEs, to buy the loans.

High fives to Barrons, which now seems to agree with other great minds (me!) who claim that Treasury refuses to use Fannie and Freddie over some ideological hang-ups, totally ignoring the capacity and ability which those two “things” possess and their underutilized ability to help balance some of the mortgage market ills.

But, now we have a major New York financial publication--owned by the parents of the Wall Street Journal--calling for that result.

Barrons would have the Fed create a special lending facility, allowing Fannie and Freddie to borrow at near Treasury rates, which—after a small margin for overhead—would allow local lenders selling those loans or securitizing them with the entities, to offer a 4.5% or less loan rate to millions of American families.

(Ironically, the Barrons plan looks much like one that has been circulating in Washington for weeks, created by Nat Cohen, a Pittsburgh closing attorney. It’s not identical, but “close enough for grenades” and I know Cohen has been shopping his proposal to any number of mortgage market policy players in DC. I am sure that Barron’s didn’t “borrow” Cohen’s ideas. Instead, it must have been a case of bright people coming to the same conclusions about the same time, although “Nat from Pittsburgh” clearly was first!)

Go Barrons. I hope some of those deaf ears on the Hill might open themselves to you and your ideas. They make sense for the American people and the mortgage finance system, which is why Paulson et al might chose to ignore them. Solely, because it “wasn’t invented at Treasury or by this (outgoing) Administration.

Obama Leadership

This week over lunch a freind told me how moved/impressed he was with something Barack Obama told an interviewer, regarding energy conservation. Obama confessed to turning off certain lights in his home to save electricity and discussed other fairly easy to do things by which most families could conserve as well as cut down on their personal energy use and expenses.

My friend went onto describe all of the wonderful things that could happen if we truly got serious about saving energy, instead of just employing the rhetoric of same which has been the case for 20 years, and follow the President-elect's lead, here and elsewhere.

This caused me to go back to something I had hoped would evolve with an Obama win, the next President having the capacity, character, and vision to lead.

This may just be one of the times in history when the right man, with the right message,takes the right office at the right time, to lead this nation on a variety of successful efforts that sow the seeds for a much brighter future for all of us and our children and their children.

I think Obama has that wherewithal to achieve major environmental, tax, healthcare, education, financial and economic changes, in part because the American people—as they have shown time and again—will follow a thoughtful leader who lays out effective policy.

After eight years of disaster and “village idiocy,” I believe that the American people will insist that the Congress and the new President defang the special interests, who have found homes in one or both political parties io the detriment of all but a few, and bust phony barriers inhibiting future national greatness.

It's there for Obama to do and his early incilinations seem right on point.

Legal Times and Fannie/Freddie Books

The Legal Times had an article/interview this week with Beth Wilkinson, former Fannie Mae General Counsel.

Ms. Wilkinson, who the article notes is married to David Gregory, the new host of Meet the Press, discussed her time at Fannie and the specifically the Treasury and Fed meeting when both Fannie and Freddie were told that they were going to be put into conservatorship.

People who had read me know that I believe that decision was based far more on ideological and political grounds than market facts. *See earlier reference to fed and receivership.) But, what was done was done.

I think it’s fair to say that Ms. Wilkinson and I share a belief that when Fannie was taken down, in what I call Paulson’s “Sunday Smashdown,” the company had sufficient capital and market access to survive. I asked then why the Fannie board didn’t fight against this Bush Administration-led effort. Something Ms. Wilkinson was inclined to do.

I still haven’t found an answer to that question.

Maybe the writers currently working on Fannie Mae books--four at last count--can decide what really went down and why.

Maloni 12-10-2008

Sunday, November 30, 2008

Let Me At Those Banks

It looks like this will be shaping up as my “beat up on the big commercial banks” blog. Someone needs to do it and with regularity and force. Oh, and I might as well take a shot at a local newspaper, too.

Last week, the Washington Post editorialized how happy it is that Larry Summers, who will be the new head of President-elect Obama’s National Economic Council, was in a position to deliver some final solution to the Post’s perception of an ongoing Fannie and former Freddie problem? (Aren’t the former GSEs already all but dead and merely servants of the Treasury, which seems to be doing a lousy job at being a “Conservator,” since the Paulson-led Treasury seems to be acting more as “receivers” and liquidators than conserving the companies’ resources for future revival/use.)

Gads, suggested the Post, we cannot have any more of this confusing private/public
partnerships, in which an entity--using private capital and traded on the world’s stock exchanges—carries out some congressionally mandated broad public policy mission, in this case creating a national deep and liquid secondary market for US home mortgages. The newspaper’s hope is that Summers will be their Administration avenging angel.

(I don’t remember the Post in such high dudgeon when the companies were leading the residential real estate markets and helping millions of low, moderate, and middle income families secure a house of their own. Twenty plus years of solid performance in that regard should not get wiped out by business mistakes made in 2006 and 2007, when the company leaders moved away from their traditional financing role and put tons of toxic junk on their books. That’s bad judgment not a structural flaw.)

That editorial, coming from I now call the “Wall Street Journal-South,” located on 15th Street in Washington, DC, generated the following letter to the editor (one of many in the past several months, which the Post never prints).

So, for your edification, here’s my response to the Washington Post’s cheering for Summers to smite the GSEs.

Maloni’s Letter to the Editor

To Washington Post:

You can bash these companies all you want and call for their atomizing, but--so far--you've ducked the real issue and the consequences of someone making that implicit call.

It is not Fannie and Freddie which are vital to our residential real estate market, it is their function, i.e. a dedicated conventional mortgage market investor, the constant market presence of which allows thousands of local lenders to make mortgage loans at all times on a standardized and consistent basis, so that virtually every community in the nation is supplied with available mortgage credit at comparable costs

With Fannie and Freddie consigned to dust, should the banks conduct that mission, since--without significant charter enhancements--they have shown they can't and won't, or should that be a government (Treasury/HUD) responsibility?

The Post fails to explain that fixed rate mortgages--the American loan of choice--likely won't be offered or only offered at huge premiums over bank borrowing costs, if banks become the nation’s mortgage originators and the mortgage investor.

If you advocate for a new mortgage market structure, at least be honest with your readers regarding the likely consequences of that change. And while you are arguing against "public/private" lending entities--and in this instance which had huge affordable housing lending obligations--what have banks become with their huge federal subsidy of deposit insurance and, now, the various Treasury and Fed subsidies added in just the past few months?

(This was not in my letter, but it’ always is important to note that commercial banks and their mortgage banking subsidiaries, which now dominate the primary mortgage market, where consumers go to shop for mortgages, have no numeric or percentage of business affordable housing requirements.)


In this week’s Barron’s the following observation about commercial activity appeared in Michael Santoli’s column,

AT THIS POINT IN AN UNFORGIVING YEAR, it's worth recalling that the first Thanksgiving at Plymouth Colony in 1621 -- where there may or may not have been turkey on the table and the day's football scores went unrecorded -- was effectively a celebration of having merely survived for a year in an inhospitable environment.
Survival alone as cause for gratitude? Eleven months into 2008 and more than a year into a bear market that has shown a vicious flair for outdoing its antecedents, investors probably can relate to this sentiment.

Banks, the ones still with us, certainly can. They are hunkering down to ride out the year, counting the taxpayer-furnished capital that recently has arrived and sitting on it, earning what for these times is a handsome spread in safe-ish assets and getting healthy enough to fight another day.

What loathsome commercial banking behavior and responsibility shirking!

Excuse me, but are the departing Bush Administration and the staying here Fed telling us that the large banks can’t even be compelled to lend, when the Treasury and the Fed are feeding them billions in taxpayers’ dollars and other forms of relief?

