Michelle Bachmann
(Here comes the really mean/unlikeable Bill Maloni.)
Thank you Michelle for euthanizing yourself politically.
(Surprised your husband, Marcus, didn’t use that development to finagle
some federal payments from that government you malign so often, as he has managed
to do in his other “business activities.” Of course the calendar year still has
about six months to go. One would think if Dr. Marcus Bachman was successful
curing the condition “Gay” and collecting from Medicare to do so, he could fix
a spouse suffering from “air head.”)
My rarely displayed misogynist side is going to wonder out loud if Rep.
Bachmann’s GOP appeal didn’t flow from
the fact that she—much like Sarah Palin—is a very attractive woman, but,
ultimately, ditzy. So little of what Bachmann alleged and then proclaimed had
merit but she got mucho media coverage—especially when she jumped into the GOP
presidential primaries with the other Dopey, Sleepy, Doc and the other dwarfs--and
the media spelled her name correctly.
She worked the system well. I can’t wait for the inevitable Bachmann
book. (I was going to ask, “How many crayons will the publisher provide with each
book,” but decided I shouldn’t.)
I am overjoyed Michelle Bachmann is leaving Congress, but I suspect her
constituents would have made that same decision for her in November 2014.
Michelle, don’t let that swinging door hit your tri-cornered hat as you exit.
New But Old
I get very tired of
seeing non-critical news stories about developments in the GSE world. The Bob
Corker (R-Tenn)-Mark Warner (D-Va) bill to replace Fannie Mae and Freddie Mac, a
112 page draft of which has been circulating in DC this week, is one of them.
So, I carved up my last
blog, put some other ideas in the product and sent it out to media types who
cover these issues, to see if possibly these reporters might ask the sponsors
or their staff some tough questions or even quote in their stories my
substantive and political skepticism.
Here is what I sent out:
Maloni Commentary for
Media Consumption and Use
"I am not sure just
what problems this monster legislation seeks to cure, since it seems to
enmesh the federal government even deeper in the nation's mortgage finance
system by offering federal re-insurance to banks and other lenders which issue
their own "private label" mortgage backed securities (MBS)?"
"The last time
banks engaged in that activity, they issued almost a trillion dollars in
worthless MBS, backed by their own corporate guarantees, and helped bring
on the 2008 worldwide financial meltdown."
"There is nothing
unique or new in this omnibus and quite taxpayer expensive bill--since all of
its moving parts and financial obligations apparently wind up in the federal
budget, except to give the large commercial banks one more valuable federal
subsidy in the form of federal insurance of their mortgage bond losses?"
"Just what 'new private
capital' will enter the mortgage finance system--as the sponsors
proclaim-- if banks employ just more of their current federally insured deposits, along
with existing working
capital to generate MBS which then receive new Corker-Warner federal loss
insurance? Big banks are sitting on record earnings ($40 Billion in first
quarter of 2013); do they need more taxpayer help to lend for housing?)"
The Corker -Warner bill
seems to rely on a lot of Uncle Sam's money to pretend its fruits will be more "private capital."
"In recent years,
Fannie Mae and Freddie Mac have been restructured with greater capital, had their onerous low income housing goals all but taken away,
been prohibited from buying high risk, low quality mortgage loans (subprime),
and have generated record earnings, allowing them, soon, to return to the
federal government all of the $186 Billion Treasury infused in them beginning 5
years ago."
"Thoughtful
improvements in these two experienced national mortgage intermediaries
seems a more logical, less expensive, and faster approach to smoothing mortgage
market imperfections than a five year phase-in of something totally new for
all of the traditional national and international mortgage market
participants."
"Who would support
it besides the big banks and why?"
"Given the price
tag of this nationalization of the nation's residential mortgage market, I am
not sure there are 60 Senate votes to approve it. And the House Republicans are
not keen at all, on growing the federal government's housing role."
Bill Maloni, former
Fannie Mae chief lobbyist, retired since 2004, is not retained by and does not represent any financial
services interest; he currently writes a blog. http://malonigse.blogspot.com/
How Washington Works
I've had the real
pleasure of meeting and working with some financial people attracted to
Washington issues by the Fannie and Freddie machinations. These are smart
financial types who are trying to understand how the nation's capital works as
they develop strategies for their companies' investment interests.
The other day, one of them remarked to me, "I just don't understand
how an entity (the US Treasury), which owns 80% of something (in this case
Fannie Mae and Freddie Mac) can claim 100% of all of the profits, while the
common stock and preferred stock of the companies still actively trade?"
Two simple answers, I can
count on my one hand the number of Congressmen and Senators who understood/understand
that F&F were created as private companies. It was unique and unprecedented.
I used to remind them, when lobbying, "Federal agencies are not traded on
the New York stock exchange," as F&F were.
Second, the deal Hank
Paulson forced on the keelhauled companies in 2008 is filled with anomalies, interest/dividend
repayment rates at twice the rate of commercial banks, debt repayments not actually
reducing the amount owed, and the two entities—once take over--denied any
advocacy role with the Congress, meaning no corporate First Amendment rights.
