Bill Maloni's GSE Blog

GSEs and the Election

I know little more than most of you—and probably a lot less—when the issue is what are the positions or intentions of Donald Trump or Hillary Clinton on the questions surrounding Fannie Mae and Freddie Mac?

Before discussing where they might be, let me note something related.

Wrong Twice

Last July when the GOP assembled its presidential candidates, I suggested that Texan Rick Perry would be the easiest for Hillary Clinton to whip, since I just assumed she would be the D nominee and Perry wasn’t very sharp.

About a blog later, I changed my choice to Donald Trump, when I realized that he was serious about running for the post. Trump’s brashness and offensive personality I assumed/suggested would be very easy for Hillary to overcome or so I wrote. I was wrong, as events have shown. She may win, but....

I just never believed that Trump could win and the Republican Party would dip so low and embrace this flawed, openly pugnacious thin-skinned, egotistical billionaire, whose next touch with everyday Americans would be his first.

I underestimated his fans’ social and financial discontent and willingness to follow a carnival barker, making promises he could never keep.

Trump likely won’t prevail—but in this year, who knows—yet he’s is guaranteed like Godzilla to stomp and crush lots of people, personalities, historic institutions (think fair elections and the GOP), before he slinks back to the depths of Hell where he started.

HRC

Some will disagree, but I believe Hillary would be the better national leader

Hillary has flaws, they are display as we speak, but she is far superior to Donald Trump, who seems to respect nobody and nothing except himself and his own egotistical needs. Because of her experience and true passion, she would be a superior President, warts and all.

And that’s before I note that Trump’s buddy Putin is afraid of Hillary.

(No, Senator Kelly Ayotte (R-NH), Trump is not a worthy “role model” for our kids.)

Possible GSE Futures

First off, keep all eyes on the courts as an appeals panel reviews the very damaging Lamberth decision which said the federal government can do anything it wants to the GSEs and their shareholders.

Judge Margaret Sweeney’s lengthy deliberations in the Court of Claims still are meandering and likely will for another year. But she seems, justly, to be unhappy with the many government delays and obstacles it’s thrown in the way of process. Sweeney’s request for plaintiffs lawyers to review 60 new documents—a motion, surprise, the government is slow walking—indicates some hope for judicial relief in her court. But, her early moves while welcome, are not dispositive.

Turning to future GSE policy after the election. let me establish first off, that I could be 180 degrees away from where ultimately they will fall on the support/oppose GSE continuum. But, I’ll still share my opinion.

The easy one to project on GSE matters I think is Donald Trump.

The GOP platform is filled with the standard ant-GSE rhetoric which seeks to demolish the GSEs and replace them with something which doesn’t involve the federal government standing so big in the mortgage market. (Good luck with that when Trump finds out his voters don’t want to be slaves to the big banks and like long term fixed rate financing. But that’s another story.)

Here’s where we get to conjecture.

Trump and his personal businesses likely depend a great deal of easy access to large commercial bank credit lines or loans. That would be easier to know if he ever made public his taxes, which he might do (NOT!) if he gets elected.

Ergo, to insure his children, who would handle his businesses if he gets elected--since he has refused to put his operation in a blind trust, as previous presidents--Trump would want Eric, Jr, and Ivanka to have similar access to the same bank credit windows, meaning Trump will back the banks 100% and seek an end to the GSEs.

Hillary is surrounded by people who have not been GSE friendly, like Gary Gensler and Gene Sperling, and therefore heavily will consider the Obama position on GSEs, which has been decidedly anti-Fannie and Freddie.

Also, the red light/green light regarding her Wall Street opinions sends some confusing signals about supporting the Street, which wants the GSEs out of the way so they can sop up that income with their big bank allies, no matter what the consumer impact might be.

However....the Black and Hispanic communities for the past 20 years have been very supportive of the two companies, when the latter focus on the GSEs and what they bring to aspiring minority mortgagors. That’s because Fannie and Freddie delivered when they could (before the Treasury/FHFA forced the GSEs to give up their management discretion on running their businesses).

While it hardly has been dispositive, even in recent weeks and months, those two demographics through Black churches and more mainline community groups have engaged with FHFA and Treasury arguing to keep Fannie and Freddie operational and serving their communities and citizens.

Now, here’s where I head, again, for speculation and “maybes.”

If Hillary Clinton is elected on Nov. 8, owing to massive Black and Hispanic voter support and the political representatives of those organizations, plus the Congressmen/women and Senators who have largest numbers of those voters in their states and districts, urge President Clinton not to scuttle Fannie Mae and Freddie Mac, I think the GSE have some chance of surviving going forward.

I also think HRC may have a greater sensitivity and appreciation for homeownership than certainly Trump, and also some of the campaign apparatchiks around her.

Is the Right Recognizing the “Lamberth Threat?”

Once again, I am not sure how effective it will be with the courts, but the fact that the conservative Cato Institute filed an amicus brief challenging the “takings” from a Anthony Piszel, a Freddie Mac employee dismissed and denied benefits from his departure agreement, i.e. “golden parachute,” is a development worth considering.

Cato says the government overreached which indeed is the same the same principle with the “takings” lawsuits which most of the plaintiffs allege in their lawsuits.

It may mean bupkis (nothing), but it still represents a first entry on the broader GSE side for the “traditionalists.” Maybe there are more opportunities for them which could catch the attention of some GOP Senators and Members.

Maloni, 10-18-2016

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