Give me a break. Better yet, stop giving breaks to those financial institutions which seem to feast at the government’s breast, but refuse to help out, until they are ready. Translation: When the government ponies up even more gravy for them.

Aren’t most of those large lending institutions chartered by the federal government?


Did I miss something or when the Treasury and Fed did their “thing” for Citi, was the bank asked to stop lobbying Congress? Were any of the senior officers removed or even asked to pick a hurried retirement date, soon?

Talk about disparate treatment.

Fannie and Freddie were treated like town drunks and Citi gets velvet gloved.


Stiglitz on Treasury

And, while I am bank bashing, for those of you who haven’t read it, seek out Joe Stiglitz’s column of advice to the incoming Obama Administration, which appeared in yesterday’s Sunday New York Times editorial pages.

I think—in addition to a beat-up on the banks for their aforementioned perfidy—his opinion of what the Obama Administration owes the “Paulson Plan” is refreshing.

This is just an excerpt, as Stiglitz discusses the Treasury’s progress.

Stiglitz in the 12-30-2008 NYT

“But what you do with the money counts, too. The money needs to be spent carefully to ensure that every dollar provides as much stimulus now as possible while also contributing to long-term growth. That is why it is imperative to restructure the Troubled Asset Relief Program. Treasury Secretary Henry Paulson has already given away close to half of the $700 billion on very generous terms and without adequate restrictions on the use of the money.
“The intent of the program was not just to give money to banks but to get them to increase lending. It has not worked, so it needs to be changed. If taxpayers pour our hard-earned money into banks, then the banks should not be allowed to pour out the money as dividends to their shareholders or bonuses to their executives. Nor should they be allowed to use the cash to purchase healthy banks, in further efforts to become “too big to fail.”
“The Obama administration should not treat Mr. Paulson’s plan as immutable simply because “a deal is a deal.” The banks knew there pro quo. Besides, the terms of the relationship between the banks and the government (including the Federal Reserve) have repeatedly been adjusted, though almost always in favor of financial companies. The Fed used to accept only Treasury bills as collateral when it lent to banks. Now it accepts risky assets — junk.”


(Happy 39th birthday, today, to our first born and oldest of four sons, Jason Wynn Maloni. He and his wife, Andi, had their first child-- a daughter--seven months ago, and may Daryn give you guys as much pleasure and pride as Jason has given his mother and me, including that scary but educational “Beach Week” incident, more than 20 years ago!!)

Maloni 12-1-2008

Thursday, November 20, 2008

Grip and Grin

I am doing these days what a lot of “experienced Democrats” are doing, as I hear the familiar names and see the faces of all of the people I worked with in years past, being named to or rumored for key Obama positions. I am thinking, “Do I want to try and get back into that rat race?”

At home, I look at my “grip and grin” pictures and staring back at me from one section—beneath my most beloved photo, former Steelers Quarterback Terry Bradshaw and me "BS-ing" at a Realtors conference in Texas--are the smiling faces and/or extended hands, of Paul Volcker, Rahm Emanuel, Tom Daschle, Steny Hoyer, Charlie Rangel, Bill and Hillary Clinton, Ted Stevens, oops (must have been that damn celebration of the Alaska Partnership Office opening) and, again, I think, “Do I really want to start working 60 hours a weeks, again?

Nope, not at my age! And “hell, no.”

And then I look at my 401 (k) which has shrunk to a 101 (AA) size and think, “Hmm, maybe I should do, say, just 20 hours somewhere?”

Now, I begin to sweat those 6 dozen questions Obama job applicants must answer. I’d need about five dozen extra pages just to do my “enemies list,” those who have me on theirs and those whose names appear on mine, and that’s just Hill colleagues! , on upper

While walking my dog and pondering these weighty matters, on upper Connecticut Avenue earlier this week, I cross paths with an old friend and neighbor, the always handsome and suave Julian Bond. We shake hands as fellow conspirators in the post-Obama time might and I asked the former NACCP head and civil rights warrior, which Obama Administration job he most wants? He laughed and said, “Court of St James.”

I wished him luck, but before separating. I remind him that if he needed a chauffeur, I know how to drive an automatic, even on the left hand side of the road! (Note to self. Consider substantive overture to Bond my initial Obama job application!)

I think to myself I could get by the “Obama no lobbying standards,” since I haven’t been paid to lobby anyone or advise them how to lobby, since 2004, even though—certainly with my blog—I have been an advocate. Maybe just being in advocacy doesn’t disqualify you, at least from driving for an ambassador!

The old surge, the power in the belly returns. I feel it. I’m in play, especially if "neighbor Bond" gets his British job! I now realize that a low key job in quiet Merry Olde England, working for Mr. J Bond as his driver, could provide me with a real “Quantum of Solace!”

Oh, oh. I now am feeling seven times happy!!

Hillary and Andrew

Where do the Democrats want to put Andrew Cuomo, if Hillary Clinton is named Secretary of State? No, seriously, this is a real question, not a request for a multiple listing of vile places and ribald jokes.

Can you imagine what kind a campaign Andrew would lay on New York Governor David Patterson demanding that Patterson appoint him to fill Hillary’s unfinished Senate term?

Does Patterson want Cuomo the hell out of the state? Does Chuck Schumer want Andrew’s competition for all of those cameras in DC? Do the Senate Democrats need another “shy, retiring, team player” like Andrew, issuing multiple daily press releases?

Arguing that it would be impossible to comb through Bill Clinton business records, partnerships, and dealings might be the easiest answer, plus it keeps Andrew in the New York AG’s office, which is not a bad fit for him (noted with a left handed compliment!).

Help for Detroit?

The only guy I worked for in my 11 years in Congress, Rep. Bill Moorhead (D-Pa) was the chief sponsor of the Chrysler loan guarantee legislation in the 1970’s, the last time Washington helped the auto industry.

Ironically, this time, I would let one of the Big Three, likely Chrysler, declare bankruptcy and then maybe help the remaining two, Ford and GM, but only in return for stiff corporate and labor give ups.

The problem is that there are better and cheaper cars available to us, made in the US by American workers—even though they carry Japanese names--and until that market dynamic changes, Ford ,GM, and Chrysler wont’ succeed.

The “Big Three” also are gluttonous and the unions have to kick in, too.

Listening to the senior auto officials plead their case, watching AIG seek/demand $150 billion in federal assistance--almost double the $75 Billion the Treasury offered—and complain they need to accelerate their officers deferred compensation or risk losing these talented people, and then hearing the commercial banks ask for money but refuse to lend what they have or what they are getting from Treasury to consumers and small businesses, really makes me sick.

Can those with their hands out begging understand that “you have to give to get” and, if you don’t want to, you shouldn’t get!

Supplicants never should be selfish!

GSE Issues

There was supposed to be a hearing before the Henry Waxman (D-Cal.) Investigations Committee today, featuring former Fannie and Freddie CEOs, Frank Raines and Dan Mudd, and Leland Brendsel and Dick Syron. It’s been postponed until Dec. 9, so that the Committee Republicans can bring some witnesses of their own. (Congrats to Waxman who toppled “Old Bull” John Dingell for in the contest for Chairmanship of the House Commerce Committee? I wonder if tat success came from Dingell’s life long support for the auto industry at a time when those Detroiters don’t look very good?)

Rep. Waxman and his staff have run a super set of hearings soliciting informative and revealing testimony from major players in the economic and mortgage meltdowns, which have laid so low our economy.

But, what else could the GOP be trying re Fannie and Freddie, with its new witnesses? On the Committee first day of hearings—with the then McCain campaign in full bloom—the GOP brought forth a “minority report,” filled with errors and distortions which tried to blame the entire economic collapse on Fannie Mae and Freddie Mac, as well as the subprime mortgage fiasco which came courtesy of Wall Street and lax or non-existent GOP federal regulation.

