Monday, November 30, 2015

Weird, but so appropriate for a Maloni blog, especially this one………

In preparing this week’s blog, I had my usual three or four GSE issues: comments on a purported White House reaction to my blog use last week of the descriptive term of “White Boys at Treasury” (the appearance of the possibility embarrassed some close to the President, I was told); an observation on the piggish “mo, mo, mo” budget request by the GSE regulator for more employees and more staff in its “Inspector General’s” office; and the government’s plan to hire more outside consultants for their GSE legal defense team, an act which opens this so called super sensitive business information to hundreds of lawyers, court officials, and their administrative staffs (but laughingly/ironically not the “real Tim Howard,” since Fairholme’s request to give him access was zapped weeks ago. He must of done too good a job abiding by those same rules for 8 years, during his own federal court travails.)

I also had links to other important matters, including a major GSE matter, the GOP and Democrat presidential nomination campaigns; a first person account of congressional incompetence/ineptitude handling of Rep. Mark Foley’s disgraceful pursuit of male pages--and more.

That blog is not in front of you now because your self-identified “tech idiot" editor lost it in the blogosphere on Saturday and couldn’t recover it, even though I save every change, each time I worked on it.

This event just underscored a few uncomfortable realities about my ability to design and publish this beast every week.

However, the main reason I’m upset at screwing up this week’s publication is……

This will be my final weekly blog. I still may write about Fannie and Freddie issues in the future—because I care deeply about their systemic fate--but not regularly or on any set schedule, since I plan to take on a new project.

I’ve written before I think the die is cast on GSE issues. First, it’s tied up in a raft of court cases which will take years to work through the system.

No matter who wins the presidency next year, Congress is riven on mortgage finance matters and the special interests will maintain their pressure on either side and dissuade the Hill from doing anything which makes practical sense.

One solution for Congress would be to make a few desirable changes to the current Fannie and Freddie model, save itself years of fractious debate and the even worse transition from the resident mortgage finance scheme to a new one, which—unless designed to neutralize large bank power—just will have the large financial institutions dominating it, with no GSE to play the role of governor.

But, Congress isn't deft enough to work that way.

New project

As most people are aware, my wife Heidi and I have four adult sons—two of whom are married and the younger two still single—and 6 grandkids, with the chance of more.

Those kids all were born after my parents died.

They know nothing of my mother, her seven siblings (my wonderful aunts and one uncle who helped shape me), my Dad’s much smaller family, the City of Pittsburgh and all the institutions and friends who colored my early years and decisions.

I plan to write a family history for them (and their future cousins??) and anyone else who thinks the Bill/Heidi Maloni family and their family tree could be interesting.

The original “disappearing blog” had far more about this project, which really isn’t necessary beyond identifying with how I plan to fill my days.

If that doesn't work out, possibly I'll come back. But, even with my new plan, I’m still available to talk with anyone who wants to talk about Fannie and Freddie, especially their history, and their complex relationship with the Congress.

I also noted in the “lost paragraphs” about the many new GSE information sources and writers, which I consider a major positive. There likely will be a new GSE oriented website, established by a very smart individual, who is hoping to develop the technical skills so my fate doesn’t befall him.

After more than 500 weekly blogs and about 1.2 million words on the subject (and well over 100,000 hits), I’m moving on and I thank all of you for reading and the many (too numerous to single out) who helped me keep the blog going.

Fannie’s and Freddie’s fate was dictated less by business reality and more by ideology and politics, and there is/was enough cash involved to underscore the maxim, “follow the money.”

I want them to survive and perform much as they performed in the past. But if they are not maintained, I predict what follows still will have similar features—with a government back up (makes you wonder why Congress would change them)--but be less efficient, more clunky,  won’t work as well creating more homeowners, and the transition will be problem filled, unsatisfying, and ultimately more costly.

Maloni, 11-30-2015

(Happy birthday, tomorrow, Jason Wynn Maloni, our first born.)

Monday, November 23, 2015

Happy Thanksgiving, good health to all, except ISIS and its supporters!

Cats and Dogs (and even a turkey)

Best Thanksgiving-themed GSE line of the week:

“LOL. Even turkeys got pardoned by the president. The GSEs seem less worthy than turkeys?! How ironic and sad state of America.” (Posted by hll7575 on TimHoward717’s bursting with comments blog.)

Barry Zigas

I was a bit surprised at the anger/upset caused by my former Fannie colleague and friend Barry Zigas’s column opposing GSE recapitalization and relief.

Barry, the Consumer Federation of America’s housing expert and leader, was a major fixture of the Bipartisan Commission’s study which more than a year ago produced the recommendations that because the CorkerWarnerJohnson Crapo legislative approach. Translation: he’s vested in much of their findings.

And, as I told him this past weekend, I thought he had written the same stuff months and months ago, ergo why the shock?

But the external reaction—mainly from those outside the Administration-- seemed to stem from his suggestion that the civil rights and social action groups, who now have taken up the recap and release cudgels, may be carrying water for the hedge fund investors, many of whom are involved in the contentious lawsuits (which I support because I think our government “did bad!”).

I didn’t agree with the BPC’s “get rid of the GSEs” recommendations or the old Senate bill, which died at the end from serious structural flaws, which long have been enumerated.

I think a regenerated Fannie and Freddie are capable of more positive things than Barry might believe, but how can anyone be confused about where he has been on these issues?

He was beaten up on Twitter and was surprised and dismayed about that. (Note to self, record that as another reason not to “Tweet.”)

But, just as I have, he has his reasons and his own (lengthy) history supporting civil rights and social action groups for the public positions he takes.

