Bill Maloni's GSE Blog

Maybe it’s my deodorant??

Last week Mike Stegman, ex-White House official, wrote a self-serving piece for the Bipartisan Policy Commission, claiming there was great support for the old Senate "GSE reform"  legislation Johnson-Crapo (which started out as Corker-Warner) and that bill should be a guide for future legislation to do away with Fannie Mae and Freddie Mac.

http://bipartisanpolicy.org/blog/johnson-crapo-housing/

When first I read it, I thought Mike must be drinking some of that Donald Trump Kool-aid, you know the kind which makes you swear you see things that nobody else sees.

In Mike’s case, it’s broad support for a bill which had no broad support. In the Donald’s case, he swears he saw New Jersey Muslims applauding the twin towers collapse and, more recently, a video of a plane flying $400 million in cash to Iran.

Mike saw some wounded duck legislation, but insists it was a soaring eagle.

I took advantage of the BPC comment section, following Mike’s tome, and sent the following:

Several things here, but I will limit my comments to Mike Stegman's massive spinning and false theme

There was no bipartisan consensus on Johnson-Crapo (or Corker-Warner, its first iteration) and proof is that it barely passed out of the Senate Banking Committee and never advanced to the floor. That was with the Senate controlled by Republicans, the House in the hands of even more anti-GSE elements, and a White House waiting to sign anything which killed the GSEs.

When you can't pass a bill with that support, something is wrong with your plan.

In this case, Stegman and his posse had no provisions in their bill for mandated low income lending (as per what F&F do), handed the primary and secondary mortgage markets to the nation's big banks (hardly worthy stewards), and had an indefinite transition period--as they scuttled the GSEs--which made nobody confident of success...and that only was the beginning.

CBO's 10 years profit/loss projections are notoriously inaccurate (since few people can deftly project economic activity 10 years into the future) and, institutionally, it has long opposed F&F, no matter who ran it.

Stick to your day job, Mike, and—as you’ve learned--bring your lunch and lots of coffee, because killing the GSEs will take a while, mainly because most of the alternatives you’re hawking are far worse.

  

Feeling smugly satisfied, I shared my work with a few colleagues, but in checking back noticed that BPC didn’t post what I wrote. I tried posting again and got nowhere. So—with difficulty--I slipped into the not seen often “nice Bill Maloni” and sent another comment, hoping someone at BPC would miss the obvious sarcasm and the author’s name.

Mike nailed it; I had forgotten how popular the Johnson-Crapo bill was with so many people, and nearly became law. If only it had some mandatory low income lending in it and didn't give so much authority to the nation's big banks.

I hope he and his allies will work to make this proposal law next year and overcome the marginal opposition from the community groups and small lenders.

Drat, I failed, they didn’t use it, either, ergo today’s blog title.

Apparently, the BPC only prints commentary that agrees with their many debate/discussion participants (Oh, the BPC’s initial Commission report gave birth to Corker-Warner cum Johnson-Crapo). 

Those two bills, virtually identical, were named for Senators Bob Corker (R-Tenn.) and Mark Warner (D-Va.) and later Tom Johnson (D-SD.) and Mike Crapo (R-Idaho).

I still think my remarks are closer to the truth than Stegman’s.

Worth noting: Before he retired, I was a big Tim Johnson fan/supporter. I believe he was a thoughtful and progressive Senator.

More than the subject proposal, which once carried his name, I hope his Senate colleagues--and whatever President and administration crew comes to town after November’s elections--and the new Senators and MoCs all remember what Tim Johnson told FHFA Director Mel Watt during a Senate hearing.

“Everyone agrees that conservatorship cannot continue forever, so I hope my colleagues will keep working towards a more certain future for the housing market, If Congress cannot agree on a smooth, more certain path forward, I urge you, Director Watt, to engage the Treasury Department in talks to end the conservatorship.”

Maloni, 8-5-2016