First they came for the Socialists, and I did not speak out—
because I was not a Socialist.
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.
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.
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.”
Good/Bad News 4Q GSE
Earnings
I told you they would be
healthy and very good (but likely not
impact the stock price—which swings to different music), with Freddie
earning $4.8 Billion in 4Q16, more than the $2.2 Billion it earned a year ago
in the same period. Freddie Mac will send $4.5 Billion of that to the
Treasury’s General Fund (unless someone in the new Admin holds up that dividend
scheduled for March).
Here’s Freddie’s
Thursday earnings release.
http://www.freddiemac.com/investors/er/pdf/2016er-4q16_release.pdf
Fannie, which announced numbers
a day later, topped Freddie and will send $5.5 Billion to Treasury next month,
with the same pregnant caveat noted above.
Here’s Fannie’s Friday
earnings release.
But the healthy totals
beg the question I posed in last week’s blog and now other people are raising,
given Steve Mnuchin’s statements.
Money, money, money,
money…MON-AY
The Trump
Administration, too, will need revenue and the GSE’s contributions ($10
Billion this quarter!) could look very appetizing to their OMB numbers
crunchers (as they did to Obama’s).
Secretary Mnuchin’s
in-the-works plan to release Fannie and Freddie from government control and
return them in some substantive way to market operations and private ownership
involves a lot more than ending the current lawsuits Treasury faces and working
on a possible settlement (which likely takes money from the Treasury’s General
Fund, near term).
One huge way to justify
fully operational GSEs--which some quant should be able to monetize--is to
“socialize the costs” of a GSE resurrection to counterbalance those who will
claim breathing life into the GSEs will cost the taxpayers.
Calculate what a
significantly unleashed Fannie and Freddie could mean in mortgage system
operational improvements; increased consumer mortgage activity; greater federal
tax revenues for GSEs, lenders and market participants; major increases in
industry related jobs, which greater GSE activity generates; and the benefits
of establishing a safer, sounder and more equitable mortgage finance model.
(See Urban Institute’s latest report on disappearing Black homeownership
opportunities.)
Added to these financial
bennies are the major political socio-economic gains for the “forgotten man”
(Trump campaign phrase) who DJT campaigned saying he would help and on
whom I believe the Obama Admin’s GSE antics turned its back.
Those ignored folks generally won’t see their super market
costs go down when DJT threatens to build the Wall or when he argues with the
media or Congress over Washington leaks or Russian his contacts. But making it
easier for this politically important demographic group to buy a first house or
refinance their current house, positively, would hit home (pun intended).
(With the possibility that GSE related expense could diminish the
Treasury’s General Fund, I guess it’s a good thing DJT is bringing onboard all
of these additional “Generals.” Groan! Sorry, couldn’t pass it up.)
Documents, Documents
Everywhere…
Now that the courts have
ordered the federal government to make more documents available to GSE
plaintiffs’ lawyers--and some showing some truly sketchy actions by Obama White
House/Treasury officials--the cases against the government look stronger and
stronger.
There are around 11,000
government documents which still could be revealed, but how many would be
needed for the Trump Administration to see they want to stay far away from this
reeking legal and political albatross?
Hopefully, it wouldn’t
take this Treasury and this DoJ much time to realize matching any of the
obfuscating Obama actions makes this case theirs.
I also hope the White
House and Sweeney and Appeals Courts aren’t engaging in a legal/procedural
“Alphonso and Gaston,” i.e. "you go first, no you go first” choreography.
*****************************************************************
Nit-picking, a few weeks ago, I offered up my personal perspective
of how many senior government, congressional, and media officials, charged
with knowing mortgage finance history and issues, just don’t, but continue to
disregard facts or utter phrases they don't understand.
I was struck this past
week, when Fed Chair Janet Yellen testified before Senate Banking Committee
Chairman and its Chairman Mike Crapo (R-Idaho) kept claiming Fannie and Freddie
were in “receivership.”
Uh, no Chairman Mike, “conservatorship,” is not “receivership.”
There is a huge difference as you, a Brigham Young undergrad with a Harvard law
degree, should know or your senior staff should have told you.
Yellen did Crapo a grand
favor by ignoring his mistake, not correcting and embarrassing him.
