Monday, September 14, 2015

Fiderer and lots of other stuff

“The Plot To Destroy Fannie Mae: Anatomy Of A Power Grab,” by David 

Fiderer’s E-Book Available now on 

Amazon; He Doesn’t Disappoint

Damning the Big Lie with Overwhelming Data

 David Fiderer’s long awaited book—minus about 45,000 words he excised but held onto for future work--finally is out on Amazon and available for review. The lengthy editing process was worth the wait as the book slams former Treasury Secretary Hank Paulson and a gaggle of former OFHEO/FHFA executives. 

Together they engineered “The Big Lie,” and shoved Fannie Mae and Freddie Mac into an unnecessary “conservatorship,” where they still exist seven years after the fact, still doing their housing missions and still spewing money into the government’s pockets, but not their shareholders’.

All of Fiderer’s research comes from publicly available documents, which is pleasing and easily verifiable. (Reportedly, he wore out two library cards at the NYC public library branch in Greenwich Village.)

Fiderer describes why F&F were not derelict when
Paulson led his insidious and politically motivated actions, nor was their low-income lending anywhere near as red-ink-filled as their so called “private sector competitors.” In fact, the banks had three and four times the losses on
their in-house mortgage-backed securities as Fannie and Freddie accrued, a fact their detractors and most of Washington chooses to ignore, as the Congress and
the Obama Administration bend over backwards to accommodate the Too Big to Fail” (TBTF) Banks.  

(I encouraged DF to conclude his long editing process and publish it, now, “warts and all,” so you can partly blame me for any typos, etc. I just thought he should get his labor of love out there ASAP because it is so rich in what people are talking about today in the GSE world. His facts aren’t flawed, just a word here and there, and a few of his sentences.)

Because of their roles in setting up a hurricane of GSE lies and specious allegations, Treasury Secretary Hank Paulson and some of his Administration colleagues, OFHEO regulatory officials Armando Falcon, Steven Blumenthal, Alfred Pollard, FHFA Director James Lockhart, media types, and other public officials inhabit Fiderer’s special GSE rogues gallery.

They all put their DNA and fingerprints on the choreographed downfall of the nation’s premium mortgage finance companies, for reasons which most readers will understand don’t pass muster but which still seem politically appealing to many.

But while Fiderer’s many perpetrators attempted to hasten the GSEs demise, none of them anticipated Fannie’s and Freddie’s dramatic rebirth/recovery to operational life, national productivity, and multi-billion profit, which both compounded initial government errors in 2008 and ushered in a new round of Treasury’s twisted GSE policies in 2012.

Fiderer describes why the two mortgage giants were not bankrupt (a theme Adam Spittler and Mike Ciklin documented this year), lacked capital or market access, when Paulson led his insidious and politically motivated campaign; nor was the F&F low income lending anywhere near as red ink filled as their critics claimed, suggesting a much less calamitous resolution could have bene forged—if politics and chicanery weren’t the order of Paulson’s day.

From roughly 2005 through 2007, the big banks and investment banks—supposedly F&F “private sector competitors”--produced and sold throughout the world $2.8 Trillion in poorly underwritten and falsely rated private label securities (PLS).

Those bank issuers had three and four times the losses on their in house mortgage backed securities as Fannie and Freddie encountered, a fact GSE detractors and most of Washington chooses to ignore, as the Congress and the Obama Administration bend over backwards to accommodate the Too Big to Fail Banks.

Read Fiderer’s work, bitch at it, glory in it, disagree or love it, but—when you finish--you’ll understand better how and why almost two dozen lawsuits were leveled against the Treasury/OFHEO/FHFA for their GSE treatment. (Not even going to talk about those court cases now, except to wonder what Judge Lamberth saw when he dismissed the Perry Capital case, which currently is being appealed.)

One final request. Let me paraphrase something my mother used to say, “I hope all of the bad guys in Fiderer’s book spend the rest of their lives needing Pepto Bismol.”

Congress: The Return of Grumble, Groan and Reality Disassociation

Yes, the Congress has returned, briefly. They’ll be out for the Jewish holidays and then return to continue fighting over GOP follies of whether to close the government over funding for “Planned Parenthood” and teeth gnashing over the Iran deal.

The Republicans have, initially, until the end of this month to produce a budget which the Democrats and the WH can support. Eventually they will because—despite their rightwing crazies—stopping Uncle Sam, again, just will make them look sorry and once again confirm the GOP’;s inability to govern but still squabble over ideological matters not germane to everyday life in our country.