That didn’t stop the R’s—and Tom Davis of all people who supped so deeply at the Freddie trough—from trying to blame the local companies for everything (including the “heartbreak of psoriasis”). Those allegations now largely has been swatted away by a variety of media and businesses sources not connected with the former government sponsored enterprises, which shows the mistakes they made but equally makes clear that Fannie and Freddie were not the root cause of much beyond their own demise (which itself may have been premature and politically dictated).

So, now that the McCain camp which tried to use this same “Fannie/Freddie did it” fairy tale in its anti-Obama campaign—is history, as is most of Fannie and Freddie--what are the Republicans going to dredge up to in an effort to sanitize their regulatory shortcomings and, once again, blame Fannie Mae and Freddie Mac?

Most observers point to the seminal actions by Mudd and Syron, respectively, to purchase large amounts of toxic Alt A and private label subprime securities (PLS) in 2006 and 2007, as the major red ink causes.

But, almost as important, is the fact that virtually every aspect of the two mortgage companies business was presided over and blessed by their former regulator the Office of Housing Enterprise Oversight (OFHEO), following the May, 2006 consent agreements both companies signed with OFHEO. From that point on, the regulatory agency had their own employees in both companies every business day of the week reviewing all transactions and decisions.

If the former GSE managements made bad business calls, what’s that say about the OFHEO staff who shared in their meetings and machinations?

This next Waxman hearing should be fun to watch as the Committee GOP has to perforce blame other Republicans for mortgage misfeasance or malfeasance!

(Mt deepest condolences to the children, grandchildren, and other relatives of Angelina Luchetti Maloni, my brave sister-in-law, who passed away on Thursday afternoon. Angie was my late brother’s wife and had just turned 69 last week. Rest in Peace, Angie, I'll keep and eye on the kids.)

Maloni 11-20-2008

Tuesday, November 11, 2008

Big Bad Paul

Kinda narrow at the shoulders and broader at the hips, but everyone knew that you give no lip to Big Paul, Big Paul, Big Bad Paul……!

I apologize to songwriter and successful sausage maker Jimmy Dean for ripping off a line from his famous “Big Bad John” lyrics, but Paul Volcker deserves the accolades and more.

If President-elect Obama just will name Paul Volcker to Treasury—even for a year, keeping Larry Summers at the NEC in waiting—I’ll feel vindicated and like a seer for suggesting on November 5 that Obama choose Rahm Emanuel and Paul Volcker for WH CoS and Treasury Secretary, respectively. As competent as Larry Summers and Tim Geithner are, neither has the domestic and international heft of Paul A. Volcker.

His insight and steely resolve to keep interest rates high in the early 1980’s, which successfully squeezed the remaining life out of Post-Vietnam inflation—and ushered in years of U.S. economic expansion and positive growth-- is considered Herculean and heroic by most economists and students of public policy. I worked for the Fed and Volcker in those days and watched as he was excoriated by the nation’s housers and vilified by Congress because he kept interest rates in the high teens.

Volcker would be an exceptional choice for Treasury Secretary.


Just as Paul Volcker gives gravitas and strength to how President Obama will go about achieving the Obama financial priorities, so too does Rahm Emanuel provide the same as the President’s conductor keeping the trains running on time.

I have to laugh at all of these pundits (mostly Republican) who reacted in mock horror to Obama choosing Rahm Emanuel as his White House Chef of Staff.

So what if Emanuel’s buddy, Paul Begala, respectfully describes the new CoS as a “pain, somewhere between a hemorrhoid and a toothache.” Rahm Emanuel has a reputation for hard ball, success and achieving his objectives. A new President facing the mountainous challenges staring Obama in the face needs someone just like that at his side and watching his back. So, he’s the iron fist inside of Obama’s velvet glove. Obama knows warmth and charm, alone, can’t drive policy changes, and major ones at that, in Washington. They call those interests “vested” for a reason.

If you are going to make legislative and policy “omelets,” I can think of few Democrats I’d rather have breaking those eggs than Rahm Emanuel, which was why I touted him last week.


Is anyone besides me upset at the behavior of the Administration and the big banks? The whole drill about giving the banks federal cash infusions was for them to use the cash to “unclog the credit markets,” by making commercial and personal loans, not to pay/boost dividends and take over weaker institutions.

It’s a simple model to implement, if the bank regulators showed some guts.

The banks get additional cash, if the banks agree to make loans--not to “everyone” or the “less credit worthy,” as the bank flacks try and imply--to those individuals who can repay the loans and those businesses seeking to expand and hire more employees.

And, yes, that criteria and performance can be measured by serious financial regulators and, yes, the banks can be held accountable.

Must the nation suffer even more before the large banks—which caused some of the mess—decide to get off their butts and do what they do best and that’s lend money?

When Fannie and Freddie both were given the significant housing goal challenges in the early nineties and some company officials asked if that large a percentage of credit worthy “low, moderate and middle income families, existed out there,” their regulators bluntly told the GSEs to “find them.” The banks should be given the same direction.

Election 2008

Many people are asking some variation of the question, “What does the GOP have to do to make itself relevant and competitive, again?” First the GOP has to stop blaming the media, fate, Palin’s wardrobe or her geographic educational gaps for Obama’s win

The dogs didn’t like your dog food. You lost the election. Your numbers dropped in both the House and Senate and there are still a handful of Senate and House races yet to be decided. The best thing the GOP could do is look critically at the election night tapes from Grant Park in Chicago and the same crowd scenes from John McCain’s Phoenix campaign hotel. There was a lot of happy diversity in Chicago and a bunch of Caucasians in Arizona. I know you R diehards hate to hear this, but the United States no longer is a white nation, politically. At some point the GOP will awake to that fact and truly open its policy doors and invite in blacks and Latinos.

Just adding some more white faces and fair hair, as I saw at the convention in Minneapolis and on the ball room floor in Phoenix, isn’t going to cut it or win future elections. That’s not a cheap shot, just demographic reality.

By actively opening your tent flaps and welcoming in others, your party platform should change and also reflect the needs of those not so well off and headed to the Ivy League, either scholastically or socially.

Your crew on Wall Street ended—for the near term—your “less regulation and more tax cuts for business” political mantra. Plan for that change.

“W” murdered your “less government, less federal spending” party platform planks. Paulson and Treasury, with its nationalization and forced bank equity investment, put “socialism” in a whole new light, especially as it was carried out by a Republican administration,

Oh and although she won her election, drop Rep. Michele Bachman (R-Minn.) as a party spokesperson. Calling for media exposure of “anti-Americanism” in the Congress is wing nutty and loopy enough to resurrect J. Edgar’s cross-dressing ghost.

Fannie, Again

The Washington Post had a front page story, today, discussing the problems of Fannie (and Freddie) especially since the government/Treasury seems to have reneged on parts of its deal with the former GSEs.

Note: Treasury still hasn’t put a dime into Fannie Mae, but that hasn’t stopped the Paulson mob from demanding that it to do more mortgage finance.

Yet, with rising debt costs due in large measure to Treasury’s policy of not making clear the status of those debt securities (are they backed by the government or not?), Fannie can’t borrow cheaply enough to keep the conventional mortgage market liquid. So, that market will stay turgid.

Congress may want to begin asking questions about the real motives in the GSE “Sunday Smashdown” takeovers, since making the companies more effective clearly hasn’t come to pass and likely wasn’t on the GOP’s real agenda.

The conventional mortgage market just won’t function smoothly without a dedicated mortgage investor, buying product 24-7. from lenders in all communities in the nation.

The Government National Mortgage Association or “Ginnie Mae” does that for FHA and VA government loans. But, until the Treasury takes its boot off the necks of the former GSEs, you won’t have a similar operation in the conventional markets. And, most mortgage observers understand that.