For the record, Barry does not believe there is a schism between the Lew, Stegman, and Weiss (or the “white boys at Treasury,” as some have started calling them) and the White House, with the White House starting to lean toward the community groups, despite continued rumors of same.

A GSE factoid which needs reiteration

When one reads about “Fannie Mae” opposing plaintiffs from deposing Egbert Perry, the head of the Fannie Mae board of directors, one should realize that this is not “Fannie Mae” the entity or Tim Mayopoulus, Fannie’s CEO, it is the FHFA, the GSE regulator.

As my good friend and former Fannie government relations  legislative counsel (who I claimed could do more with two commas than many lawyers could do with a paragraph), wrote, “ Remember, FHFA as legal conservator assumed all legal rights of the corporate entity Fannie Mae when the conservatorship was established, including the sole right to be legal voice in lawsuits.”

So, it’s the government Treasury/DoJ trying to block these actions (unsuccessfully, since Judge Margaret Sweeney has now ruled against that motion).
But, we know there will be more and other motions.

FHFA Wants Mo, Mo, Mo……

Read Paul Muolo’s article from Inside Mortgage Finance and ask yourself, why is all of this necessary. (Remember the FHFA’s IG office is the one which sought permission for their personnel to carry guns!!!)

Even Though the GSEs are Shrinking, the FHFA and OIG Keep Adding Employees  
By Paul Muolo

"The Federal Housing Finance Agency plans to increase its staffing levels by almost 12 percent in the New Year, even though the asset base of its two charges in conservatorship, Fannie Mae and Freddie Mac, continues to shrink.
Moreover, the agencies watchdog, the Office of Inspector General, plans to increase its head count by an aggressive 23 percent in fiscal year 2016 to 155 positions. The figures were contained in the FHFA’s new “Performance and Accountability Report.”  
Budget-wise, the FHFA is actually spending less money on personnel costs: $199.1 million in FY16 compared to $199.7 million for the year just ending. The OIG is spending more: $49.9 million in the New Year compared to $48.0 million.
Besides overseeing Fannie and Freddie, the FHFA has oversight authority on the common securitization platform and the Federal Home Loan Banks, the latter of which has posted growth of less than 1.0 percent over the past nine months.   
In a past audit, the OIG criticized the FHFA for lacking a “sufficient number of examiners.” In the new budget, the FHFA plans to increase its examinations head count to 275 from 248 in FY 2015."

The FHFA IG’s office’s main job is to report on the FHFA, finding things the regulator did or didn’t do, while overseeing the GSEs, which the IG thinks should not or should have happened.

Most IG’s and their reports are not worth a pot to spit in (you thought I was going to say something else!!). Well, they are not worth that either!

More FHFA IG staffers to look after more FHFA employees seems to be a circle that needs broken. But—as often is the case—who will stop them, since—join me now—“It’s only Fannie and Freddie!”

Since the two companies will pay for all of this overhead, the bean counters at OMB likely won’t balk. But, they should.

Our United States is Better Than This!!

A gaggle of 30 governors, all R’s except one, and most of the congressional Republicans oppose offering sanctuary to Syrian refugees, for fear of them possibly bringing “terrorism” to our shores?

Panicky, fearful people do strange things. This mass fear of immigrants—and calls to reject them--is one of them, especially when there are there are safeguards in place to filter out possible terrorists or those who would engage in terror.

But the mainly conservative elected officials working/using this scare line don’t want the public to understand that distinction, because it works better when the public is ignorant.

No, the new immigrant protections which exist might not be full proof measures, but they are present in sufficient strength to satisfy me—as a son of an immigrant and grandson of two sets of them, that our nation should not—in the face of the evil in the Middle East shut our doors to those seeking safety and deny the beauty and hope of this land to Syrian or other refugees.

To our national disgrace, we listened to these xenophobic frighteners before World War II with the St. Louis—when we turned away a ship with Jewish immigrants trying to escape Hitler--and later with Hungarian refuges escaping Russian retaliation for that country uprisings in the mid-1950’s and again to allies who fought with us in Viet Nam and Iraq.

The United States is far from perfect, but we are a better and braver than these political sycophants who want to seal out borders.

They are the same folks who preach patriotism and wave the flag but live few of the ideals which makes our nation unique favored.

My America doesn’t do the things they seek and I agree with President Obama and not the right wing crazies who are seeking personal and political gain on the backs and lives of ISIS victims.

Trump. Cruz, Carson, Rubio, and the other hate mongers seeking the GOP presidential nomination, plus their gubernatorial posse, need to reread those US and world history books they now are ignoring to get some votes.

I wish the many organized Christian churches and sects in our country look critically at what they are being told by these situational patriots and measure the call for exclusion from our shores against what their God believes and their Bible preaches.

What Others Are Saying

Presidential Corner

Who is headed where among GOP candidates?

Trump and George Will Square Off

Trump Has New Spokeswoman, Former Cruz Ally


Trump/Spokesperson says shutdown mosques


Just what is Donald Trump trying to do?? Will his new spokeswoman address this outrageous post?

Fannie and Freddie Corner

Scott Olson, in Housingwire, on F&F Future (I like the comments after what Scott wrote.)

Investors Unite urges rejection of DoJ Delaware Motion (also carries link to Judge Myron Steele’s comments this past week at IU event).


Are GSEs a timely investment or a never investment?
More Bethany


Maloni, 11-23-2015
Blog will be delayed today; out this afternoon.

Monday, November 16, 2015

Keep the GSE World in Perspective

France and Some Other Stuff, Not as Important!

My deepest condolences to the French people and my wishes for the recovery of all of their wounded.

I hope this is a lesson for President Obama that this kind of evil—which is far reaching—can’t be met with half measures and soft vows, promises and erasable red lines.

