Bill Maloni's GSE Blog

First they came for the Socialists, and I did not speak out—
because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out—
because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—
because I was not a Jew.

Then they came for me—and there was no one left to speak for me.

Martin Niemöller (1892–1984) was a prominent Protestant pastor who emerged as an outspoken public foe of Adolf Hitler and spent the last seven years of Nazi rule in concentration camps.

Benjamin Franklin: “We must, indeed, all hang together or, most assuredly, we shall all hang separately.”

GSEs; Leaving DJT Alone for a Bit

Interesting past week for Fannie and Freddie and enough bizarre Trump events, comments, and actions that I’m largely leaving them alone, because I am certain each day/week will bring more examples of non-traditional and roguish behavior*. (See footnote at the blog’s end). Oh, and thank you federal judges.

Total odd lot: Part of me doesn’t think Trump press secretary Sean Spicer will last very long in his job. He needs a whole new wardrobe—and works for a President for whom clothes seen very important—SS doesn’t seem confident and his several faux pas probably suggest an early exist. Just saying’.

In case you missed Melissa McCarthy’s SNL Spicer send up.

http://www.huffingtonpost.com/entry/melissa-mccarthy-sean-spicer-snl_us_58973380e4b09bd304bbbfcf?

Not quite as impactful for the world but very much worth discussing was the evolving GSE tableau, both in the political world, in the courts, and with the improved stock market performances on both F&F preferred and common.

Mandamus

Clearly, the legal highlight was the segmented impact of the Court of Appeals’ mandamus decision—largely, but not totally--rejecting the government’s legal maneuvering and affirming Judge Margaret Sweeney’s demand the federal government turn over 60 or so documents, heretofore withheld from plaintiffs’ counsel by the White House and Treasury Departments. The court said the federal government still can keep 8 docs shrouded.

This paves the way for those same plaintiffs’ counsel to see some @11,000 related documents also withheld by the Obama Administration, but now the purview of the Trump Treasury and Department of Justice.

As I—and others-- have said and written, few if any of those materials hold sensitive GSE business data, but certainly contain lots of embarrassing political information, if not records of outright law breaking.

One fact—(I notice weird things!)--in the still secreted items was the name “Michael Stegman” on many of those documents, suggesting to me that he was in the middle of much of that Obama skullduggery.

For those needing good GSE fantasy material—it all could come true (or not!)—read Wayne Olsen in Seeking Alpha.

http://seekingalpha.com/article/4042570-exiting-nationalization-ramp-roadmap-ending-expropriation-gse-equity-investors

The Mortgage Bankers Association

At the beginning of last week, the MBA—known also to some as the Corker-Warner industry support group, especially when it drags along the National Association of Realtors and the National Association of Homebuilders (which were not part of this exercise)--must have seen its shadow or the handwriting on the wall and disgorged its “new” plan for mortgage reform.

The new MBA plan to bollox the GSEs should not be confused with any number of similar previous efforts or political positions.

But, IMO, the folks at the MBA haven’t been honest brokers about the trade group’s—as opposed to the bulk of their individual members, IMO—views of the current GSEs moving forward as private owned entities and their new Task Force scheme reflects that.

I’ll try and keep my indictment to simple concepts.

Mortgage bankers—which just are mortgage “companies,” even those owned by a parent bank—need to sell every loan they originate to somebody, which is why Fannie and Freddie as a constant buyer/securitizer facilitate their sole business raison d’etre. 

I have no idea what the DJT Administration and Steve Mnuchin, the likely Treasury Secretary, have in mind when they talk about freeing the GSEs and letting Fannie and Freddie do much of what they’ve always done.

But, it should be a refreshing hope for the nation’s mortgage industry which for eight long years has been under the thumb of the Treasury and the Federal Housing Finance Agency (FHFA, the GSE regulator.

Nobody I’ve heard/read is talking about cloning pre-2008 or even 2004 F&F without making structural/operational changes. But the MBA insists—as it did when Obama still was in office— the Congress must be involved in any future plans.

Why? No surprise, it’s all about the money!

The MBA hopes Congress will throw enough legislative/ political sand in the GSE gears that certain big MBA lenders won’t have to face the efficiency and competition the GSEs produced in their pre-2005 halcyon days.

As I wrote in a comment last week, the MBA insisting the Hill shape future mortgage market plans is like General Custer demanding more Sioux meet him at the Little Big Horn.

Despite the MBA’s flowery language about prior congressional approval, keeping the GSEs, and/or producing multiple credit guarantors, don’t buy it.

The MBA hopes Congress will blow up any new Treasury plans permitting the GSEs to control conventional loan underwriting standards and stop PLS or harmful mortgage products from entering the nation’s conventional secondary mortgage market.

I believe that puts it in conflict with the majority of its members and certainly would-be American home buying consumers.

(For those wishing a less-belligerent analysis of the MBA proposals, see Tim Howard’s blog and the Jan. 31 MBA proposal answer he provides.)

Don’t worry, we’ll hear more from the MBA (and, personally, I am very happy to learn MBA’s President and CEO, David Stevens, is on the positive road back from major medical issues).

Mnuchin Approval

The Senate Finance Committee last week approved Steve Mnuchin nomination to be Secretary of Treasury, on a “party line vote.” His floor vote comes next.

In the past, when that phrase was used, it always meant the all in the prevailing majority party voted one way and the minority party another. In this case, the Senate Democrats didn’t even show up to vote, showing a combination of opposition, disdain for the process and the candidate.

Expect more of this guerilla political theater as the minority Democrats get used to the Trump Administration and its actions.

But with a scant three vote GOP margin, the President and Senate Majority Leader Mitch McConnell (R-Ky.) can’t afford too much running roughshod, unless they first overturn 200 plus years of time-honored Senate rules on what constitutes a majority.

CEA Comments

Gary Cohn, President Trump’s head of the Council of Economic Advisors (CEA), spoke about changes the DJT Admin hopes to make in financial services, i.e. wiping out parts of the “dreaded,” but largely toothless Dodd-Frank legislation, and noting that Steve Mnuchin has been working on GSE idea which he prioritizes and the White House hopes to implement quickly.

Again, I have no idea what those plans are but one thing I do admire is Mnuchin oft times repeated comfort with GSEs, securities, and mortgage finance issues, based on his 30 years of business experience. He’s telling people that he “knows his onions”—which is so refreshing.

Unless, you’ve been up close and witnessed it with your own eyes, ears, and brains—as I have--most Americans would be shocked at the number of people in positions of GSE policy and power, who know “squadoosh” or “bubkis” about their areas of responsibility.

That personal observation cuts across partisan, agency, WH, congressional, and media lines.

GSE Bad Guys

I wouldn’t be me if I didn’t identify some ongoing, personal concerns.

The traditional GSE bad guys, MBA notwithstanding, have been very quiet in the face of six weeks of Mnuchin/Cohn news stories, as if they are waiting to pounce and have plans to do so.

Once again, I could be wrong, but I doubt it. With court cases still to be decided (Lamberth Appeals Court, Delaware, and more from Judge Sweeney), Trump control of DoJ and Treasury, and a possible Administration effort—in some form--to revive Fannie and Freddie, it behooves GSE supporters to stay ready to oppose the inevitable outcry which positive GSE developments produce.

Maloni, 2-6-2017

*I am not ceasing critical Trump policy/personal comments, just trying to deliver less DJT outrage, which easily can be found in superior media and blogs, and offering more GSE stuff today.