So, I’ll keep saying it to the Congress, “Get ready to create a new “Fannie and Freddie” or take a smart shortcut and figure out how to breathe a little life into the ones you have, before Treasury sucks all of the life form them and you have no options and a rapidly deteriorating conventional mortgage market.


Temporaily, I am putting away my political six guns back, since I assume it wasn’t lost on anyone that two major GSE antagonists (John Sununu and Chris Shays) were defeated last Tuesday and a third “wannabe” (Elizabeth Dole)--who frankly didn’t have the smarts to do anything original on GSEs--also went down. Just call it “mortgage frontier justice.”

Add the retiring Chuck Hagel *R-Neb,) to that list and a lot of GSE animus will leave the Congress this year. When the next Fannie/Freddie issue arises, Senator Shelby (R-Ala,) may have to caucus in a phone booth.

Maloni 11-11-2008

Tuesday, November 4, 2008


So long sad times
Go long bad times
We are rid of you at last
Howdy gay times
Cloudy gray times
You are now a thing of the past

Happy days are here again
The skies above are clear again
So lets sing a song of cheer again
Happy days are here again

I think it’s safe to say that Barack Obama’s stunning victory can be grounds to drag out this “Tin Pan Alley” standard--which is most associated with Franklin Roosevelt’s the 1932 election win and subsequent Democratic victories--and begin to celebrate this new day for our nation and the world.

We still have about 10 weeks of George W. Bush and his cabal, but most of those appointees will melt away before “W” gallops into that helicopter on the White House lawn on January 20, 2009, and finally departs.

Obama and his team now need to ask themselves the question that military commanders have asked themselves, literally and figuratively, since time in memoriam, “We’ve taken this hill now what in the hell are we going o do with it?”

I won’t offer President-elect Obama my “to do” list, since I am sure that he has a long list of his own. But one idea which appealed to me came in a recent letter to the Washington Post from a college student’s father.

He suggested as long as the federal government is giving billions to Wall Street, why not take some of that money and “forgive every college student loan,” made during the Bush years, so these kids and their parents can put that money into the economy and not give it all to the banks, since their “Uncle” seems to be nicely taking care of those financial institutions.

Once you iron out the details, that idea makes a lot of sense to me, as long as we are “forgiving” some debts and throwing federal dollars around. I think that is a symbolic and solid investment in our future and removes some financial burdens for lots of middle class kids and their tuition-paying parents.

Those GSEs, Again

I hope that idea fares better than my “Find a way to use Fannie and Freddie” to help with the Treasury’s not yet undertaken, “but I promise you soon to be,” massive mortgage backed security asset sales that the Treasury has promised us shortly will be forthcoming, once they give all of their Wall Street friends the jobs and opportunities to move those failed “private label” mortgage backed securities, meaning non-Fannie Mae and Freddie Mac securities.

In the meantime, Fannie and Freddie sit on their hands, waiting for Henry Paulson to state unequivocally if the former GSEs debt—as the Bush Administration advertised--is backed by the federal government, which should bring mortgage arts down, or is their debt “almost/nearly, a scosh/kinda/maybe” backed by the full faith and credit?

Confusion over this fact just makes the job tougher for everyone in the market.

I wonder if it has occurred to the Hill Democrats, who invited “the GSE nationalization,” that nobody in the Bush Administration really seems to know what to do with Fannie and Freddie now that the companies have been subsumed by the government and our national mortgage market continues to suffer.

It appears that the Republicans’ only policy goal was to destroy Fannie and Freddie, as per the early Reagan mandate. Now that they’re put the companies in the crapper, the GOP is headed out of town and will let the new Obama Admin dispose of the bodies.

Even Ben Bernanke, last week, in his “we hate Fannie and Freddie but we need them” speech hinted at the reality. While Fannie Mae and Freddie Mac as corporate entities may not be needed, but their exclusive function as dedicated investors is needed to create and maintain the United States secondary mortgage market.

Until the Congress (re) creates a dedicated mortgage investor, we will continue to have flawed and illiquid conventional mortgage markets and unnecessarily high mortgage rates.

I still haven’t heard anyone rebut this analysis or offer a viable option, beyond letting HUD make every mortgage to American families.

Senators Obama and Biden. You have New Jobs, Dudes!

Congratulations Senators Barack Obama and Joe Biden, now Mr. President elect and Mr. Vice-President elect. May you both serve long and well and may this nation and the world enjoy the benefits of your success!

(While you haven’t asked me Mr. President elect, I would name Paul Volcker your Secretary of Treasury and Rahm Emanuel your White House Chief of Staff.)

Maloni 11-04-2008

Wednesday, October 29, 2008

Obama Should Win, But.....

Barack Obama should be the next President of the United States.

I am not going to make any wild offers if the nation doesn’t elect him President. But if Obama does not win handily, including taking states that long have voted Republican in presidential elections, it only will be because he’s a black man and the implications of that are chilling.

George Bush and his failed policies across the board left John McCain with little political foundation and much to defend. And yes, the McCain voting record very much supports the vapid Bush doctrines. The American public, correctly, blame George W. Bush for much of the current domestic financial and international malaise.

John McCain has run a very bad campaign, filled with indecision and bad judgment. McCain no longer is the “maverick,” having given up that title when he scurried decidedly to the right to win his party’s nomination. If given the unavailable second chance, I doubt McCain would choose Sarah Palin as his running mate. Mike Huckabee, Tim Pawlenty, or even Condi Rice would have been superior choices.

On the other side, Obama has run a superb campaign. He has generated excitement among the young, helped generate thousands upon thousands of new registered voters, and attracted millions of dollars in small contributions from those who never have given in the past. He’s attractive, smart, appealing and seems—more than McCain—to have the charisma to lead this nation back to balance and leadership around the world.

Poll after poll—measuring different slices of registered and likely voters from across the spectrum—show Obama the desired candidate.

All of this screams, “Obama Wins.”

So, you see where I come from with my opening statement.

We’ve read it a hundred times. You can’t poll for racism or discrimination. People won’t admit to it, with some not even aware they are subject to it.

One prominent New York Times columnist wrote last week, “There are not enough racists in America to turn this vote for McCain.”

From his lips to God’s ears!!

Fannie, Redux

How can all of those well-meaning folks on Capitol Hill not get pissed at reports like Tuesday’s Wall Street Journal story, “Rescue Plan Faces Delay in Hiring Asset Managers?”

The news article discusses the Treasury problems in finding outside talent to do the initial work to identify, acquire and sell the billions of failed mortgage assets necessary to unclog the nation's credit markets. The WSJ writer records typical and very predictable government related bureaucratic problems.

The article says that once in place, “The managers will help determine which assets to buy, when to buy them, and whether to sell or hold them.”

Golly gee Batman, isn’t that what hundreds of Treasury-indentured officials at Fannie Mae and Freddie Mac do every day for real?

Except for Treasury arrogance or reverse hubris, some smart government official should simply tell the Fannie/Freddie CEOs-- both of whom are Bush choices--what needs to be done, give them the business tapes (identifying the security assets) and tell them to get the best price for the sales, WITH ALL PROCEEDS GOING TO THE TREASURY?

That should take about four phone calls and three email messages to get going! (Are you reading this Barney. Chris, and Chuck??)

The two companies and their eight or more thousand employees, all of the former GSE operational systems, and market talent are already owned/controlled by the Treasury and those work forces surely will do what they are told, at minimal cost to the taxpaer.

Many people have made this totally logical suggestion and more will, as Treasury drags its feet in putting people into place and insists on replicating what already exists at Fannie and Freddie. What a waste or time, especially since everyone says this sales step is necessary “restart the credit markets.”