If we can’t kill the idea of “radical Islam,” then at least our nation relentlessly can lead like minded others, as long as that takes, to send a huge majority of these extremists to purgatory!

GSE Trends

There are some hopeful GSE signs.

The most optimistic GSE development for me—when not too many material things have developed-- is the increased volume of articles, discussions, books, and now animated commentaries on Fannie and Freddie activities, supporting their operational future and considerations of how to bring their systemic benefits to the nation.

That’s very recent occurrence and, going forward, it will help shed more light on the bizarre, highly questionable, and sometimes thuggish GSE treatment meted out initially by the Bush Administration and later the Obama crew.

I told a good friend that I believe the GSE die is cast regarding significant reform, no matter who wins the White House in 2016.

Republicans or Democrats controlling the coming Congress will face the same hurdles they did a year ago, when the Senate tried to create a new secondary mortgage market mechanisms.

The next Congress will encounter the same uncertainty, unknowns, fears of a clunky and unresponsive “new” mortgage market, with a bevy of conflicting stakeholders leaning on both parties, sowing fear and worry.

A resolution also is significantly jacketed by the many court challenges, which likely will go all the way up to the Supreme Court, because of the amount of money involved and the significance of possible government law breaking or Constitutional violations.

The GSE plaintiffs, some just plain folks and others the well-heeled institutional investors, seem to have deep pockets and the wherewithal to go the distance, which doesn’t mean they will win, just that they’ll keep the issue in doubt until a final legal decision is rendered or the government seeks an accommodation.

Yes, a new President--more receptive to the Fannie’s and Freddie’s mission and financing role-- might be able reasonably to fix the mess the current Administration leaves, but some core issues still will face a Republican President or a Democrat and how those folks decipher the GSE history and its effective operational reality.

For me, that’s where the plethora of new Fannie and Freddie information and sources comes into play.

I have no idea if a real Fannie and Freddie knowledge ever will reach the public’s level of understanding. But more and greater material and public discussion could have that result, meaning those business and political elements which created up the largest and most distortive anti-GSE “crap wall” should have the most to lose. And you know who you are.

Circulated throughout the GSE World

One of those new GSE websites (information, no prose and palaver) that has done a superb job making material is “GSE Links,” which I extolled in the blog before.

(It’s made any links I offer redundant, but who cares, since more is better?)
Last week, it carried a link for every item I am highlighting in this week’s blog.

From the Mouths of Babes

If you haven’t seen this fabulous animated video, revealing a mortgage savvy daughter of a GSE executive lamenting all of the lies and anger surrounding “her father’s company” and who did what to whom preceding the 2008 financial meltdown, you missed something neat.

Those of you who agree with this sentiment, figure out clever ways to use with your friends, relatives, and others.

Senator Bob Corker (R-Tenn.); They're Coming

If he hasn’t donned them already, I advise Senator Corker to put on his big boy football pads and helmet.

Major media—and even a few in Tennessee--are looking into the Senator’s personal financial dealings, as already signaled by Brody Mullins in the WSJ. But there are others.

As I responded to my buddy, “Mr. F” when he sent me the Valuewalk article linked below, detailing the Senator Corker’s 900 or so stock trades in 2014 (when did he have time for the public’s Senate business?), I speculated to him a lot of those companies, whose stock Corker bought and sold, have issues before the Senate Banking Committee, both specifically and generally. I wonder how many had their lobbyists visit Senator Bob to discuss with him their needs, difficulties, and problems.

Fortune Magazine and the GSEs

One of the best, objective, and comprehensive GSE articles appeared last week in Fortune Magazine, from the hand of Roger Pariloff, a writer with whom I am not familiar. But, write more, Roger!

It’s the type of high profile article in a major magazine that seldom appeared two years ago, save when Bethany McLean would write about GSEs.

Fiderer Nails Stegman

David Fiderer—this time writing in National Mortgage News--unleased his sharp rapier and skewered Mike Stegman, again last week.

It can’t happen enough to drive some of the hot air and institutional arrogance from one of the President’s top GSE spokesmen and show up the BS Stegman has peddled for so long.

Eventually, it will catch up with Stegman, or—as Fiderer likes to say about deceivers--”They can run but he can't hide.”

What Others Are Saying

Presidential Corner

Did Hillary Lose Dem Debate?

Did GOP Candidates Send Coded Messages to Wall Street??
(They weren’t in code if you know the issues and the talk!)

If you think the R candidates don’t know crap about GSEs, just wait till you hear them talk about the Fed and monetary policy???

Bush needed to be better and wasn’t

Dr. Carson, welcome to the big time; as Mr. Dooley said, “Politics ain’t bean bag.”

GOP Sours on Bush??


Is Pastor Cruz, Ted’s Dad, telling Tall Tales?

Fannie and Freddie Corner

Strength and Weaknesses of B.Shapiro-E.Kamarck; New Fannie and Freddie Recap and Release Plan


Wayne Olsen on Shapiro-Kamarck


Maloni, 11-16-2015

Monday, November 9, 2015

No-nothings, Watt (knows some things), Corker (oh, oh), and marbles

Fannie/Freddie Earnings and Corker Pratfall;

Pols Better Off with “Woulda, Shoulda, Coulda”

Except from those who know enough about the issue to parse it and put it in context—see Mel Watt’s statement among the F&F links, below--the hubbub over Freddie’s bookkeeping loss and Fannie’s smaller than normal profits has drawn mainly negative attention.