There maybe one or two short  term extension, but the R’s will run up the white flag and just bite the bullet on whatever internecine hot button matter drove them to threatened another shutdown.

What’s happening in GSE Land (Besides Fiderer’s Book)?

The GSE world appears tame by these standards. There is a demand from the big banks to rush the Shelby “regulatory relief reform” bill, which has a an anti-GSE nugget in it, opening the  new GSE platform project Common Securitization Platform (CSP) to the big banks and prohibiting the government from engaging in any deals with F&F investors.

One prominent GSE observer chided me for worrying about those things, but I repeat, never underestimate SBC Chairman Dick Shelby (R-Ala.), who controls those items in his legislation.

Senator Warren and GES Legislation

Some folks made a big deal of Sen. Elizabeth Warren (D-Mass.) removing her name form the Corker GSE legislation, which would have, again give banks access to the CSP and prohibited the federal government form using F&F revenue for deficit reduction.

Before anointing her as a new GSE friend, the truth may be closer to what her office claimed which is she opposed the prohibition of the government not be able to utilize GSE cash for other programs.

Forensic Analysis of the GSE Forensic Analysis

The forensic accounting paper produced earlier this year by Adam Spittler and Mike Ciklin got a pump last week in an independent analysis produced by Louisiana State University’s Dr. Larry Crumby.

As a reminder the Spittler-Ciklin paper argued that neither Fannie nor Freddie lacked sufficient capital to handle their secondary market responsibilities and mission, but that they were forced into “conservatorship” owing to a different Bush Administration agenda, powered by Treasury Secretary Hank Paulson (see Fiderer’s book) implementation, which likely saw him break the law, lie to Congress, and feed super valuable insider information to Wall Street types looking to score financially on F&F’s ill treatment by Treasury..

One caveat to Crumby’s work—which doesn’t undercut his final Spittler-Ciklin conclusions, but suggests some sloppiness—is his buy in to the idea Fannie and Freddie were forced to purchase, each month, $20 Billion of poor quality PLS/MBS  as part of the government’s deal.

That never happened, as a review of the F&F’s quarterly reports will/would have shown and researcher. But that BS creeped into the GSE world in an allegation first reported by reporter Dawn Kopecki (again, see Fiderer’s book)—who recently was separated from her work at Bloomberg--and then re-reported by others as if it was fact not fiction.
It wasn’t then and still is not factual.

Bethany Mclean’s Book

Ms. McLean starting her books tour this week.

Bethany Mclean’s new book, “On Shaky Ground, It’s Too Soon to Stop Worrying About the Nation’s Housing Market.”

Bethany in NYC, Tuesday, September 15, 12:30 PM.
At the Museum of American Finance's Lunch and Learn Series on Tuesday, September 15, at 12:30. 48 Wall Street, NY, NY.
Columbia University, Tuesday, September 15, 2015
6:30pm — 8:00pm, Low Memorial Library
Columbia University, 535 West 116th Street
New York, NY 10027

Bethany in DC, Thursday, September 17, at 7 PM
At Politics and Prose Book Store, 5015 Connecticut Avenue, NW, Wash. DC 2008

Catch the author and buy her book, if you are in or near these two cities.


Another example of the federal government saying one thing, when the opposite is true.

Ask most mortgage observers and investors, if the federal governments stands behind GSE debt and MBS?

They’ll say “Yes,” pointing to the 2008 conservatorship.

But, wait a second, Treasury and the WH will say “no” and point to the fact that F&F debt and MBS are not listed in/on the federal budget, ergo they are not federal responsibilities!

Small point, literally correct, but figuratively not correct, but very reflective when it comes to the bizarre world of F&F treatment by the feds (not “The Fed!).

What Others Are Saying

It’s all Trump.

There will be plenty of time to analyze Donald Trump -before the GOP anoints him with their presidential nomination, but certain qualities I see—and I assume others see—are worth noting/fearing, now.

He’s no doubt smart (just ask him), but his arrogance and frontal lobe behavior, where he says whatever comes into his mind, with minimal filters, may not serve him well when the nation watches him get the GOP nod and then ponders, “Braggadocio and bravado are good, but is this the kind of candidate/person we want for President and to lead the nation?

Hillary’s faltering and Trump soaring is forcing more attention on him, allowing some to see faults they haven’t noticed before (not unlike what’s happened to HRC).