Fannie Redux, Redux

How many times have I heard the “McCaniacs” say, “And Fannie Mae employees have contributed more to Senator Barack Obama than any other Senator in the Congress, except Chris Dodd!

I have no idea if that is true, but let’s assume it is.

Two things standout. One, both Dodd and Obama ran for the Democratic presidential nomination, so some/part/much of that money is based on Fannie employees (who are citizens, too, with First Amendment rights) liking them in their senatorial roles, but also preferring them as presidential timber.

In addition, Dodd—now Chairman of the senate Banking Committee--always has been a “houser” and someone Fannie always viewed as a supporter.

McCain has been a GSE critic, albeit one with a much lower decibel quality than his campaign purports, and part of the Bush mob which has harrassed and challenged the GSEs at every turn.

Now, tell me again, why Fannie Mae employees, with a large contingent of minorities, should prefer John McCain? Wasn’t it enough (or bad enough?) that Fannie’s former CEO was a McCain financial supporter?

Last Media Laugh

The GOP has been blaming the media for their political and policy weaknesses and certainly McCain and Palin’s less than stellar showing

It almost had me feeling sorry for the Grand Old Party. I started wondering if there was anything to this and then I remembered that these hacks were the same crew that started blaming the media for Bush’s failures and McCain’s missteps months ago, hoping to get some “media guilt” coverage.

These were the guys, in 2004, which couldn’t give a fig about “swiftboating,” and lied about WMD, Iraq, and Bush’s abysmal record and policy decisions. These were the guys who didn’t think cheating in Florida in 2000 and then trampling their own “state’s rights” philosophy to have their Supreme Court steal the first Bush win.

If the media is biased, then it is the Republican’s fault, because they baited and then whacked the very reporters from whom they wanted good coverage.

I have no sympathy for the GOP, their lament, or their cause. I only hope that every Obama poll showing very positive numbers is an understatement of the facts.

If an Obama-Biden victory is forthcoming next Tuesday, the message GOP survivors should take away is simple, “You kept trying to feed America crap. It tastes lousy and we don't the GOP menu anymore!”

Maloni 10-29-2008

Wednesday, October 22, 2008

Desperation on the Right

“Beelzebub to the Seventh Level, Beelzebub to the Seventh Level. Bee paging Senator Joe McCarthy. Paging Senator McCarthy. Joe, get your skinny butt up here and bring John Birch and J. Edgar with you. Make sure Hoover isn’t wearing that damn frock. We’ve got problems in McCain land and you three are needed.”

Let see, in the past week one of the McCain-Palin surrogates suggested Barack Obama and many (Democrats) in Congress are “un-American.” Governor Palin, herself, implied Obama and Biden were “socialists,” and then—the coup de grass--Rep. Lamar Smith (R-Tex, senior Republican on the House Judiciary Committee and several other senior R’s asked the Attorney General to investigate the GSEs and, implicitly, the Congress for failing to pass GSE regulatory legislation, when the Republicans were in control of both chambers and George W. Bush was President!!

Mulder, Scully, are you listening? It hardly gets better than this.

But, it will, the nasty right wing poop throwers are out in force, because the GOP is facing significant congressional electoral defeats and its troops are panicking. That frenzy is forcing decent folks like Spencer Bacchus (R-Ala,) to sound silly, while whacko folks, like Rep. Michelle Bachman (R-Minn.), sound even more wing-nutty.

Bachman started it last week, calling for the “media” to investigate all of the “anti-Americanism” in Washington, which she justified by saying Obama recently hung out at corporate board meetings with Bill Ayers, the 60’s “Weatherman,” who served time for Vietnam War era domestic hostilities (when Senator Obama was 8 years old). Bachman not only wants the press to examine Obama, which it seems they have been doing, but she also wants the media to look into the entire Congress, too! (Has anyone heard her current rant, denying she said what she said, all of which was captured on national TV Uh, Michelle, and they have you on tape?)

Then, Governor Palin, after trying to escape her self-inflicted gaff of calling some parts of America more “pro-American” than others, suggested that Senators Obama and Biden have socialistic tendencies.

Socialistic tendencies………Hmm.


Socialism refers to a broad set of economic theories of social organization advocating state or collective ownership and administration of the means of production and distribution of goods, and the creation of an egalitarian society

As my good friend John Buckley reminded me, “Socialism” looks like what Hank Paulson produced when Congress gave him that unbridled “financial bailout authority.” John said that Hank first rolled up Fannie Mae and Freddie Mac, ending their lives as shareholder owned companies and making them federal instrumentalities. The Treasury Secretary moved on to the federal takeover of insurance giant AIG, taking on all of its financial obligations. Still acting very “Leftist,” Paulson—channeling his best Karl Marx-- blackjacked several of the nation’s largest banks into accepting Treasury equity investments and guaranteed the debt and securities of dozens, maybe hundreds, of other financial institutions?

And that was just in a month’s time. Those damn Republican Socialists work faster than their D wannabees.

Are Paulson’s audacious acts the kind of socialism Governor Palin worries an Obama Administration will undertake? Maybe she fears a continuation of the Marxism that the GOP, without much Democratic input, decided was their chosen/preferred way to fix the nation’s financial and economic problems.

Or, is there another kind of “GOP pro-American Marxist Socialism,” which Paulson has been practicing? I guess we need only to wait for the next McCain-Palin press release to find out the answers.

Marxism and the Brothers!

What Lamar Smith (R-Tex) did this week is Marxist, too, but more Groucho or Harpo, than Karl!!

In a sequel to the “Gang that Couldn’t Shoot Straight” book and movie, the House Minority Leadership, acting through Smith and others, blew the whistle on themselves and asked Attorney General Michael Mukasey to investigate the nasty dealings of such thugs as Richard Baker, Jim Leach, Tom DeLay, John Boehner, and Mike Oxley, many in the Bush Administration, and a gaggle of GOP Senators and their Fannie/Freddie tormenters—since those public officials and the White House controlled the levers of congressional power when Fannie escaped getting nailed!

What a rogues’ gallery of perps and conspirators! Where’s a good guillotine when you need one?

The congressional descendants of Lincoln’s party argue that the GSEs failed to acquiesce to their demise. Fannie and Freddie refused to go along quietly with the GOP’s planned legislative beheadings and, instead fought the efforts, even employing some Republicans to do so! Shocking, shocking! What would Jack Abramoff say or do??

The House R’s want DOL to investigate that outrageous behavior investigated and name names!

Now, the reason the Democrats are exempt from this witch-hunt, obviously, is that the minute they took control of Congress in 2007, following the 2006 elections, they went to work on GSE regulatory reform legislation Those efforts became law this year, with broad GOP support.

So, where did those aforementioned R’s come up short—between 2000 and 2006--when they controlled everything? Maybe Mukasey does know?

I have a suggestion, since this investigation won’t happen in the next two weeks nor will it save those House GOP seats. The Republicans just should confess their guilt and seek contrition.

Institutionally and morally, there is a certain catharsis in coming clean and atoning for your sins.

I urge every single GOP Senator or Congressman--who thinks they have been manipulated by Fannie Mae and Freddie Mac-- to give back any political contributions he/she received from Fannie and Freddie’s PAC, immediately, including those several $10,000 totals sent to House GOP Members. (See past three cycles of GSE political contributions.)

However, what could be far more valuable and enlightening to the public--in this GOP campaign to confess and do right--is if each of those House and Senate R’s would “monetize” (“Fed” terminology to put a dollar value on something that doesn’t necessary lend itself to quantifying) the bountiful, high quality, and “reaffirm my incumbency” press coverage/PR each of them obtained by joining personally with Fannie and Freddie in the dozens of housing initiatives announced all over the country, in their congressional districts, and in Washington.