Wrongheaded example #1

WASHINGTON, D.C. – Rep. Scott Garrett (R-NJ), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, issued the following statement after Freddie Mac posted a third quarter loss of nearly half a billion dollars:

“We’re back to business as usual at mortgage giant Freddie Mac. Its third quarter losses are a harsh reminder of the not so distant past where its monumental failures cost hardworking American taxpayers untold billions of dollars. It’s not fair to expose American families to Fannie and Freddie’s liabilities, and it’s not fair to reward executives at these government-sponsored enterprises with huge salaries while taxpayers are on the hook for more bailouts. We need to stop the bailouts and limit executive pay as long as Fannie and Freddie’s misguided leadership continues to cost Americans money.”

Garret woulda have been better off had he said it’s important to realize that Freddie has been doing just the type of low risk business we need them to do, but this Third Quarter business report is the result of an accounting matter, not misguided business efforts.

Wrongheaded Example #2

Fannie, Freddie Losses are the Warning Shots of a Return to a Pre-Crisis Model
Washington, Nov 3, U.S. Representative Ed Royce (R-Calif.), a senior member of the House Financial Services Committee, released the following statement in reaction to third quarter losses reported by Freddie Mac earlier today:

“Losses like this combined with multimillion dollar CEO salaries at the GSEs are the warning shots of a return to the pre-crisis model of private gains and public losses that wrecked the economy. We can't simply put the blinders on and say that Fannie and Freddie are just like other companies when taxpayers are on the hook if they go in the red."

Royce shoulda said, “I’ve opposed paying the CEOs more, but they are in a tough spot since no matter how well they run their operations none of their profits can ever wind up as capital, which means people have to understand that unique issue and Congress or the Admin should change that process.

I started out calling these “jackass statements,” but decided I didn’t want to malign the poor animals. In each instance the elected public officials had an opportunity to explain what really happened with Freddie (or maybe an enlightening overall picture of the GSEs and their capital predicament), but all three opted to go low road and issue some threat or faulty allegation.

Just couldn’t bring themselves to suggest Freddie’s tiny, relatively speaking losses, were not a return to  pre-2008 mismanagement, but an accounting anomaly, which likely will turn itself around within 6 months, if rates go up as many people believe will happen.

But all three of these sorry public officials support the screwy arrangement where neither Fannie nor Freddie are permitted to hold onto their earnings—beyond a minimal amount—to build protective capital.

Again, the only companies in the nation which are treated that way. Why?

In just three years, they have paid back to the Treasury over $240 Billion plus or $55 Billion more than they were given but because they can’t keep it for protection against losses, they are screwed.

I know I am preaching to the choir, but occasionally an apostate reads me and maybe I can reach him or her.

Wrongheaded Example #3

WASHINGTON – U.S. Senator Bob Corker (R-Tenn.), a member of the Senate Banking Committee, today released the following statement regarding government-sponsored enterprise Freddie Mac reporting a $475 million loss in the third quarter and the Federal Housing Finance Agency’s (FHFA) efforts to de-risk these entities.
“Today’s announcement by Freddie Mac is yet another reminder that our government-sponsored mortgage enterprises continue to put American taxpayers at risk,” said Corker. “While Congress must act to protect taxpayers by reforming our nation’s housing finance system, I commend Director Watt and the FHFA for taking steps in the meantime to de-risk these behemoth duopolies and hope the agency will accelerate the process.”

Freddie’s Loss, Fannie’s earnings and Corker’s Stumble
I guess Sen/ Bob Corker (R-Tenn.) was so busy giving others stock advice when he told CNBC’s Rick Santelli a few weeks ago  that investors should “short Fannie and Freddie,” he forgot to file his own required stock transactions history with the Senate.

Hey, it’s tough, as you millionaires reading this know. It’s amazing how some of those seven figure deals can just slip your mind—as the Wall Street Journal’s Brody Mullins  reports happened with Sen. Corker. But, look how quickly Senator Corker remembered them—once the nation's primary business newspaper gigged him--and had his staff comply with the rules.

If he hadn’t so quickly cleaned up that record, once Mullins and the Journal looked into it, someone might think the Senator wanted to avoid calling attention to those trades and that little Tennessee company which facilitated them.

Piling on? Nope, not in the least!

Here's Corker's back home newspaper.

All of this prompted a nice blog report from a regular GSE commentator, Ron Begala Swanson,who produced these graphics—from publicly available material--comparing Banking Committee Senators reported stock transactions. It does seem to raise some questions about Senator Corker’s trading activities vis-à-vis his SBC colleagues, but that alone doesn’t raise any questions, right, right?

But what if some of those trades involved companies which regularly appear before the SBC and/or lobby the Senators?


What Others Are Saying

Only 8 in the next “Adult” GOP Debate; Christie and Huck get pushed to the earlier "kids" forum.


Presidential Corner

GOP Says, “We Trust Trump!”


Fannie and Freddie Corner

FHFA’S Mel Watt statement on Freddie Earnings:

“Freddie Mac’s strong business results in the 3rd quarter were more than offset by losses associated with managing the company’s interest rate risks.  This resulted in an overall quarterly loss that was not due to a decline in credit quality or an increase in credit related losses.  Freddie Mac’s financial disclosures have consistently highlighted how accounting rules and changes in interest rates could negatively affect their quarterly earnings.  Freddie Mac continues to fulfill its obligations to support the housing finance market and provide liquidity and access to mortgage credit.  However, as both Enterprises continue to reduce their retained portfolios and transfer credit risk away from the taxpayers to the private sector, these activities will also reduce their revenues.  Volatility in interest rates coupled with a capital buffer that will decline to zero in 2018 under the terms of the Senior Preferred Stock Purchase Agreements with Treasury will likely make both Enterprises increasingly susceptible to the possibility of quarterly losses that could result in draws going forward.”

