Sunday, July 25, 2010

“Gee Whilikers”

Last week, I wrote about machinations within the Tea Party and President Obama signing the new regulatory reform bill into law. The White House managed to kick those two “positives for the Democrats” from Page 1, substituting their self-inflicted wounds in the Shirley Sherrod matter. (See more on that below.)

However, earlier last week Senate Minority Leader, Mitch McConnell (R- Ky.) did manage to display some truly feckless behavior, which I hope is remembered by the nation, involving both the TP and reg reform,

Appearing on CNN, with reporter Candy Crowley, McConnell was asked what he thought of the Tea Party internal warfare and its political significance. This after Tea Party elements began publicly fighting with one another, with each was trying to ban the other from Party activities.

Now, you have to realize that the Tea Party—besides its many negative manifestations—is being counted on by McConnell and other Republican elders as a real GOP force and asset.

To Mitch and the boys, Tea Party members and their friends represent potential “boots on the ground” in politically fertile states and congressional districts as the fall congressional election campaigns kick off in September.

Tea Party members generally are more conservative than most Republicans but they display a frenzied zeal (almost too much) which seems lacking in the County Club R’s. But—and this is major—they also are kind of whacky and unpredictable, like nitroglycerin which might explode any minute taking out whomever is close.

Mitch’s hope and prayer seems to be that the TP and friends will prosper, grow and focus their anger on the Obama Administration, big government, and excessive federal spending—ignoring the GOP’s Bush history in those—and help but never formally associate themselves with the Republican Party, its activists, and national agenda.

So when Crowley asked Leader McConnell about the TP and the internecine warfare which had broken out before the Shirley Sherrod incident, rather than address the subject or get close to the query, he gave an answer which sounded something like (paraphrasing), “Gee Whilikers, I don’t have time to worry about things like that which aren’t in my official Senate world. No Siree.” (Mitch’s nose repeatedly grew about four inches after that and he started to turn to stone, but the cameras didn’t pick it up.)

Regs, You Mean they Issue Regs?

McConnell did get more specific and resorted to grade school logic when Crowley asked about the new regulatory reform bill, which most Republicans opposed, as they consistently defended the financial services miscreants who brought on the debacle.

"It's going to require the issuance of 370 new regulations," he told Crowley. (He didn’t add the “Gee Whilikers” stuff.)

Yes, Mitchell that’s how new laws always are implemented and that’s how the federal government fixes situations that were broken, as most observers recognize was the case with the Bush Administration’s “See no evil” approach to federal financial regulations.

What did you think would happen, Mr. Minority Leader?

In looking back, I never did see a practical GOP substitute for the Dodd (D-Conn)-Frank (D-Mass) bill which became law. The Republicans spent a lot of time shilling for Wall Street and the big bank guys but could never devise a way to deal with the 2008 meltdown aftermath, except to say, “Oh please don’t hurt those big financial institutions.”

“The Rich Get Richer”

Our “Federal Comp Cop,” Ken Feinberg, revealed that 17 financial firms, which had received federal financial assistance through the Troubled Assets Relief Program (TARP), paid their senior officials more than $1.5 Billion were misguided in doing so and asked them not to do it, again, the next time there is a financial meltdown.

They agreed, voluntarily, not to do so the next time.“Class, class, can you say ‘flaccid?’ ”

Shirley Sherrod

The story of Shirley Sherrod is now well known. This Agriculture Department veteran was sacked by the Obama Administration shortly after a doctored video tape of her--speaking to an NAACP group--emerged on Fox News. The tape, which was edited and didn’t included her complete comments, which would have wiped out any suggestions that she was racist or anti-white, then was used by Ag Secretary Tom Vilsack to call on Mrs. Sherrod to resign.

Barely a day later, the real story came out forcing Vilsack, the White House, and the President, himself, to apologize for their misdirected haste and offer her a new job. Oh yes, and “Mr. Irrelevant,” Jesse Jackson, was in the middle somewhere calling for something.

If I was Mrs. Sherrod, I’d vent first—loudly--at the Fox political operatives, who knew exactly what they were doing, when they went public with a distorting portion of her remarks, hoping to make her look like a racist and throw dirt on the NAACP which just had called for the Tea Party leadership to clean up its act.

