Cats
and Dogs
(It’s
slow in GSE land; summer always is. So I am examining some recent issues and
personalities and adding one or two additional perspectives. But the major
reason for this approach is that “Camp
Maloni” began four days ago. That’s the annual, three week event when 6
Maloni grandchildren—three from the west coast and three from the east
coast--arrive to delight and bedevil Gram and Grampa. We go swimming, horseback
riding, tent camping, eat a thousand popsicles, go berry picking, go to the toy
store about 40 times, make “Somemores,” suffer minor injuries, fight with one
another and drive up Grampa’s blood pressure, but also produce some loveable
and unforgettable moments making it all worthwhile. Unless something earth shattering
happens, the blog will go on a brief
vacation at least until Camp Maloni ends.)
Scott
Garrett Performs for the FSR
I don’t know Rep. Scott Garrett (R-NJ), Chairman of the
House Financial Services Committee Subcommittee on Capital Markets and Government Sponsored Enterprise. He
arrived on the scene, after I left. But people I respect said—despite being
very conservative--he was a pretty smart guy and “good on housing issues.”
I looked forward to reading his speech delivered last
week to the Financial Services Roundtable, hoping to see some enlightenment or
even some progressive thinking.
Nope, didn’t happen, wasn’t to be; my friends are/were
wrong. I was disappointed when I went through his prepared remarks.
He Ignores
Similar Chamber Actions
In addition to bad form dumping all over a recent committee
colleague, former Rep. Mel Watt, Garrett’s words displayed very little
analytical content, quite the contrary.
Garrett just threw red meat to the bank lions.
The Congressman hurled the obligatory partisan brickbat at
the Senate D majority and its leadership for the Senate Banking Committee’s
failure to report the CWJC legislation with enough votes to drive it to the
Senate floor.
He blamed liberal Senators for not backing the
legislation to do away with Fannie and Freddie, but seemed to miss a gaggle of
very conservative committee R’s, as well, who opposed the CWJC bill.
Less than adroitly, he then tripped over another uncomfortable
fact.
After eviscerating the Senate and Leader Harry Reid for not
passing the CWJC bill, Garrett bragged about the bill his full House Committee
produced, the so-called PATH ACT, sponsored and shaped by Committee Chairman
Jeb Hensarling (R-Tex.), which would end F&F and turn the mortgage world
over to the banks.
Rep Garrett, despite all of the abuse he heaped on Reid
and D Senators, glazed over or forgot that his Banking Committee barely approved PATH and with insufficient votes to
propel it to the House floor, virtually matching the Senate committee’s
shortcoming.
Both
Banking Committees approved a mortgage reform bill but neither had their bill
go to the floor. Goose and Gander? And the Senate’s margin of victory was far
greater than the House’s votes for PATH.
So what does that say about Boehner, Garrett, Hensarling
and his House R colleagues, who exist in far greater numbers and majority percentages
than the Senate Democrats?
Say
Less and You Won’t Look As Foolish
Garrett just should have sucked up that bicameral common
lack of success and headed in a different direction couching his criticism in
less haughty terms.
But instead, the Capital Market and GSE Subcommittee
Chairman waded in, repeating every hoary F&F tale for the bankers and their
cohorts, using every phony GOP allegation and buzz word (“ACORN” and “Obamacare”…huh?) including one dear to my
heart, when he said:
“Their
(F&F) whole corporate model, which was based on shifting risk to the
public, maximizing bonuses, and corrupting the political system, was shown to
be bankrupt.”
Gotcha, Mr. Garrett!
As I done before, I challenge Rep. Garrett (and/or his
staff) to prove that Fannie’s corporate model was based on “shifting risk to
the public.”
(Before they were taken over in 2008, can he/they cite
one instance where F or F asked the “public”—I assume he meant taxpayers—to
pony up for any corporate loss?)
What’s his evidence of “risk shifting?”
And “corrupting the political system?” How, exactly?
If he was addressing the situation years ago when Fannie
and Freddie were renown for lobbying prowess (excuse me, while I bow to myself
in gilded memory), where and how was that illegal
and what did we/they do—involving Congress—that corrupted it (any more than it already
was)?
Garrett’s observation, I think, may have been a greater indictment
of the Congress than F&F.
If he was discussing recent history, where has he been
for the past 6 years when neither F&F--because of the conservatorship implementation—were
permitted to have corporate lobbyists? (Isn’t that a violation of someone’s First
Amendment rights?)