Dick Bove, a Long Haul

Bank Corner

Fed Make Banks Write “Wills”

Jamie Dimon: “And to my dear lundsman Bill Maloni, I leave my home in London, the condo in Palm Beach, my Shelby Mustang, and $7 million in cash, $15 million in bearer ……!” Oh, it’s not that kind of will??


NY Fed Chief Calls for Bank Culture Improvements

GOP Bank Butt Kissers, Again 

(Needed federal revenue: “Don’t get you, don’t get me, let’s get the guy behind the tree.”)

Let’s Violate Some More US Banks Rules;
There is lots of Money in the Middle East

General Politics Corner

Will and O’Reilly; Let’s Watch Them Fight!!


Fannie Angle in Will-O'Reilly fight

I don’t know enough or care about the George Will-Bill O’Reilly President Reagan spat (see above), but Will’s response in Sunday’s Washington Post included him protecting former California Republican Congressman and later head of the SEC, Chris Cox, from an O’Reilly barb that at the SEC Chris Cox, “presided over the mortgage debacle that collapsed the economy in 2007,” saying O’Reilly’s comment was “simply weird!”

Was it?

After all, it was agency head Cox and his chief accountant, Donald Nicolaisen who placed the SEC’s seal of approval on the bogus OFHEO’s 2004 claim that senior Fannie executives engaged in “securities fraud,” a lie which stood for 8 years before a federal judge obliterated the allegation in his rulings.
Years later, Nicolaisen backed off his certitude and belief Fannie failed to comply with relevant accounting standards, but that was too late to stop the erroneous rush to judgment on the individuals and the resulting bank driven Private Label Security subprime stampede, seeking to fill the GSE vacuum.

But, in rubber stamping that original spurious OFHEO tale, 12 years ago, I believe--with his 2004 complicity--Cox did have his fingerprints all over the coming mortgage debacle and the subprime mess the nation’s major banks and investment banks produced when they sought to take advantage of the GSEs weakened state.

Ergo, on Cox, O’Reilly is correct.

Humor Corner

1. The sport of choice for the urban poor is BASKETBALL.
2. The sport of choice for maintenance level employees is BOWLING.
3. The sport of choice for front-line workers is FOOTBALL.
4. The sport of choice for supervisors is BASEBALL.
5. The sport of choice for middle management is TENNIS. And . . .
6. The sport of choice for corporate executives and officers is GOLF.

THE AMAZING CONCLUSION: The higher you go in the corporate structure, the smaller your balls become. There must be a boat load of people in Washington playing marbles..

Maloni, 11-9-2015.

Monday, November 2, 2015

717, Trevor Thompson, and the Admin's Bank Butt Kissing

Booyah! TH717 and Trev Thompson

Do the Nation a “Solid”; see below.

All I can say about this video is Wow!! (Kudos to “TH717” and Trevor Thompson, who designed and created it.)


Other GSE Issues 

Lots of mortgage observers still are upset because the Obama Administration continues its robotic, belligerent, aggressive treatment of the GSEs. I know I am.

I’ve tried to explore the roots of this President’s reasoning, but have great difficulty finding an answer, save for this one thought, at the end of the day this crew of barely traditional Democrats trusts and supports the nation’s major banks, far more than those financial institutions merit.

White House Taken Prisoner

Ergo, Obama and friends have been “captured by the street.”

In any number of venues—to support the idea that the Fannie and Freddie add real value to system professional users and more importantly to the nation’s housing consumers—I’ve tried to dismember this WH’s GSE complaints and show why their arguments, today, are outdated  and financial fantasy, which also ignores the past 7 years of effective GSE regulation.

The Obama approach belittles the  supremely successful pre-2004 Fannie and Freddie, which carried out their national mortgage liquidity missions, despite the Bush and Clinton Administration  ratcheting higher GSE housing goals until they were more than 50% (as high as 55%) of their annual business (when the low-income market demographic never was that high). It also ignores the post Housing and Economic Recovery Act of 2008 (HERA) of F&F regulation, which has been fine, albeit too stringent.

Absolutely, the GSEs generated income or “made money” in their halcyon days —as they were designed by law to do (a fact reaffirmed year after year by a non-complaining Congress); but that’s how the mortgage lending market works.  Which institution, except the "Bank of Dad or Mom," lends money without expecting a fair return?

GSE critics, still upset over pre-2008 profit and compensation, don't realize that Fannie and Freddie had statutory limits (meaning established by Congress and overseen by OFHEO/FHFA) on their executive payment plans.

In addition, Fannie had complementary internal guidelines which kept compensation at a 60% measurement against non-government financial services companies; but the still mindless spout abuse about salaries, stock options,  and a litany of other  complaints.

"Antonio and Mike" Show

Last week, Treasury officials Antonio Weiss and Mike Stegman, the latter speaking to the Mortgage Bankers in San Diego, also repeated the hoary “the GSEs have not paid enough to the government for the help Fannie and Freddie were given in 2008.”

Stegman’s nose, aimed directly at the mortgage bankers' behind, also significantly grew as he cataloged untruths to the mostly gleeful MBA. Really Mike, “separate the primary and secondary markets”; hasn’t David Stevens dropped that dead animal, yet?

Your own &*^%$#@ regulators control these two enterprises. They can't do any business, anyway, which isn't first blessed the FHFA. GSEs can’t cross the MBA’s mythical “bright line.”

But Antonio/Mike, aren't your big bank friends anxious to buy or securitize all of those loans going to the GSEs???

Oh, that dog won't hunt either. Why is that Mike??? 

Here, I’ll tell you (and Antonio), the big guys don’t want to carry the risk and too few institutional investors trust the bank  PLS guarantees.