Senator Crapo, here’s a
reminder for you and your SBC staff.
Source: Value
Plays, 2014 (An unattributed quote, the author of
which I would like to give credit but can’t since I don’t know she or he!) discussing
the difference between receivership and conservatorship.
The (Congress)
absolutely could have put the Fannie Mae / Federal National Mortgage
Association Fannie Me (OTCBB: FNMA) and Freddie Mac / Federal Home Loan
Mortgage Corp (OTCBB: FMCC)’s into receivership and liquidated them. They could
have done it. The problem is they DIDN’T do it. They put them into
conservatorship and by doing so by law have an obligation “to preserve the
value of the assets for stakeholders”. What they then did with the 3rd
Amendment is to begin to perform a de facto receivership on Fannie Mae and
Freddie Mac’s by slowly liquidating them by transferring their wealth to the
Treasury. That is a “no-no”.
Receivership and
Conservatorship are two VERY different things. There are very different
requirements of the Conservator and the Receiver. A receiver receives
the assets to dispose of them, the conservator becomes a steward of the assets
to preserve them. The two are not remotely related. What the gov’t did
with the 3rd Amendment is turn a conservatorship into a receivership. They do
not have the right to do that. THAT is that these lawsuits are about.
*********************************************************************************
Mark Calabria (memories,
memories)
Some GSE-fan expressed
concern when VP Mike Pence named CATO denizen Mark Calabria’s his new
economist.
I won’t pretend to know
what Calabria’s latest GSE views are, but some of you might remember this useful
paper (available on the always reliable “GSE links”) that he
co-authored two years ago.
Humbling (but great) GSE news
Tim Howard
told me he received 10,000 blog hits last week.
******************************************************************
The POTUS, Flynn, Etc.
What I don’t understand
is why the President waited two and a half weeks to fire Mike Flynn (I mean ask
for his resignation), when DJT knew Flynn had talked with the Russians on
matters that weren’t Flynn’s responsibility.
To me, that is the major
Flynn issue, with lying and changing his story to VP Pence and others, a
secondary violation.
But, could Flynn—at
DJT’s request-- have been talking to the Russians months ago, possibly
discussing removal of the US economic sanctions in return for Putin’s help
defeating Hillary Clinton?
Man, if I was Chairman
of the House Oversight Committee, Jason Chaffetz (R-Utah), I
would be all over that one like flies on Russian stink, like an alky on booze, a
stallion on mares, or as he was on HRC on Benghazi!
You get the picture.
I’ll yell, again,
“Republicans in Congress, it’s the Russians.” Wake up, these are the
guys--with cause-- you’ve hated for most of the past 70 years”
Their government’s intent
hasn’t changed much.
When will it click with
the GOP congressional leadership and rank and file? Do all of your constituents trust the
Russians and believe they only have goodwill in their hearts for their new
orange-haired American friend in the White House?
So, what are you going
to do about it?
This isn’t a new
partisan theme for me, I badgered President Obama, John Kerry, and other
Democrats about it often.
Russian leaders have no
interest in US success, its citizens, or its welfare, except what they can
literally steal from it, squeeze out of it through their criminal behavior, or
deliver pain and disruption to our national and international aspirations—and,
to be very fair, all of that was Russian SOP long before Donald
Trump was elected President last November.
So now Putin sends a spy
ship to the waters off Connecticut, deploys a new land based cruise missile
likely in a treaty violation, welcomes an Iranian General to Moscow—on whose
hands we say there is “US military blood”—and whose visits there are
forbidden by UN sanctions, and Russia continues to harass and dangerously buzz
our airplanes and ships.
How will our new
President—who chided Barack Obama over being too lenient/weak with our nation’s
enemies—treat these Russian provocations??
If the President does
nothing, he adds to the rumors that the Russians have damning (“blackmailing”?)
material on Trump, Flynn and “others” in the Trump White House and inner
circle.
(http://www.cnn.com/2017/02/10/politics/russia-dossier-update/?iid=ob_homepage_deskrecommended_pool)
Please don’t snicker and
discount the old spy craft meme, “We have dirty pictures of you,” which
Russian operatives regular used to blackmail visiting US diplomats, corporate executives
or their employees, tourists, and western media methodically and premeditatedly
caught by Russian security services on camera dallying with their
Russian-supplied lovers.