After making clear her view of the conservatives behind this setup, I—politely—would tell the Obama Administration to stick its job where the sun doesn’t shine, because it reacted so cowardly to this challenge and for not even reviewing the entire tape of her speech.

In my mind, the Administration’s handling of Mrs. Sherrod’s case raises fresh questions about the quality of the White House team and how well they analyze situations and deliver messages. (Don’t tell that to North Korea or Iran.)

I am sure that Mrs. Sherrod’s “15 minutes of fame”—if she so chooses--will give her a bully pulpit and plenty of income to justify turning down the nice man’s job offer, all the while asking. “Mr. O, where were you and your peeps, two days previously, when I really needed you?”

Mrs. Sherrod will enjoy guesting on Oprah and Letterman, and the inevitable book contract or consulting on a movie of her life.

She likely could contribute more to the racial dialogue and understanding in this country by hitting the talk circuit and discussing with her audiences what really happened between her, the white farm family and related matters.

I hope she resists the big GS level job, which invariably will hide her in a non-descript federal office.

BTW, see Willie Nelson’s paean to Mrs. Sherrod, below. (Yes, that Willie Nelson!)

The Russian Spies

“During a recent meeting, Russian Prime Minister Vladimir Putin provided encouragement and sang patriotic songs with 10 agents who were expelled from the United States this month after they were accused of spying, state media reported.”

That was the lead from a weekend story about the Russian spy network uncovered in the US, which we so compliently wrapped up for the Russian to reduce their international embarrassment.

Enough said (for now) about sleazeball Putin!

Congratulations… my good friend Nate Gatten, who came to Fannie Mae in 1999, to toil with me in Government Relations, left the company and went onto to good fortune working for JP Morgan Chase. He has been rewarded for his positive contributions in Jamie Dimond's operation and posted to London, where he will represent the company on financial services and regulatory matters in the EU and Asia. Nate, Annette and their delightful family will depart for England at the end of the year.

My favorite Gatten story (and there are many) involves Emma Gatten, the eldest of four sibs and only daughter. Emma, who is beautiful with red hair, now is about 11. Several years ago, she came to my house and she looked so precious, I said to her, “Emma, will you marry me? I’ll make you a queen.” The skeptical five year old looked at me with steely eyes and asked, “Are you a King?”

No fool she!

Maloni, 7-26-2010

Tuesday, July 20, 2010

Delist and More

It’s In the Details!!

The Congress now has passed the Dodd-Frank financial reform bill and congratulations are due those gentlemen and their staffs for their success. It’s never been harder to get Congress to approve controversial omnibus legislation, but they did.

It’s not as strong a bill as I would have liked and it still depends a great deal on the quality, energy, creativity, and objectivity of the current federal financial regulators.

As I learned early on in my Washington professional career, the “Devil is in the details” and the details are in the hundreds of regulations, studies and reports, which the new bill calls on official Washington to produce.

Good lobbyists know that what was lost on the Hill often can get captured at the agency level where implementing regulations are drafted, especially if the agency involved wasn’t warm toward the particular provision. While the statute can’t be ignored, it can be studied and slow-walked to death, so that advocates lose interest or office holders lose elections. The effect becomes the same.

The mobs that worked the Hill now will descend on the White House, the Fed, the Treasury, the FDIC, Comptroller’s office, SEC, etc. and see if they can cajole those folks into doing something that the lobbyists couldn’t totally sell on the Hill. The reverse happens, too, but not as often, when an agency didn’t get all that it wanted in a provision, and writes regs a tad more vigorously (viciously?) than the legislative history might suggest.

The bottom line in all of this is that a ton of work remains to implement what the Hill produced and that process just begins with the President’s signature.

Delisting Fannie and Freddie

I was asked the other day what I thought about the delisting of Fannie Mae and Freddie Mac, i.e. removing them from the stock exchange under the permissible rules, and relegating them to the pink sheets and the penny stock arenas.

I have no “inside” financial information about either company. What follows merely is my speculation on the speed with which the companies lost their lifetime space on the New York Stock Exchange and the possible reason for that alacritous action from an agency not known for such.

In the next few quarters, Freddie or Fannie—if not both—actually might show black ink or serious signs of financial recovery. (Yes, they still owe the Treasury billions, but those debts can be paid at a reasonable rate and over a reasonable time frame, if the Administration wills it.)