Seeing these two marionettes write columns and dance the “MBA shuffle,” forced me to ask myself, just what has the Treasury, or the US government done for the GSEs, save target them with abuse, flawed logic, retribution, and possibly broken the law and violated the Constitution.

Can F&F get a good word?

Think about it, has anyone heard any Obama official utter one positive word or statement about what the past 7 years of GSE success meant to the nation and its citizens?

(Mike and Antonio still are blaming F&F for the 2008 debacle, ignoring their bank friends’ activities, horribly lax federal financial regulation, and Greenspan’s loose monetary policy.)

The White House, post 2008 needed, quickly, to fix the US mortgage market, after its foundation was shaken.

Most people then (and to this day) ignored the huge commercial bank red ink debacle of $2.7 exclusively issued “private label” mortgage backed bonds --meaning no Fannie and Freddie participation in it--securities which were falsely rated to enhance their appeal and sold throughout the world.

Those flawed offerings quickly went belly up and cost the taxpayers far more money—in comparison--than the  rather small GSE bailout.

In seeking to buttress the mortgage market, the departing Bushies and the incoming Obama folks sought domestic and global respect for  US residential mortgage activity, so they turned to…….Fannie and Freddie.

They had options, they had options, but..

The Bush Administration, could have employed directly the Treasury itself, tried some Fed mechanism, turned to HUD, Ginnie Mae, or some amalgam of big banks to organize and keep loan money moving throughout the nation and the world.

But, they eschewed each of those flawed options and chose to rely on Fannie and Freddie. The two have responded fabulously in a new system, regulated by the same Obama folks who almost daily bedevil them and denigrate them. (Before that was the Bush Admin’s game.)

(Psst. Counsellor to Secretary Lew Antonio Weiss, here is your boss telling the House Banking Committee that Fannie and Freddie have repaid the taxpayer all that was given them in 2008.)

(Oh and before I go too much further, will the media and others note Secretary Lew telling Rep. Capuano the federal government backs Fannie and Freddie, which should cause someone to say, “Well why isn’t the GSE $5 Trillion in liabilities on budget, Jack?)

So, for the past seven years—and who knows how many years going forward the GSEs will  be needed—Fannie and Freddie  have operated quite well the nation’s mortgage markets. (I’ll save you the sorry commercial bank record, but find room to display it later in this blog).

Will/can anybody at this feckless WH or Treasury speak up and attach a value to that service? They are quick to say “F&F didn’t pay enough,” despite the GSEs sending more than $40 Billion to Treasury beyond what they were given in 2008, but how about all of that systemic success the two generated??
Some WH bright person should find some societal value there? But, how would we know?

Buehler, Buehler, anyone???

Most fair minded Americans would agree there are some GSE positives which this WH could extend to Fannie and Freddie, even rhetorically?

Maybe even a holiday card?

I am not suggesting a month, week, or even a single day to honor the GSEs.

Special Emphasis Programs Observances


--African American History Month 


--National Women’s History Month


--Asian/Pacific American Heritage Month

June 26

--Lesbian, Gay, Bisexual and Transgender Pride Month

Sept 15 --  Oct 15

--National Hispanic Heritage Month


--National Disability Employment Awareness Month


--National American Indian/Alaska Native Heritage Month

Those activities, events, interest groups which have just a single day number into the hundreds and possibly thousands, thanks to their congressional patrons sponsoring the required legislation.

Can anyone see through the crap wall GSE opponents have built and rationally decide the Fannie and Freddie deserve some positive recognition and acknowledgements, even a nicely worded letter, or Good Golly, a kind word or two from 1700 Pennsylvania Avenue?

Count the denigrations and abuses

No. Since conservatorship, Fannie and Freddie generally have been vilified, financially violated, and repaid for their operational support of our our mortgage system, with zero respect or cheers from “downtown” or the Hill.

(I just can see Lew, Stegman, and Weiss—adorned in Obama police uniforms—saying to wondering middle income American public, “Get along folks, keep moving, there’s no value in these two or what they’ve done.”)

The nation’s largest banks get bigger, more insulated and run circles around their own regulators; no longer lend broadly for mortgages, generate real fear in small lenders worried the behemoths will swallow up the tiniest or least efficient among them.

Occasionally—like every month--the big depositories get caught, but post-facto, in the shoddiest types of schemes—for which they pay their fines and then get on with doing the same crap.

These financial institutions are not the most desirable Obama mortgage finance stewards. But try telling that to the White House?

In my “What Others Are Saying” links, below, is a column from this past week’s “The Hill” newspaper written by Donald Grant, head of a group of African American banks saying their communities need Fannie and Freddie up and working.

Not a racial issue

This isn’t a just minority lament, it can as easily come from middle income majority families in every state. 

That is a lost message for this tone deaf Administration which prefers to kick the mortgage finance can down the road (I used this metaphor before, but it is so-o-o accurate) to the next White House occupant.

I hope he or she understands the matter between than the Obama White House.

Oh and as to the “rumor,” that BHO will come out of the mortgage closet now that the budget deals are behind him and  swing a big bat to “recap and release the GSEs,” I am going to adopt my Missouri persona and dare him (and Stegman, Weiss, Lew, Watt and others) to “Show me?”

What Others Are Saying

Presidential Campaign Corner

Bye-Bye Jeb?? Time to head for those “cool” things?

Fannie and Freddie Corner

GSE Earnings This week? Only FHFA knows. But look to Thursday/Friday.

Check the numbers, Black Bankers want GSEs Released

More Minority Groups Seek F&F Up and Working

New GSE Lawsuit

“Koo-koo-ka-choo, Mrs. Robinson”

Scary Dick Bove Article; BHO Leaves us in a Lurch!