The practice is called a
“honey pot” trap.
What is Putin Holding
Over Whom??
I think Putin and his
thugs believe, they now have White House “hollow man,” who they can buy off
with lies, intimidating threats, and possibly sugar, i.e. green light emoluments for Trump Inc. investments
in Mother Russia hotels, golf courses, ski resorts, etc. (“Quick, send Donny Jr. and/or Eric scampering to Russia, with a full Secret Service
contingent, again, to conduct family business and spend taxpayers’ dollars, as
Eric did recently in Uruguay!”)
That’s one
Putin/Russian Mother I wish this Congress/White House would plow
under and bury!!
To support President Trump, as well as the United States, I urge
President Trump to give a speech in which he communicates with the American
public/voters explaining what his presidential Russian aspirations are and how
he hopes to achieve them.
That might clarify and
mute some of the ugly things happening around him and being suggested about him
and his Administration.
Please, just trust the
American people, Mr. President, and share.
**********************************************
Please
read Frida Ghitis….
…and
Maureen Dowd
Maloni, 2-20-2017
Really like what I've read about General H.R. McMaster; if he's legit, it shows me DJT can bounce back from a dud (Flynn) and choose some quality.
ReplyDeleteAs noted in my blog GSE segment, I hope we need more "Generals!" ;-)
Hey Bill...looks like the Perry appeal went against us. You have any initial thought(s)?
ReplyDeleteJust got home from my hospital volunteer gig; will begin reading the opinion and try and post something soon.
ReplyDeleteFirst look, it's not good on a few fronts for pro-GSE crowd; adds huge pressure on Mnuchin.
Somne first thought on the Appeals decision, which I am certain I will expand as the days evolve.
ReplyDelete***********************************************************************************
I am flabbergasted by today’s Appeals court decision, but……I’ve written frequently about the height and depth of the anti-GSE “Shot Wall” inside the Beltway this is just the most recent example.
Two learned judges seem to ignore the facts and history and somehow concur that the government can do whatever it wants to Fannie Mae and Freddie Mac. I have no other explanation, given what I thought were outstanding arguments presented by plaintiff’s lawyers establishing the opposite.
I can’t sugar coat my feelings—as a non-lawyer*— legally this leaves only an appeal to the Supreme Court of the United States (SCOTUS) for justice; but readers should remember that’s never an automatic. The SCOTUS could refuse to hear the case, which is what the entire anti-GSE crowd will be urging.
My friend Gwenn Hibbs, who is a very good lawyer, did have this observation, she shared with me, regarding some uncomfortable “legs” this decision could have.
(GLH's comment follows)
-------------------------------------------------------------------------------------------
As the dissent so eloquently points out, the precedent set here could eventually imperil financial market stability: “Now investors in regulated industries must invest cognizant of the risk that some conservators may abrogate their property rights entirely in a process that circumvents the clear procedures of bankruptcy law, FIRREA, and HERA. Consequently, equity in these corporations will decrease as investors discount their expected value to account for the increased uncertainty—indeed if allegations of regulatory overreach are entirely insulated from judicial review, private capital may even become sparse. Certainly, capital will become more expensive, and potentially prohibitively expensive during times of financial distress, for all regulated financial institutions.” P. 27, dissenting op.
----------------------------------------------------------------------------------------
Of course, Treasury Secretary Steve Mnuchin still can come forward with his plan to resurrect the GSEs, but I feel some of the urgency has been removed by today’s ruling and also Congress could/should feel emboldened to interfere since—as I have written too often these past few years—we still have not had one federal judge issue any opinion supporting the GSEs.
*What I don‘t know, but suspect, is the implication—perhaps fatal—the Appeals Court decision represents for the remaining few GSE cases (think Sweeney and Delaware).
I do know, it sucks to be us today and I don’t know if the Trump White House, Treasury, and Department of Justice, can/will ride to the GSEs rescue?
I added something to the above that somehow didn't make it into the comments seciton.
ReplyDeleteI noted, since it is a "Maloni blog, it has typos.
The ones I identified were in the first sentence of the above comment and then in the actual comment, it should be "SHIT WALL," not "Shot Wall."
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