Let Me Count the Ways…

I am referring to those huge politically valuable congressional appearances at all of the GSE bilingual housing fairs, where those GOP Member/Senators were asked to participate; the Partnership Office openings and regular briefings and reports, detailing GSE mortgage finance created in their cities and states, with those GOP pols present and taking credit; the ribbon cuttings on senior citizen housing events or handicapped housing facilities, which each company financed and which each managed to have some local Congressman/Congresswoman or Senator present, making appropriate comments; the hundreds of industry group meetings with local builders, Realtors, lenders, and consumers, where these now self-righteous public officials could bathe in the “GSE-provided” aura of being "housers,” ingratiating themselves to their constituents, and also getting valuable face time and introductions to local housing finance industry movers and shakers, who also were helpful at fundraising time.

Quantify the value received, convert it to dollars, and give it back. Re-establish your political virginity! Seek public absolution for your “GSE-driven fall from grace” and donate that money to a community group at work helping the less fortunate.

In doing so, repeat, “When we Republicans ran the Congress, we were ‘taken in’ by those damn GSEs and our elected Caucus leaders, too.”

Given what they seek, I think the R’s should relieve the Justice Department of this burden, simplify the AG’s tough job, and save the nation the expense. The House GOP guys and girls should join hands, walk down to the DOJ, hang their heads and offer AG Mukasey a “Pogo” explanation.

“Yep Son. We have met the enemy and he is us!”

Maloni 10-22-2008

Sunday, October 19, 2008

Not Good Being John and Sarah

--In the latest Maloni blog, I hope to start a regular occurrence, a “guest segment,” where a knowledgeable financial services individual shares his or her views in the blog for the readers.

--See our first contribution from a long time friend and colleague, following my pithy contribution!

Bad week for the GOP. “Flush, swirl, swirl, down, down.”

It’s the sound of the McCain-Palin campaign going down the commode.

Senator McCain tried—again--to play Fannie Mae “whack-a Mole” on Barack Obama’s head, in their final debate. McCain resorted to that chestnut three times in three debates. Add Governor Palin’s same tactic in her one debate with Joe Biden and you have four times the GOP ticket, on national TV, tried to con the American public and blame Fannie and Freddie for our nation’s most serious economic problems.

That either makes the Republicans egregious liars or candidates unwilling or unable to understand and explain the real causes of some of these problems.

John McCain and Sarah Palin apparently haven’t read my recent blog, suggesting McCain is a “fraud” for trying to assume alpha dog leadership of the “GSE whistle blowers?” Does he think his name is Sununu, Hagel, Shelby, or even Richard Baker, whose real anti-GSE personas, he’s trying to claim as his own?


And what is Governor Sarah smoking?

Her response to the Alaska Legislature’s “Trooper Gate” report, which detailed her and husband Todd’s part in trying to get her brother-in-law fired from his State Police job, was, “I’m very, very pleased to be cleared of any legal wrongdoing…any hint of any kind of unethical activity there.”
The report very clearly says that she violated the state ethics laws! Were the words too big for her?

I guess in the “I’ll get back ta ya.” wink, wink Palin world, the state investigator’s words mean something else.

My Almost Nobel

Congratulations to Princeton University professor and New York Times columnist Paul Krugman for winning this year’s Nobel Prize in Economics. Krugman just barely edged me out. No Swede told me that I was in the running, but I knew I was.

Notably, just before Krugman’s award was announced—while I was measuring my office drapes at the Nobel Institute--I added two of Krugman’s NYT articles, to the fabulous “index” in my last blog, which contained a variety of high quality works blowing large holes in many of the McCain and Bush distortions about Fannie and Freddie being the cause of the subprime mortgage problems and the broader economic collapse. It must have gotten Krugman over the top.

Good work, Paul, A kronar for your thoughts, or 10 million to be exact.

Just to repeat the obvious, “subprime mortgages securities”—named because Fannie and Freddie only originated “prime” quality mortgages”—were created exclusively by Wall Street outside the GSE systems, employing a direct mortgage broker to investment bank network which delivered loans for packaging and resale throughout the world.

Private label subprime securities (PLS) did not come through or from the more traditional Fannie and Freddie automated underwriting systems.

The financial services companies and hedge funds, chasing high yields in 2006 and 2007, bought hundreds of billions of PLS securities and/or dealt in their derivatives distillations, making huge financial mistakes. Fannie and Freddie were guilty of those same PLS and Alt A mortgage purchases.

These self-inflicted mortal wounds have taken their corporate toll, at Bear Stearns, Indy Mac, Merrill Lynch, Wachovia, Countrywide, WAMU, Lehman Brothers, and AIG and on and on. Fannie and Freddie still exist in some more dead than alive “zombie state.”

I expect that others soon will make that trip to capitalism’s Boot Hill.

All of these businesses made the same egregious error. They bought the poisonous PLS subprime garbage or similar low quality mortgage backed securities. The poorly underwritten mortgage loans backing the bonds went bad so completely and quickly, that the private guarantors could pay not their debts and/or ineffectively bought sophisticated hedges upon other sophisticated hedges, with the results not changing.

A bunch of “smart financial services people” outsmarted themselves and the nation is paying for it.

If you must have someone or something to blame, you might ask how did all of these financial services companies and hundreds more--each of which was regulated by one of the following federal regulators SEC, Fed, Comptroller, OFHEO, or the OTS—avoid having their primary regulator flag, stop or slow down their financial stupidity, before they had no option but to go belly up?

Rather than own up to that, it’s easier for McCain and fellow travelers, including our very unpopular President George W. Bush, to prevaricate and blame for the fault two “cutesy pootsie great headlines named companies,” than to tell the truth about disengaged or neglectful federal financial regulators, playing their GOP parts as lovers of laissez faire business practices.

Let’s Use the GSEs!

There were other notable developments this past week, as the nation lurched from bailout crisis to bailout crisis and as most people saw their 401 (K) shrink to 101 (B) size. These included non-choreographed but complementary—and possibly prescient-- statements by banker Lew Ranieri, economist Susan Woodward and Rep. Barney Frank (D-Mass.), of House Financial Services Committee fame.

Their common theme was “don’t forget Fannie Mae and Freddie Mac (the heretofore Maloni-designated “dead”), when the real work starts.

Frank and Woodward (she in a Washington Post op-ed) reminded Treasury not to ignore Fannie and Freddie when it took on its Herculean new task of cleaning out the Aegean mortgage stables.

Ranieri, the “father of mortgage backed securities” and a delightful and very smart individual who has been in the mortgage business for 30 years, said the following to an audience at Harvard’s Joint Center for Housing Research.

"The biggest and most necessary challenge will be rebuilding Fannie and Freddie. We are not going to have a market unless we have a deep, stable institution or institutions willing to take appropriate risk and carry it into the future….A properly reconfigured Fannie and Freddie is the most important thing we can do."

Fannie, Again

Speaking of which, with all of the focus on the new $750 Billion initiative and everybody wondering how it’s going to get done and who is going to do it and will it be enough, etc. etc, has anyone seen the US Treasury put one emergency dollar into Fannie? Has Treasury paid any of Fannie’s creditors or sent checks to those holding GSE MBS? Did Treasury step up and meet a Fannie payroll?
The answer to all of these is “No,” because Fannie seems to have their own money and continues to meet all of its financial obligations.

Did anyone look at Fannie’s Second Quarter business report and notice that the company paid federal taxes? You only do that when you make money, not lose it.

Those “Second Quarter” losses, which caused the Admin and the Hill to go to the racks, were accounting losses, based on the same accounting rules which regulators now seem to be relaxing.