Banks Foul Up Corner

Latest Pro-Publica report on which banks still owe Uncle Sam for their TARP bailouts.

Someone quick tell Sen. Corker (R-Tenn.) and Sen. Warner (D-Va.) that banks from their states, Tennessee and Virginia, have failed to repay nearly $100 Million in taxpayers funds, extended in 2008-2009. Just sayin’.

Foreign Policy Corner

Is this a case of ugly chickens coming home to roost??


Maloni, 11-2-2015

Monday's Blog Will be Delayed; Out Later Today.

Monday, October 26, 2015

Didn't Jack Lew Once Tell Rep. Capuano F&F Repaid Their Debt?

My Response to Antonio Weiss

(Written on 10-19, the day his belligerent article appeared in Bloomberg; see link below.)

I am disappointed.

I had heard Antonio Weiss was a smart fellow, who Senator Elizabeth Warren (D-Mass.) scotched for a full time Treasury job just because of his Wall Street roots.

Well, where he worked almost doesn’t matter; because what he wrote this past week about GSE mortgage reform suggests he isn’t a very deep or critical thinker and a lousy homeownership advocate.

Weiss Says No

In a prominent article, objecting to Fannie Mae’s and Freddie Mac’s recapitalization and release from “conservatorship,” Mr. Weiss--now a counsellor to the Treasury Secretary--rattles off the same Obama administration empty bromide chorus which produced the spot we are in, today. Fannie Mae and Freddie Mae (the GSEs or government sponsored enterprises) locked in “conservatorship,” sending every penny of their earnings to the Treasury General Fund.

That amount now is almost @$240 Billion and growing. Neither has been permitted to retain earnings for protective capital—beyond a minuscule amount--
since former Treasury Secretary Tim Geithner’s 2012 “Third Amendment" sweep decision.

Bank Celebrates Weiss's call Gets Fined

It is telling—as I will expand later--that Weiss’s article came out on the same day that US financial officials charged Barclay’s Bank with a $350 Million fine for violating credit union mortgage operations.

This regulatory tariff shouldn’t be confused with Barclay’s two other major US fines this year, the first for $2.6 Billion as part of a six bank assault on the FOREX and then a US Commodity Futures Trading Commission
(CFTC) fine of $115 Million for false reporting on swaps rates.

In putting thumbs down on some Fannie Mae and Freddie Mac operational future, which could be achieved through Obama regulatory fiat, Weiss naively chose to call on the Congress--which barely can agree on what is the day and date in DC--to cooperate on a massive mortgage finance system reform which he contends will serve the nation better and reduce taxpayers risk. (Mr. Weiss, can you say commercial behemoths “Too Big To Fail?”)

Senators sought to do that last year but limped away, shaking their collective heads because the proposed reform scheme didn’t see worth the anguish, confusion, delay and uncertainty of their legislative proposal which came out the back end of the White House/special interest legislative spaghetti grinder.

No New Plan Antonio, just Nada?

Missing from Weiss’s hollow call to action is any new plan which possibly might pass the formidable GOP dominated congressional committees and not just reward the nation’s largest banks, at the expense of would be homebuyers and other mortgage finance professionals who fear large bank domination.

Weiss now has become a major part of President Obama’s “kick the mortgage can—and a lot else--down the road” and force his Democrat or GOP successor to do what he won’t undertake, even though he has the power to make dramatic executive changes to the Fannie Mae and Freddie Mac situation.

The significance of my comment about Barclay’s Bank’s fine and Weiss’s announcement (which got mirrored later that day by Treasury’s Mike Stegman speaking to the Mortgage Bankers Association) is every single mortgage finance alternative—which this Administration, the Senate and House Republicans solidly endorse—would give the primary and secondary mortgage markets over to the nation’s largest banks and their allies.

So one part of this paranoid Admin calls for “mortgage reform which Congress must pass,” while another office fines the heck out of the banks, who would be the ultimate untrustworthy beneficiaries of the Obama/congressional mortgage market reforms.

Psst, Some Banks Cheat

Maybe now would be a good time to remind the White House and its minions of a certain cruel reality, which vexes most Americans, but which was neatly embodied by one of Barclay’s employees who crowed last May when the bank’s FOREX fine came down. He said, “If you ain’t cheatin’, you ain’t trying.”

Pretty dismal bank mantra to contemplate, right Mr. Weiss? But that is a revealing look into bank DNA and I suspect, coming off Wall Street, you know it quite well!

When the commercial banks in the post-2008 period took down two and a half times what Treasury gave Fannie and Freddie—since their private, non F&F, mortgage bonds losses were close to $500 Billon--did anyone say the bank business model didn’t work, even though their securities were spectacularly more taxpayer costly than the GSEs?

Oh That, Again

For me, what’s almost as hoary is Weiss’s GSE criticism of “privatizing gains and socializing loses.”

What does that mean? Recently I wrote that Fannie and Freddie, in each of their first 38 years (76 total), paid every business loss they incurred from their own revenues, not looking to Uncle Sam for any help.

It was the Bush Administration—that continues to draw critical academic and literary scrutiny of its possible ideological agenda--which chose to put the GSEs into conservatorship, a very questionable decision still being challenged in the courts and forced on them $187 Billion (closer to $150 Billion, if you look at the details), which has been paid back—similar to the various banks which got federal financial assistance at that time—even though Weiss and others argue the money hasn’t been repaid.

Financial Support Has Been Repaid

If you ask most Americans, Mr. Weiss, “When you borrow 187 apples and repay 240 apples, have you paid off your debt?” The answer is “Yes.”

But, what if there was an unprecedented critical stipulation applied to the GSEs that no other firm faced?

