The
Cynic..Who Me??
Some blog readers have noted some cynicism in my comments
about HERA and “Third Amendment” court cases and possible outcomes for the GSEs.
That’s a fair review.
In contrast, many solid and smart posters at the
“TimHoward717” blog—allies, if you will-- are very optimistic that “the truth and
law will prevail” and both their opinion and their personal net worth will be
enhanced, when GSE share values skyrocket.
I hope they are right and I am wrong, but…..Washington (courts,
Congress, media, opinion leaders, etc.) doesn’t too often anoint “winners,”
with the losers skulking off into a corner licking their wounds with nothing to
show for it.
There are endless variations of this exact political principle—almost
a staple of democratic process--which occur inside the Beltway daily, with
various “half loaves” being handed out. But
some of the halves are tastier and fresher than the other half.
Certainly the Congress, any Administration, and others hope
nobody (voters and contributors) goes away too upset with a final resolution —except,
of course, if you are a Fannie or Freddie fan and, maybe, a hedge fund
principal (aka “those bottom fishing bastards”).
I point to Judge Thomas Wheeler’s recent AIG decision—which
we know is being appealed—when he found that the Fed engaged in takings but the
Judge didn’t think it necessary to award damages.
People jumped all over any reported comment Wheeler made
during the hearing, suggesting he was sure to side with plaintiffs and against
the government.
So now—when that didn’t happen, because Wheeler middle it--Boies
and Greenberg get to say they were right, but the Fed (the government) doesn’t
have to pay anyone for its violations.
Again, just look at some of the post-Wheeler reactions.
Tons of people say it was a Greenburg rebuff,
while others crow it was a principle win
for the GSEs and “takings” case.
Not that he needs more money, but I doubt if Hank G can
monetize Wheeler’s decision, absent a successful appeal. But, we know his legal
team will keep at it.
So, are the GSEs forever to be Wily Coyote, close but never
quite catching the Roadrunner?
How to
boost GSE stock prices….
If someone just could convert the @$240 Billion the GSEs
have paid Treasury--under conservatorship--into raisins, it might pave the way for
the SCOTUS—hearing an appeal of a lower court’s “Third amendment” decision--to graphically visualize the volume
of “takings” to which the two have been subject.
It worked for the raisin producers, ergo…..
That would be a lot of grapes/raisins dumped on the Court
steps, to show the magnitude of the F&F takings, but—one way or another—it
might convince our nine black- garbed SCOTUS solons that Boies, Olsen, et al
are correct in charging Uncle Sam--now that the raisin folks have been
recognized as federal takings victims--with lawlessness in seizing all Fannie
and Freddie earnings.
FHFA
Report
I love the irony of these reports which FHFA publishes re
F&F’s riskiness.
IMO, the entities largest risks are their government
operators can’t run a business employing any type of entrepreneurial capacity,
save giving warnings about possible future problems (which often create).
As “Pogo”--cartoonist Walt Kelly’s famous comic political
and social commentator-- once reported, “We have met the enemy and he is us!”
Just who is FHFA criticizing when it blames F&F for not
doing enough or moving fast enough?
The answer is starring back at FHFA when it looks in its
bureaucratic mirror.
Recapitalize the GSEs and get out of their way, then report
how well—or poorly—they do.
Right now, FHFA looks like a clucking maiden aunt snickering
and pointing fingers at her niece’s and nephew’s actions, saying, “In my day, GSEs didn’t……!”
(See Carisa Chappell’s FHFA report article
from Inside Mortgage Finance, below.
By Carisa Chappell
Fannie Mae and Freddie Mac have made
progress in improving their corporate governance structure and managing credit
risk, but they still face significant headwinds, according to the FHFA’s annual
report to Congress.
The report noted that the prospect
of negative net worth in future quarters for Fannie might be more likely than
in recent periods thanks to a reduction in income from Fannie’s shrinking
investment portfolio. Also income from loss reserves and legal settlements is
diminishing.
While the report noted that Fannie
has significant initiatives underway to improve its governance, risk management
and systems infrastructure, it said the magnitude of the projects would expose
the enterprises operations to heightened risk.
It also said “critical work remains”
for Freddie, despite its efforts to change its overall risk management
framework. The organizational changes accompanying that project elevate
Freddie’s risk profile during the transition period.
Wallison: Gift from the Past
Good friend David Fiderer—doing
Saturday night research, I am certain—sent me this comment form a 2014 NY
conference panel discussion in which AEI’s Peter Wallison speculated on why the
Geithner Treasury opted for the “sweep.”
It’s not that revelatory but
underscores what some of us believe it had a lot to do with Geithner carrying
forward Paulson’s plan to dust the GSEs from the mortgage scene. Fiderer
wondered if Wallison’s candid assessment might have come from one of more of
GOP officials still involved with the FHFA, at that time.
“The
Treasury Department decided in August of
2012
instead of receiving a normal dividend on that preferred
stock
that the Treasury Department got for making these contributions,
which
paid about 10% on the stock annually and
it’s cumulative,
instead of that, what they would do is require
Fannie
and Freddie to send them all of their earnings. They
modified
the stock in other words so that Fannie and Freddie
were
going to be sending the Treasury all of their earnings.
Why did
they do this? Now I’m not privy to all the internal
discussions,
but the reason that many people like me thought
they did
it is that the then-Secretary of the Treasury Tim
Geithner
was always a strong opponent of Fannie and Freddie,
and he
was afraid that if they became profitable as they have
now, if
they became profitable and began to have earnings,
they
would recapitalize themselves. And the more capital they
had, the
more they looked like a profitable, a successful, corporation,
the more
likely it would be that Congress would be
pressured
into letting them out of the receivership and to return
to the
market probably as government-sponsored enterprises
again.”