If Fannie’s “Third Quarter” report—due out in a few weeks--shows that they paid federal taxes for the last three months, some of the bright Senators and Congressmen, who rolled over when Paulson “at the last minute” asked for “emergency” authority to nationalize the GSEs, just might want to ask, “What in the Hell just happened” and on what basis did Fannie stop being a viable company, since it had and still has positive capital?

For those who just don’t understand how the mortgage market really works, let me state that our markets require a dedicated mortgage investor, so lenders readily can sell their originations and not have to hold mortgage loans on their books.

The Congress and the new Administration either will awake to this commercial reality and either create a new one or set; utilize the remnants of Fannie Mae or Freddie Mac, or as my friend writes below, the country better learn to like adjustable rate mortgages, because that’s all the banks will make.

In the wake of this current real estate meltdown who wants top hold mortgage debt or MBS, unless that is your exclusive and unquestioned market role?


I first met Gwenn Hibbs 25 years ago, when I went to work at the old Federal Home Loan Bank Board, the savings and loan industry regulator, and she was a staff attorney. The Bank Board, under the late Jay Janis and his very able assistant Rita Fair, had a covey of super bright young lawyers, many of whom I’ve been fortunate enough to stay associated with over the years.

Gwenn was part of that group of smart financial regulatory lawyers who worked extremely hard in the nation’s last financial services crisis, when the thrift industry imploded. In addition to her technical legal skills, I remember that Gwenn once wrote every lyric for a dozen lawyer sung songs for a Bank Board holiday party.

When I first could, I hired Gwenn to work with me at Fannie Mae, as my legislative counsel.

I told people that Gwenn, as a lawyer, “could do more with two commas than most attorneys could do with 10 words.” She retired from Fannie before I did and, since, has worked with kids in need, taught music and instruments (she’s an accomplished musician), helped write a family book with her sister, trained many dogs, and can freeze you with one look, when you cross her.

Gwenn Hibbs: Bait and Switch

Houston, we have a problem. Since July, the Hank Paulson Sleight-of-Hand Magic Show has swallowed the other branches of government. Working with the FHFA, and the enormous new powers of the TARP, he’s already started a process to disappear the GSE underpinnings of the housing sector. As a nice bonus, the same Wall Street companies who sold $1.5 trillion in subprime neutron bombs to investors will live to play another day, and their shareholders will be sleeping soundly for a long time to come.

September 7, Hank Speaks: The GSEs, albeit solvent and exceeding statutory capital requirements, will be “rescued” into conservatorship -- supposedly to remove systemic risk, address moral hazard, and restore solvency and investor confidence. Hank also says that we must bury the “flawed” GSE business model of thin capital, mixing private profit incentives with a public purpose. Way too risky. No more shareholder dividends, no more lobbying and no more talking to anyone else in government without permission.

Also for the greater good – but clearly harming capital, solvency and investor confidence -- Hank announced that the GSEs would shun turning a profit, increase support for housing, lower guarantee fees, and go on a starvation diet after the election. Translation: Shareholders lose their shirts and employees may lose their pensions; asset sales and reorganization could occur without any further congressional oversight; but America recaptures Free Market Discipline.

Fast forward to September 16: ”ginormous” Paradigm Shift alert.
The new rules: highly leveraged buccaneer firms on the verge of bankruptcy (well, except Lehman Brothers, don’t ask) are allowed to socialize their losses at taxpayer expense. Oh, and we don’t need to send another message on that whole "you need more capital/moral hazard" thing, do we?

September 16: AIG gulps down an initial loan of some $80 billion; it uses the bailout pot to lobby against stricter regulation and throw itself $400,000 parties.

October 3: Congress allots $700 billion to rescue every Tom, Dick and Harry Hedge Fund who ever made a bad subprime loan or underwrote toxic MBS. Mysteriously, Lockhart refuses to say if Fan and Fred will be allowed to sell assets through TARP

October 15: Hank announces a new, improved TARP plan never mentioned to Congress – inject equity in ailing banks, guarantee interbank loans, and guarantee all non-interest bearing deposits. Any firm that participates can continue to pay dividends, and overpay executives as they please. The common shareholders will live to see share values rise again in the near future. Pundits say the real all-in cost will be $2 trillion.

What we learned in school today: Our regulatory regime at every level failed to appreciate the risk of subprime securitization, and didn't require enough capital from anyone. But if no one had enough capital to survive the Wild West of subprime profiteering, how come we're only blaming Fannie Mae? Because what's good for Wall Street is good for America. A GSE-free market means much higher profits for Wall Street with lower risk -- say goodbye to 30-yr. FRMs and learn to love ARMs.

Maloni 10-19-2008

Monday, October 13, 2008

“Throw Out Your Dead!”

(This blog is long, but I think worth it. Lots of detail, mixed with my controlled rage, especially at the end with the index which puts a lot of McCain/Bush “ BS-exposing” info in one place.” Maloni)

“Throw out your dead” is a line made famous in Monty Python’s classic movie, “The Holy Grail.” But lately it has been co-opted by Senator John McCain’s presidential campaign and its bizarre new pleasures. Naturally, the foul play is abetted ably by the GOP establishment. Joining the McCain orgy are Hill Republicans, some in the media and, naturally, the always clueless Bush White House.

Why the sudden Republican interest in the deceased?

Simple, they all are neo-necrophiliacs or “Neo-Necs.”

How else do you explain the mindless “screwing” the Right is giving Fannie Mae and Freddie Mac, both of which are dead and gone?

“And the Neo-Necs sing, ‘Throw out your dead. We want to par-tay, par-tay with them!’ "

What the GOP Did and What They Say (as their noses get longer)

The Right killed the companies, but apparently they aren't satisfied to let them rest in peace, but want to satisfy their election lust with the “dead” GSE corporate husks.

McCain et al are blaming the companies—which have been overseen by Republican appointed regulators for the past 8 years--for tanking the US real estate market and making abusive investments in subprime mortgages and taking down the entire economy.

Consider this slick Neo-Nec move against the GSEs which have fallen, died, and can’t fight back, as the ultimate GOP “party gift,” one which keeps on giving.

It’s so easy to lie about the dead, especially when they were vilified in life. Their surviving “relatives” have been enjoined—by this Administration—from defending them or saying much of anything.

Thank God for us bastards in the family, who aren’t muzzled.

Fannie and Freddie currently are under utilized wards of the federal government and true corpses in any corporate sense. Their employees have been warned not to talk to anyone about what’s going on inside. Their headquarters are all but cemeteries. But it hasn't stopped McCain and his “Neo-Nec” cronies from blaming the two for today’s scary headlines, as well as related complex problems known to many, but understood by few.

For McCain’s crowd and his election efforts, the more public ignorance and confusion the better, since the true culprit—Wall Street subprime mortgage lending, outside the Fannie and Freddie channels--and virtually all of the resulting financial failures and systemic economic problems are covered in GOP fingerprints and DNA.

The GOP posse first helps garrote Fannie Mae and Freddie Mac, plunders their capital accounts, has it sick “Neo-Nec” way with them, and then decides to make the corpses hateful poster children--in McCain TV ads--claiming that the GSEs caused the subprime mortgage mess, which has racked the nations’ residential real estate markets and brought down our economic and financial systems.

If that isn’t a “GOP Neo-Nec GSE screwing,” what is?

C’Mon Anderson et al, Get the Facts!

I am really upset about this, not so much at the Republicans for whom this is a standard play, but at the media who gullibly pass on those charges. I'm also galled at the public officials who are afraid to challenge this nonsense because there are fearful of standing up, too vapid, or too lazy to do the simple research to show the transparency of the Neo-Nec lies.