And there was.

No bank or other financial service companies had its version of the  bizarre application of “GSE debt can never be repaid but goes on forever.”

What also is painfully transparent is Weiss’s ignorance or premeditated diminution of Fannie’s and Freddie’s successful post-2008 regulation.  That new oversight paradigm has all but foreclosed the same pre-2008 scenario from reoccurring. (Why, Mr. Weiss, do you think the GSEs have prospered financially since then and “repaid” all of that taxpayer money?)

The GSEs current regulation: which nobody wants dramatically altered, allowed both companies to repay taxpayers @$240 Billion; limited the type of mortgages they can securitize and improved the credit profiles on those loans; resulted in them reducing dramatically the sizes of their retained portfolios; and ushered in creative ways to sell their remaining losing mortgages to other “private investors,” utilizing private mortgage insurance tools and other devices.

Mr. Weiss, are your favored banks so well regulated?

But, but, Why all of those Bank Fines, If They are The Answer?

If so, why have they been hit with over $100 Billion in US regulatory fines—in the same post-2008 time frame, constituting a broad range of serious legal and regulatory violations and wrong doings (laundering Mexican drug money, commercially dealing with Middle Eastern extremists and governments, manipulating the LIBOR index to which most US adjustable rate loans are tied, etc., etc., etc.)?

Lost in all of the smokescreen this Administration creates is that mortgage market players, meaning home buyers, lenders, Realtors and builders, are very familiar with Fannie and Freddie and how they work in conjunction with their own personal and business objectives.

Only tinkering a little with them and their nationwide business relationships, to the extent necessary, is far more practical than abolishing the GSEs and starting anew in a non-stop, vibrant $11 Trillion US mortgage/housing market which approaches 18% of our GNP.

My friend, Bethany McLean, an award winning financial services and GSE author, is fond of summoning Winston Churchill’s memory and applying the great British war time leader’s word about “democracy,” when she paraphrases, “Fannie and Freddie may be the worst form of mortgage finance system, except for all of the others.”


My Bad!

I was so PO’d when I first read Antonio Weiss’s article, I sat down and quickly penned the above.

I cleaned up my inevitable typos and sent it to a friendly journal, asking if it would be interested in printing it?

They were, but raised some issues about the strength of a few comments I made both about Weiss and the nation’s big banks.

My first reaction—which is why the column appears in my blog and not a major medium—is that I have multiple reasons for my view of larcenous bank behavior, which the financial institutions seem to reinforce every few weeks, and I wasn’t going to water them down (although I could have).

Weiss I don’t know, but speculated on his “type,” given the nature of his arguments.

Bottom line--in sending out my screed to a journal which publishes to a much bigger audience and more frequently than I--it has the right and obligation to seek whatever quality they want in a “guest” column.

This is my blog and, first and foremost, before I publish my own stuff, it has to satisfy my objectives.

It’s their publication and the same principle applies.

So guys, you were right and I was wrong because I forgot a most important social tenet, “Your house, your rules.”

What Others Are Saying

Presidential Corner

A nation (likely) thanks you Joe Biden. I do.

With all due respect, I think you would have been hurt more by running and the tepid reception you would have encountered, as well as the partisan (and Democrat) slings and arrows your campaign would have produced.

The money you didn’t take in can be used by others in the general election and you should get “thanks” for that, too.

Elephants Square Off, Bush Trump No CIC

Trump versus Bush and Bush

GOP Establishment Readies War in Trump?


But, beginning of Jeb’s end?


Is Hillary now Thriving? Excellent “Debate,”
Biden drops out, GOP flubs Benghazi Hearing
Fannie and Freddie Corner

Fortune (nastily) says “no GSE reform”

Fiderer offers Twitter entertainment advice…

  David Fiderer (@Ny1david)

10/23/15, 11:47 AM
Thought Trey Gowdy's case against Hillary was persuasive? Sign up to hear Ed Pinto's case against the GSEs.

John Bancroft in Inside Mortgage Finance

GSE CEO’s Urge CSP Patience (Heh, heh, heh!)

Fannie, Freddie CEOs Urge Patience to the Industry on the Single GSE Security
By John Bancroft,

Fannie Mae and Freddie Mac rolled into their eighth year of government conservatorship pushing forward the two major reforms they can accomplish under their existing charters: selling off a significant portion of the credit risk on their current business and building a new MBS platform.

Top officials from the two government-sponsored enterprises urged the industry to be patient about the launch of the common securitization platform and, a little further down the road, the single security for GSE to-be-announced MBS.
“It will happen,” said Don Layton, CEO at Freddie Mac, during this week’s annual convention of the Mortgage Bankers Association. The joint venture is staffed and “no longer living like poor cousins” at the GSEs themselves. But the timing is uncertain, as with any major technology change, he said.

“It is a big undertaking involving some $5 trillion in assets,” Tim Mayopoulos, CEO of Fannie Mae, reminded the industry.

Bank Mess Up Corner

Barclay’s Pays latest big bank fine (3rd third in 2015); almost $3 Billion for only for one bank

General Political Commentary Corner

History of the House Speakership


Conservatives Balk at Some Ryan Demands; some call him “The Prince of Janesville”

Extreme GOP statements

House R's spending bill would repeal much of “Obamacare”

Michael Gerson Asks Key Question About House GOP


Does Rep. Elmers’ “Affair” Have Legs in NC?


Foreign Policy Corner

Krauthammer Flails Obama over Putin Syria Success

ISIL combatants hit by Russia & Syrian jets. Yay??



Tune in Wednesday Night, 10-28, to the next GOP presidential debate, on CNBC.

Maloni, 10-26-2015