In addition to other
recipients of federal support having less onerous repayment terms, none of these
post federal relief bad things happened to other corporations which Uncle Sam
helped, such as AIG, GM, etc.
Sorry for what might be
mortgage system paranoia, but it’s difficult to ignore some misguided punitive
motives in the actions taken against F&F.
As I note elsewhere.
Unwisely, F&F did invest in flawed Alt A no-documentation loans and PLS
Wall Street subprime securities, both of which were soon worthless. Yet
virtually every major mortgage investors in the world did the exact same thing,
sopping up almost a trillion dollars in Wall Street subprime securities, which
is why the 2007-2008 meltdown extended beyond US borders.
The federal government,
starting with the Bush Administration, spend invested several hundred billion dollars in financial
assistance in large and small banks and no legislative mayhem fell any of them.
Market Gyrations over Bernanke's testimony
Almost two weeks, Ben Bernanke
testified on the Hill and indicated his backing for continued Fed QE (quantitative
easing), the central bank’s monthly multi-billion purchase of mortgage revenue bonds.
The stock market spiked 150 points as Bernanke testified.
Shortly after on the same day, with
the stock market still open, some
investors began reading notes from the previous month's Federal Open Market
Committee (FOMC) notes--the Fed’s monetary policy arm, with a rotating regional
members--which suggested some of its non-Washington members disagreed with Bernanke
on the mortgage bond purchases because of future inflationary concerns.
When that view quickly
circulated, the market dropped dramatically, gave up the Bernanke-driven gains
and ended up down for the day.
This "what will the
Fed do?" seems to have plagued investors for days now as the market goes
up and down, mostly, with fear about the Fed stopping the QE stimulus.
My advice, having worked
at the Fed an elsewhere where there were active boards, is—when in doubt—watch the Chairman’s lips and listen to his words.
If Ben Bernanke wants
the central bank to buy mortgage bonds to stimulate our still less than buoyant
economy, the Fed will do so, ignoring fears of the FOMC regional "Nervous Nellie’s
from Montana"
Maloni, 6-5-2013
Well said, sir.
ReplyDeleteJust a lunch pail carrying day laborer, a blacksmith at the forge of democracy! :-)
ReplyDeleteSo yesterday I get home beat as a dog, so beat I ate at Denny's because it is across the street. And I figured, I'll shower and then watch the game - should be done at 9:30, leaving me many zzzz's.
ReplyDeleteNope! Great game.
http://www.investorvillage.com/smbd.asp?mb=5494&mn=1100&pt=msg&mid=12853494
ReplyDeleteCourageous on both sides; better play by the B's.
ReplyDeleteI can accept losses but not timid efforts, which the Pens offered in games 1 and 2.
This was more like it and great playoff hockey.
Remember where you heard it, the pressure immediate switches, if the B;'s don't sweep tomorrow night.
More like, better (and lucky) play by Rusk for 3 quarters, the third of which Pitt fully expended itself, then Boston taking advantage in overtime.
ReplyDeleteB's should have lost, but I'm glad they didn't. BOS/CHI brings back so many memories.
Great work; I enjoy reading your skewering of Corker. :)
ReplyDeleteMr. Mae, stop by our google group- the Fanny and Freddy discussion board. Long-term holders of prefs and common.
With all due respect to your group, Feral, I use to post on a more open board until juvenile commoners killed it, then moved to IV, but to be honest, I think everyone should move here because Bill's depth of understanding of the GSE's is greater than anyone else we have access to.
ReplyDeleteThat is if he will have us.
Hey, what's not to like about being your own boss, not that there's any revenue involved, and posting when you think you have something to say--no matter how banal.
ReplyDeleteFortunately, there is a ton of GSE/F&F related stuff to babble about and there will be more.
But, the most irritating thing for me is how thick headed so many in Congress are.
They're been told F&F are bad, have no real idea why, save some fracture memory of a lie or a negative headline or some Yahoo performing in the R or D Caucus and like lemmings they queue behind anything which promises change but not necessarily improvements.
(Ooops, subject of my next blog.)
Let me once again suggest you ask your contacts about Nader and, now, Berkowitz. These two are pretty influential dudes, more so, I would say, than Corky is.
ReplyDeleteSign it (you too, Bill)
ReplyDeletehttps://petitions.whitehouse.gov/petition/restore-fairness-fannie-mae-and-freddie-mac-common-shareholders/vYQfrKHP
Maybe next year! Go B's!
ReplyDeleteI like Quenneville better than Julian and also the Chi team and players better than Boston's, but the City needs some happiness after the bombings, so I am conflicted.
ReplyDeleteI will go.....Hawks!
bill, i like what you write but it needs to reach treasury, fha and obama. than it will make a difference.
ReplyDeletewhen you think c-ship may end? do you think pfds and common have value? opinion if any?
ReplyDelete