The folks who are foes of the two companies, including officials at FHFA and some in the Obama Administration, might find it more difficult to “abolish” Fannie and Freddie—a wish House Banking Committee Chairman Barney Frank (D-Mass.) and others have—if the two started to earn money and continued to undergird the entire conventional mortgage market, albeit not efficiently, as they have since Hank Paulson torpedoed them.

It helps enemies of the former GSEs to have them as flat on their back and looking as negative as possible, ergo the haste to “delist.”

While the delisting cost both companies much of their remaining “market value,” that fact may not ultimately matter if they roar back into financial health.

One additional thought about the “future” and Fannie and Freddie.

If the GOP succeeds in flipping the House in November and “abolishing Fannie and Freddie” becomes the GOP majority’s battle cry, many D’s will find themselves opposing that just because the Republicans want it. Now, where the Administration winds up on these matters--if those undesirable but possible developments unfold--is anybody’s guess.

But, it might be that that the Wall Street Journal, Forbes, and their ilk still might have Fannie and Freddie to kick around, long after they would like to have them.

Hey Rahm, why is Ed Demarco still holding the FHFA job?? There must be some thoughtful Democrat who would like to run that agency and could.

Tea Party

I wrote some weeks ago that one didn’t have to delve too far into the Tea Party’s agenda and activities before you discovered racism, sexism, and anti-Semitism and that’s before you even get to Sarah Palin.

Now—in response to complaints from the NAACP over radical and ugly Tea Party behavior—factions within the conservative group are battling over who can tell who to leave their “small tent,” while they warn non-believers “not to gloat” as they conduct internecine warfare.

Why shouldn’t people gloat? It fun seeing those guys beat the hell out of each other. I suspect that some folks hope they keep it up for two more years.

In fact, maybe the country club GOP wing, the extreme Christian Right, and Tea Party members of every stripe, should meet somewhere in the great Midwest, shout out a bunch of Black, Hispanic, Gay, and Jewish jokes, sing the “Horst Wessel,” start the brawl and then go medieval on one another until a winner prevails.
Just think of the material that will give Glenn Beck and Fox News.

Elizabeth Warren

I’ve been very impressed with the work of the “Troubled Assets Relief Program Oversight Commission,” headed by Elizabeth Warren.

Its work, to date, has been comprehensive and very readable, without pulling too many punches similar to the reputation of Dr. Warren.

Dr. Warren, whom I believe would be an excellent head for the new consumer agency, created in the Dodd-Frank legislation, seems to be butting heads with the White House’s “old boys’ network,” as well as the GOP and the big banks, who are conducting a “not her” campaign against the former Harvard law school professor.

Nobody is owning up the whose hand is on the knife trying to plunge it in Warren’s back, but look closely at who claims it’s not them, i.e., the Treasury crowd including Tim Geithner and Larry Summers, and you’ll likely find the culprit!

The Administration’s bank apologists—and the GOP establishment—should back off and let President Obama appoint someone who has shown that she understands what consumers want from Washington.

President Obama, should ignore the hacks and make what he knows is a solid appointment and one that would satisfy the American public, certainly those who voted for Obama.

Elizabeth Warren would win Senate approval and beat a possible GOP filibuster, initiated because Wall Street and the banks don’t seem to like Dr. Warren. More reason to support her for the job.

Maloni, 7-20-2010

Friday, July 9, 2010

Let’s Put the Banks to Work

Bank Help?

Congressional Republicans can sponsor and drive a major effort to supersize the US economy, brighten their own listing side of the political balance sheet, and play a “private sector” card that won’t generate budget deficits, as more federal appropriations or stimulus spending might.

It’s called, “Lean on large and small commercial banks to get off some of the $1.8 Trillion dollars on which they are sitting and lend it to businesses, large and small, and individuals alike in the communities where those same banks raise deposits.”

Not a hugely catchy title, but you get the idea.

That is huge pot of private sector stimulus that could jumpstart the economy and which would represent a welcomed large financial “giveback” of all of the federal support the financial institutions received through the TARP era.

Yes, current federal financial regulators would have to support that new lending, but it is a ton of new money and would rely on “market mechanisms” and underwriting legitimate borrowers, which in term should stimulate growing private investment and lower our current 9.5% jobless rate.