But, that’s what our electoral process is all about.
I understand how many people have OD’d on President Obama and his” do no evil light” handed approach to projecting America’s military strength and our national character, but governing a powerful, hungry, and diverse nation like ours takes more than “The Donald’s” New York chutzpah to be a successful international national leader (or Andrew Cuomo already would have gotten the Dem nomination).

Round 2: Remember the CNN GOP Presidential “Debate” is Wednesday, Sept, 18, at 8PM. Please Watch it. (Same 10 guys with Carly Fiorina added.)

Presidential Corner

Rand Paul on “The Donald.”

“You have a long-term governor from a large conservative state leaving the field, and meanwhile, the media continues to reinforce a celebrity that really doesn’t have qualifications for office and in fact would alarm me if he were in charge of our nuclear weapons,” Paul said. “So, really, I think it’s a serious versus the unserious. And there is a danger that if we continue to laud so much attention on basically someone whose level of discourse is that of junior high, I think there’s a problem, there’s a great risk for the country.”

Read more:


Donald Trump on Carly Fiorina in Politico.


Trump Grows Lead in Iowa


New Yorker Magazine on Trump’s deceit


Bush tax plan—carried interest


Fannie Mae/Freddie Mac Corner

Fannie Says Homeownership Demand Falls

ValueWalk cites GSE accounting fraud but not by the GSEs (Dr. Crumby’s work)

UI’s Laurie Goodman confirms no private sector residential mortgage security activity, yet every proposal to get rid of Fannie and Freddie relies on the existence of one.


Audit underscores accuracy of GSE Forensic accounting report? (Crumby, again.)

New York Post, quoting plaintiff’s lawyers, says Treasury official Ugoletti lied in his deposition.

Bank Screw-Up Corner

“Did we miss anyone big? Nope, looks like we got them all, again!”


Obama/DoJ to go After Wall Street?? I’ll believe it when I see it.

Maloni, 9-14-2015


Anonymous said...

Page 41 of Bethany McLeans book states...

"A member of the group that sets federal accounting guidelines later explained that government wasn't actually going to exercise its right to take ownership of Fannie and Freddie. Instead, the bailout was designed this way because "driving the stock market value to zero" would "prevent current shareholder speculation resulting in speculators taking advantage of government intervention at the expense of others," according to the minutes of the meeting that became public in 2015"

What meeting was this? Where are those minutes located?

Bill Maloni said...

Anon--Thanks for writing, working on the answer and I will get back to you and your Q soon (hopefully).

I think I know the Financial Accounting Standards Board (FASB) workings group, to which she refers, but until I am certain about where the info appears. I wait for the rest of the information and respond more fully.

G. Buckman said...

Bill and Anon, I believe the info can be found in the 2008 December FASAB Meeting on page 24.

Bill, I believe Bethany's Columbia event will be live-streamed tonight starting at 6:30pm. Here's a link to the event (a streaming link should be available sometime right before it starts on this page). Thought you might be interested, so I hope this helps.’t-fixed

Bill Maloni said...

Yes, I am and thank you, GB.

Bill Maloni said...

Anon--Here is your requested information, right from the source, between NYC events.

GB said...

Bill, I thought Sen. Warren was off this bill, but this (below) just popped up as a Jon Prior tweet. If you don't mind sharing your Politico Pro story info, what does it say about Warren being back in now? How has the bill changed and are they still trying to stop Treasury from doing anything with its SP Shares?

Jon Prior ‏@JonAPrior · 14m14 minutes ago
Senate Banking members led by Corker Warren re-introduce Fannie, Freddie 'Jumpstart' bill w/ prohibition on fee hike


PS...I thought the Columbia event was outstanding last night!

Bill Maloni said...

GB--Still looking into your story, but "same church, different pew." Try this one on.

GB said...

Thanks for looking into it Bill. Sorry, but the link takes me to the pay (Pro) side of Politico of which I don't have a subscription. Thanks anyway.

Go Steelers!

I'm guessing their headsets will work fine this week at home. haha Lets hope their D figures things out soon enough.

Bill Maloni said...

Sorry, GB--(I just have access to the standard P and rely on friends sending me other aticles.) Send me an email and I'll get you the two articles you mentioned, now that I have the second.


The Steelers D won't stop anyone but themselves this year; no exaggeration, it is that porous and piss poor.

It will allow minimum three and four touchdowns a game, which Ben and the O will have to surpass.

GB said...

Thanks Bill. Don't have your email. Check your PB&J comments...

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