The Republicans hope they can fool enough people and further demonize Fannie and Freddie, hoping that the mud will slop over onto Obama and somehow make McCain a winner. The Bushies, the congressional GOP Neanderthals, the think tanks on the Right, and many in the media have turned "Fannie and Freddie" into an epithet which both angers and frightens people. They are "cute words"--which nobody really understands--but they sound clubby, inside the Beltway, and possibly ugly and evil. (Whatever happened to, “Never speak ill of the dead?”)

So, in a very successful coordinated election year attack, McCain and the GOP try to blame Fannie and Freddie for the subprime mortgage scourge and for dramatically weakening the economy. Will this desperation play—one of several for the flagging GOP ticket--help McCain’s flagging efforts?

At the end of this blog, I list several sources which reject the thinly disguised McCain effort to cover the Bush Administration’s financial regulatory and mortgage policy failings. I also list websites, articles, and reports rejecting the "GSEs caused subprime” myth, and other discussions of the McCain campaign’s attempts to morph John McCain’s mundane performance on GSE matters from its current “chicken s—t” consistency to “GOP chicken salad.” ready for voter consumption!

Forget the content of those bogus, subtlety suggestive racist ads that McCain is putting on about Fannie Mae. Just remember that the latest one was produced by the very same guys who did the 2004 “swift boating” of John Kerry. That ad campaign--later shown to be factually wrong--successfully convinced too many voters that Kerry, the wounded, decorated Navy Vietnam war veteran, didn’t see much combat and was un-American.

McCain decried this scandalous “swift boating” tactic in 2004, when aimed at against Kerry, because it also had been used again him in the GOP primary. But, his team has gone back to the same guys to further defile the GSEs.

McCain on GSEs: The Record and The Facts not the TV Ads

Let me give you the sum total of John McCain’s last five year Senate record on Fannie Mae and Freddie Mac, the one on which he and his spinners claim that he blew the whistle on GSEs. (Again, all of my comments will be buttressed by “indexed” commentary, at the end of the blog.)

Listen fast so you don’t miss it, since McCain only made one floor speech in 2005 and announced on that same day that he would co-sponsor a bill introduced more than 12 months previously by GOP activists.

That’s it! Who knows what GSE thoughts he might have had moving between his eight homes or driving one of his thirteen automobiles, but McCain’s actions were pretty thin.

Senator McCain, the “maverick” and the self designated watch dog protecting against a whole range of GSE problems, chaired a subcommittee on the influential Senate Commerce Committee, from 2000 until the Democrats took back the chamber in 2006, but never employed it on Fannie/Freddie issues.

From 2000—until the GOP lost the Senate to the Democrats in 2006--John McCain NEVER HELD/CHAIRED a subcommittee hearing on any GSE legislation or issue. Nor did he testify before any other congressional committee on the issues on which he and Governor Palin, on McCain’s behalf, claim the Senator acted as a seer.

Plenty of others, in both the House and Senate, did harass and challenge the GSEs, as Fannie and Freddie lost its congressional loyalty and support. But, there’s not much evidence that John McCain was one of those regularly banging on the GSEs houses.

My Friends, I……?

Instead of doing anything original, creative or even active, Senator McCain in May of 2006 went on the Senate floor, a few days after Fannie’s and Freddie’s regulator had issued a scathing report on the two companies, and delivered a 360 word “I told you so” floor speech. (Told us so, when?).

McCain was so energized with that speech, so girded for battle, that the Senator declared that he…..he…..he would “co-sponsor” a rather weak GSE bill which had been introduced 12 months previously by fellow GOP Senators Chuck Hagel (R-Neb,) and John Sununu (R-NH) and generally reviled by most conservatives.

Wow, what courage and leadership!

Hagel and Sununu, unlike McCain were GOP pols who regularly did kick Fannie’s butt, unlike John “Talk the talk but don’t walk the Walk” McCain.”

As Fannie Mae’s chief lobbyist through 2002, I can remember strategizing about Hagel and Sununu, because they both were so smart and active. Fannie sent prominent GOP emissaries into see each Senator to present our case and try and turn them around or at least make them neutral on GSE matters.

Stories about the GSEs hiring McCain’s campaign director, Rick Davis, to run the Homeownership Alliance and placate McCain, are not accurate. John McCain never generated that kind of political angina within Fannie Mae. He was an opponent, but not one who caused any real concern, because he seldom did anything and wasn’t liked by the Senate GOP rank and file.

The Hagel--Sununu proposal, which McCain co-sponsored, died in the Senate Banking Committee, controlled by the GOP and chaired by Sen. Dick Shelby (R-Ala.), mainly because the GOP right wing believed that the bill was too easy on the GSEs.

The GOP held out and, indeed, got a tougher bill reported in 2008, when the Democrats controlled the Senate. But, up to and including that legislative odyssey, which took most of 2008, there is no legislative or rhetorical trace of any McCain GSE legislative GSE activity.

Whistle Blower?

Did the Whistle Blower blow his whistle in the forest with nobody around to hear or didn’t he blow it at all?

There is no record of Senator John McCain haranguing Shelby to act, when the latter chaired the Senate Banking Committee. There is no record of McCain calling a press conference or introducing new legislation on GSE matters, in 2006, 2007, or 2008. There is no trace of John McCain speaking out on GSEs matters in person or for “the record.” before the Banking Committee, when it was chaired by Shelby, or in 2007 when Senator Chris Dodd (D-Ct.) was the Chairman.

It was Dodd, Chuck Schumer (D-NY), and Shelby, and House Banking Committee Chairman Barney Frank (D-Mass.), who this year shepherded a GSE regulatory bill through the Congress. President Bush signed it into law in August, two months ago.

But McCain and his "homies" sought to re-write history, when McCain got the GOP presidential nod. Suddenly he cast himself as a watchful bull dog tearing through the GSE garden. Instead, his real record looks a little bit like “Tiny Tim,” mincing through the tulips.

I think that McCain’s team saw the confusion and anger surrounding Fannie and Freddie and tried to cast his largely “nothing burger” GSE senatorial performance into some sort of heroic role, based on one short, 350 word, Senate floor speech, and one co-sponsored bill, introduced by others more active on the GSE case.

As Senator McCain urged the New York Times and others--when the story of Rick Davis working for Fannie and Freddie and heading the Homeownership Alliance surfaced and McCain brayed that news didn't prove any ongoing link with Davis and the companies (save for the fact that Freddie krpt paying Rick lobbying wages for four years, after Fannie stopped, right up until August of 2008)--I urge people to check the Congressional Record for McCain’s true GSE performance.

It’s a far cry from what he and the Governor and all of the right wing spinmeisters are suggesting. (See Index.)

But as one financial analysts said to me last week, "Who cares, Fannie and Freddie are dead and gone?”

Sadly he was correct. But for now, John McCain and the GOP right wing are disrespecting those once valuable national mortgage assets and wrongfully assaulting Barack Obama.

That really pisses me off!

Maloni 10-13-2008

Links and Citations to Others Talking about Subprime and McCain on the GSEs

(This is a Google site, identifying the veracity of McCain statements and allegations on a variety of GSE issues and the genesis of subprime, as well as the now international economic problems flowing from the US real estate meltdown. It might also have some of the items identified below.)

McCain on the GSEs

The GOP’s “Blame the GSEs” Plan

Subprime Mortgages, The Source and the Problems It Caused

BIS 78th Annual Report, Part VII. The financial sector in the advanced industrial Economies, Highlights,

BIS, The financial turmoil of 2007-?: a preliminary assessment and some policy considerations, by Claudio Borio,
Working Papers No 251, March 2008,

Is the 2007 US subprime financial crisis so different? An international historical comparison. Working paper 13761,

Understanding the Securitization of Subprime Credit, Federal Reserve Bank of New York, March 2008

(President's Working Group Financial Crisis Report,