It sounds like something Democrats would jump on and advocate, but it needs the GOP’s blessing before it could truly happen.

How much more bedrock Republican can you get?

It is what first the Bush Administration and then the Obama Administration should have demanded as a quid pro quo from the banks, which originally received the TARP money.

Those financial recipients willingly took Uncle Sam’s money but--rather then lend it in communities where they have branches—they chose instead to inflate their balance sheets with cash and arbitrage it, putting little of the money back into the economy.

Oh and the bankers also managed to pay themselves handsomely for performing this “no brainer” transaction.

I believe if the Republicans rallied behind a major demand for the banks to begin significant new lending, it would help the GOP politically more with moderate and independent voters than taking extreme policy positions which appeal only to the Tea Baggers and Birch Society elements in their party.

The first prominent Republican Senator or Governor—who fancies himself or herself 2012 presidential timber--will earn significant political cache and followers by endorsing this approach to infuse the national economy with fresh capital that doesn’t require new congressional spending. That means tapping the banks current balance sheets.

The GOP seldom challenges the large financial institutions, instead providing huge protection for them, as it did in the recent financial regulatory reform bill. How about insisting that the banks give back to the nation in a traditional way, like making loans rather than making 1% trading financial instruments back and forth between the Treasury and Fed?

Every business or individual borrower out there is not a deadbeat who won’t repay their debts. But the latter characterization seems to be how banks now are viewing those who—five years ago—would be natural bank customers and good ones.

If the R’s don’t want the federal government to do the necessary economic infusion with taxpayer dollars, Lincoln’s party should, at least, insist that the commercial banks and Wall Street do it with private capital.

Many in the GOP have scoffed at Paul Krugman’s suggestion that we need more federal spending, now, for the national economy to recover. I am sure that Krugman would endorse the banks and investment banks taking on that role.

But what do the Republicans think will bring stimulate new businesses and job creation aside from their tired bromides of “business tax cuts and less regulation?”

Asking the big and small financial players to use their money to lend and invest in America and Americans would help immeasurably. After all, this is what they were created to do.

This plan is so “red, white, and blue” and “apple pie and Joe DiMaggio.” I almost can hear Simon and Garfunkle singing, “Where have you gone Grand Old Party….”

The Russian Spy Swap!!

“Don’t Trust the Russians,” I’ve often suggested.

What really is behind the timing of US officials disclosing this elaborate Russian spy network and “sleeper” agents and others and, now, sending them all home in exchange for a few handfuls of sickly Russian prisoners?

So, this disclosure might embarrass the Russian? BFD. They should be embarrassed. They all are “curveh and goniff.”

Did we squeeze enough intelligence from the dozen Russians or so that we’ve been watching for a few years—as they live underground with phony names--to roll up Russian spy networks throughout the US, which inevitably still exist.

Or does anyone think that the crafty Old Russian spymaster Vladimir Putin stopped at inserting just these 12 folks into our lives?
Unlikely that!

Did we get enough of our “assets” in return for the Russian resources we released and traded? It doesn’t feel that way.

So we get a handful of our spies and maybe another country’s agents back. But does “spy life” then go on between the two countries, as usual. If so, why give up any of our Russian chameleons, who could be future pawns?

Why can we never seem to appeal successfully to the Russians on Iran, North Korea, the Middle East, yet in the space of less than two weeks, we can arrest, process through our courts, generate guilty pleas and then swap a dozen and a half people between countries.

Some part of this story still is missing. Our “spies” were withering away in Russian jails, while their guys were living middle class lives in US communities and swapping 10 for four is an even deal?

Of course the “other side” doesn’t have effective courts or legal system processes. Just some “Jackboot” in an Armani suit who decides that he needs to get his thugs out of the US, ASAP, so he can continue to produce more of them, who understand—if captured--they won’t be allowed to languish in American prisons.

Even the official Russian statement about the swap sounds like bullpoop.

The Russian Ministry of Foreign Affairs said the move was made "in the general context of improving Russian-American relations, and the new dynamic they have been given, in the spirit of basic agreements at the highest level between Moscow and Washington on the strategic character of Russian-American partnership."
If you have to deal with the Russians—which I would discourage—keep one hand on your wallet and the other on your virtue, since both are subject to theft!

I think that Medvedev and Putin today are laughing at us.

Maloni, 7-12-2010