Fannie Mae and Freddie Mac today, or for the past half
dozen years, can do nothing but respond passively to congressional inquiries, since
both are denied any permissible ability to advocate or “lobby.”
“Bonuses?” Buzz word, Congressman.
Read the papers Rep. Garrett, the Veterans Administration—which today everyone
seems to revile--among other government agencies pay bonuses to their top
people.
F&F were created by Congress as “private companies,” no
matter how much you disdain that reality. So, they certainly were within their corporate rights to offer bonuses as part of compensation.
Simple question: “Since when did federal agencies trade on the New York Stock Exchange as both F&F
did?” (Even today, post
conservatorship, F&F
currently “de-listed” common stock still gets reported in the Washington Post’s
business section if/when either’s daily
or weekly growth (or loss) merits inclusions in the “top performers” list.
Explain that away, please.
Some
Uncomfortable History for Garrett
Your very Subcommittee owns that legacy. Then known as the
Housing Subcommittee of the House Banking Committee, it wrote that Fannie
Mae enabling legislation in 1970, by design, shaping Fannie Mae in a far
different guise than the existing Department of Housing and Urban Development
(HUD).
Congress wanted the new Fannie to operate like a private
company and its successes for the next 30 years (Freddie Mac joined it almost
10 years later) reflected that bipartisan wisdom.
I’d have a more respect for you if you straightened out
your own understanding and history of two major players over which the
subcommittee--which you lay claim to proudly chairing--has primary jurisdiction.
To bring this all up to date for you, because of the
sensitivities of your Financial Services Roundtable audience, maybe you didn’t
want to discuss—or just don’t know—the sorry mortgage lending history of the
big banks just 7 years ago?
I’ll keep it brief.
The $2 Trillion plus garbage private label subprime
securities (PLS) those banks sold in 2006 and 2007 infected world markets
and produced more than three times the losses of the combined Fannie/Freddie red ink,
which itself was $186.5 Billion.
GOP:
Banks Can Do No Wrong
When will the GOP ever get over its love affair with the
nation’s major commercial banks and its unwillingness to recognize depository
culpability for major parts of the 2008 financial debacle? You can't pretend--although most do--that the banks messed up, big time.
Check out the table later in this blog which shows that
F&F have repaid--with an expanding $15 Billion overage--the 2008 federal funds
infused in them. There are, however, a lot of banks and mortgage companies,
which have yet to repay the TARP (Troubled
Asset Relief Program) dollars Treasury gave them.
But those specifics don’t fit with your narrative, just
like the House’s failure to pass the
Hensarling PATH Act didn’t.
Your PATH action floundered because the extreme Right in your
House GOP Caucus wouldn’t bless it, since the big banks don’t want the solitary
job of offering conventional mortgage loans without the federal government
providing them with loss guarantees.
As a gentle reminder, the principle provision in the
Senate bill, on which you waxed semi-eloquently, was a new federal subsidy, i.e. federal insurance on bank mortgage security
losses.
Maybe you can save discussion of those truths for your
next honorarium opportunity!
(If
the Congressman's office would have responded to my request to supply one, below would be a
link to the Rep. Garrett’s remarks to the Financial Services Roundtable meeting.
But they didn’t. I also couldn’t find one at the FSR site, the full Committee
site, or online.)
TARP
Money Given and Repaid
Here is a current list of all of the financial
institutions which the Treasury began helping following the 2008 financial
implosion and the amounts those entities have sent back to the Treasury (the taxpayers)!
Petrou’s
Post-Facto CWJC Analysis
I long have admired Karen’s Shaw Petrou’s work and (and I am jealous of) her successful
career as a financial services expert. We disagree sometimes, but she’s very
good at her job.
Karen has worked for the big banks, but—beyond that
grievance—she brings a sharp analytical insight to issues when most people
just tickle the surface or rant. (See Maloni!).
Hoping she is spot on, I especially wanted blog readers
to see her article produced, at the end of last month, which contains her stark
congressional worries for the behemoth banks.
KSP's article was shared with me by friend and former Fannie/Freddie
colleague Rob Zimmer, who now represents a group of community lenders and closely watches big bank machinations.
(Coincidentally, Rob also was the source of the TARP
repayments link employed above. Thanks, twice.)
Maloni,
6-27-2014