Presidential Campaign Commentary
Before I could acknowledge that
Donald Trump had joined the gaggle of GOP presidential candidates, Louisiana’s
Governor, Bobby Jindal, made himself the 13th Republican to toss his
hat in the ring. (Chris Christie’s rumored to be #14, with an announcement next
week.)
Rumor: GOP looking to reserve Grand
Canyon for its presidential debates, since few venues can accommodate 14 or
more speakers and the resulting hot air.
I’m no longer rooting for former
Texas head man Rick Perry to get the nomination because he would be easy to
beat, but have shifted my support to Trump, hoping the GOP names him its
candidate. (I was not influenced by Jon
Stewart’s response to Trump’s announcement.)
http://www.ew.com/article/2015/06/24/jon-stewart-donald-trump-presidential-campaign-media-tour
Lenders Hit Watt over CSP for Big Guys
In a letter to FHFA Director Mel
Watt, two national small lender trade association small lender trade
associations questioned Watt’s endorsement of giving the nation’s largest
lenders access to the common securitization platform (CSP).
Let’s
Hear it for the Big “B” in DC
And
Hope for a Lot More of it…..
Bipartisanship showed its long missing but still beautiful head
last week in Washington and President Obama and the American people—as they
generally are when the two p[arties work together--were the beneficiaries.
Overcoming its own divisions, the Supreme Court twice
favored Obama on the healthcare decision and with its support for same sex
marriage across the nation—with court Conservatives and those outside of SCOTUS
predicting hellfire and damnation.
The GOP Congress, with help from Democrats, did its
share—separately in the House and Senate—combining D’s and R’s and giving the
Administration its fast track trade request.
In the wake of the devastating attack on members of the Emanuel
AME Church, South Carolina Republican Governor Nikki (R-S.C.) Haley stepped up
and called for removing the Confederate flag from the SC Capitol grounds, which
showed real courage and political smarts. Haley struck, quickly, while the iron
was hot in support of such a gesture and her actions stimulated other similar
developments both in and outside of government.
No, the “Stars and Bars” did not cause that evil church act
but it has been, for 150 years, a symbol supporting Black suppression, subjugation
and mistreatment, whether its supporters will admit it or not.
What
Others are Saying
Glen
Bradford writes in Seeking Alpha how former Treasury
official Mario Ugoletti’s current
deposition supports F&F plaintiffs.
____________________________________________________________
The demographics in our nation are changing and it’s worth
responsible GOP leaders considering this phenomenon, as per Timothy Egan in the NYT.
_________________________________________________________
Charles
Harrison’s thoughts on Wheeler’s AIG decision in Seeking
Alpha.
____________________________________________________________
Again, the always thought provoking Glen Bradford, also writing in Seeking Alpha.
___________________________________________________________
Echoing my blog prediction that the Wheeler decision will
bring forth lots of articles and commentary of the question, “Did F&F need a bailout,” Trey Garrison’s Housing Wire carried this
very tantalizing/heavy “GSE forensic accounting” article by Adam Spittler and Mike Ciklin.
http://www.housingwire.com/blogs/1-rewired/post/34280-the-three-card-monty-accounting-of-fannie-freddie-conservatorship
______________________________________________________
Go
Ahead Uncle Sam, I Dare You to Stop Me…..
____________________________________________________________
This certainly will get
“The Donald” and the GOP all those desired/important Hispanic votes.
____________________________________________________________
I hope 24-year old Bristol Palin's second out of wedlock pregnancy doesn't ruin her Mom's VP
chances with the Republican’s party’s rank and file!
___________________________________________________________
Enjoy these! And thanks to former Fed colleague and friend, Ed Ettin, for sending them and of
course to Winston Churchill for spouting them...
|
Paraprosdokians: (Winston Churchill loved
them.) are figures of speech in which the latter part of a sentence or phrase
is surprising or unexpected, and generally humorous.
1. Where there's a will, I want to be in it. 2. The last thing I want to do is hurt you. But it's still on my list. 3. Since light travels faster than sound, some people appear bright until you hear them speak. 4. If I agreed with you, we'd both be wrong. 5. We never really grow up, we only learn how to act in public. 6. War does not determine who is right - only who is left. 7. Knowledge is knowing a tomato is a fruit. Wisdom is not putting it in a fruit salad. 8. To steal ideas from one person is plagiarism. To steal from many is research. 9. I didn't say it was your fault; I said I was blaming you. 10. In filling out an application, where it says, 'In case of emergency, Notify:' I put, 'DOCTOR'. 11. Women will never be equal to men until they can walk down the street with a bald head and a beer gut, and still think they are sexy. 12. You do not need a parachute to skydive. You only need a parachute to skydive twice. 13. I used to be indecisive. Now I'm not so sure... 14. To be sure of hitting the target, shoot first and call whatever you hit the target. 15. Going to church doesn't make you a Christian any more than standing in a garage makes you a car. 16. You're never too old to learn something stupid. 17. I'm supposed to respect my elders, but it’s getting harder and harder for me to find one now. |
Maloni,
6-29-2015
(Today
starts the second week of the annual “Camp
Maloni,” when five of six grandkids (the 2 ½ year old, Seaver Star Maloni, stayed
in San Diego) descend for three weeks of Grammy and Grandpa—mostly the former
(the kids say I’m a grouch)—last week’s activities list is too long to record
but tent camping is this week (this year, Swallow Falls park not Skyline Drive)
and a week at the beach after that. My wife is an angel with Spartan energy.)
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