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.
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.
GSE Week: the Same Blah
News
Let me try and review
where I think the state of GSE play is, reminding you that I may be way off.
GSE Developments in the
Courts
--Judge Margaret Sweeney
awoke, saw her shadow-- growled at the government defendants for seeking
additional time to give plaintiffs the thousands of federal documents which she
has consistently requested for what seems about 100 years now--and then Sweeney—worried
about two more months of snow?--promptly gave the Treasury 43 more
days to screw around and delay justice.
Sweeney told the world
to tune back in the week of May 25 for her latest “you better” deadline to
produce the desired docs, which I believe will produce a predictable government
request for more time or some some other stalling consideration.
Ho hum, whatever it
takes—or however long it takes—to get a GSE plaintiff’s win.
Those legal requests and
others in GSE cases beg the question, “Have any Trump people arrived gotten
into the Treasury-DoJ roles in the GSE cases, because the federal government’s
actions sure look a lot of the Obama Administration’s obfuscate, delay, “dog
ate my homework,” and more delay games???
Any chance Judge Sweeney
once, a long time ago and far away, dated “Joe Btfsplk?”
Appeals Cases and Others
--Two appeals court
cases, “Robinson versus FHFA (Federal
Housing Finance Board)” (Sixth Circuit) ” and Saxton versus
FHFA” (8th Circuit) still exist and the hope is that those
courts might agree more with the outlier DC Appeals Judge Ann Brown who
challenged the Lamberth opinion, than they do with Judges Ginsburg and Millett,
who agreed with Lamberth and supported the government.
Those legal actions both
will putt (golf term intended) along as we move into the late
Spring/Summer doldrums and hope that some judges somewhere see the Lamberth
overreach and reject it, setting up conflicting appeals court decisions, where
the US Supreme Court would have to pick a winning side.
--Judge Nancy Atlas is
hearing the “Collins” case in Texas, another lawsuit over the net worth sweep.
Recently, she was asked by plaintiffs’ lawyers to wade into the thicket
of whether FHFA is a constitutionally viable federal agency, since
the FHFA Director cannot be removed by the President for “cause.”
The DC circuit court, in
vacating a Consumer Financial Protection
Bureau (CFPB) decision, Government lawyers used that argument to support
plaintiffs opposing certain aspects of the CFPB’s regulatory activities. (Both
FHFA and CFPB have similar organizational structures, each with a single agency
director.)
--And, yawn, we’re
waiting for a Judge Royce Lamberth’s response when Judges Millett and Ginsburg
asked Lamberth to review the shareholders rights concern expressed in their
opinion which confirmed Lamberth’s original decision. But, none of these
matters—as we’ve seen—have hard, “must meet” deadlines.
“Nodoz” or lots of caffeine anyone?
GSE News From Capitol
Hill
The GSE congressional
evil forces are hard at work, trying to figure out a way to stifle Fannie and
Freddie, for all of their old obvious reasons.
I expect they will
continue to fail, ultimately, although in the House-- where House Banking
Committee Chairman Jeb Hensarling (R-Tex) can produce an “atomize the GSEs
“proposal and likely get it to the House floor. That possibly would screw up
his other ambitious plans to neuter the Consumer Financial Protection
Board and push Dodd--Frank changes through as well.
But, there just is so
much anti-consumer legislation the GOP can promote before it becomes obvious
that the Republican party and its leadership care less about the public’s needs
for fairness, equity, and financial protection, but prioritize what the large banks lavish on
them with campaign contributions.
(I am not sure what’s
left in Dodd-Frank to squeeze out, save the demand that major financial
institutions have more capital to manage the risk they are great at claiming is
excessive while their federal regulators, historically, give them a capital
pass or easy capital maintenance.)
But, that won’t stop
Hensarling from flexing his jaw and his committee jurisdiction muscles.
While House Dems may not
be able to stop ol’ Jeb, but he could get slowed down or stopped, if there really
is growing unhappiness in the hustings--see GOP angry town hall
reports--with what President Trump campaigned on and what he’s done or plans to
do.
The public may not
sit back, quietly, if Congress seeks to produce “more benefits for the banks”
while lower and middle income Trump voters--and those others who didn’t support him--hungrily hold out their empty hands for promised consideration, jobs, health insurance, “Meals on
Wheels,”* etc. and need many of the federal programs the new Administration seeks to
cut. (*One wag noted, not only do they want to end the ‘meals,’ but
they’ll also want to steal the wheels, too.”)
Voters who hope to buy a
house or refinance their mortgage might not be happy when Jeb tells them to eat
his dust and throws them to the mercy of the nation’s largest banks, who have never
been consumer friendly, i.e. see opposition to CFPB, Dodd-Frank rules, and
other pro-consumer issues.
The Senate rules and the
stronger Democrat numbers holds out better hope for GSE advocates, if anyone on
the Hill really believes this is the year to “reform the nation’s mortgage
finance system,” code for “get rid of Fannie and Freddie.”
Until he changes his
mind, Senate Majority Leader Mitch McConnell (R-Ky.) says all chamber non-tax
reform legislation will abide by the 60 vote Senate rule, meaning it could be stopped by filibuster.
As I wrote to someone
who asked about possible Hill action (paraphrasing), “There still is no meeting
of the minds. Nobody up there recognizes, let alone understands, the role of
shareholders, profits, and accurate capital. In any omnibus bill, instinctively congressional
Democrats will try and solve every social ill they believe the current system
ignores, while the GOP will try and abolish Fannie and Freddie and make the
banks and their lending rules the only option for mortgage seekers.”
It’s another reason why
I think the best hope revolves around the Trump White House, eschewing formal
congressional action, then doing as much as it can to revive and resurrect
Fannie and Freddie through regulation and executive authority.
I hope Secretary Mnuchin
and his new deputy Craig Phillips grasp that wisdom and realize the ugly—almost
uninformed--nature of Congress on these matters.
Phillips has been named
Mnuchin’s GSE point person and, like his boss, while he has a long Wall Street
history in the business, will need to bone up on the ugly DC politics. (See
the excellent Gretchen Morgenson’s NYT feature on Philips.)
Corker and Warner
Of course anything
Fannie/Freddie in the Senate will draw “the terrible twins,” Senators Bob
Corker (R-Tenn.) and Mark Warner (D-Va.), who never saw a pro-GSE idea they
liked. Yet, both invoke—without ever explaining it or I suspect understanding
it—“The GSEs are guilty of private gain and public loss.”
When they do that, I am
itching to ask these Senate solons—who, like Hensarling, favor giving the
primary mortgage market as well as the secondary mortgage market operations to
the nation’s biggest banks—1) which federal financial institutions don’t bathe
in federal subsidies, 2) do they realize the big banks--going outside the GSE systems--lost more money on their
“private label” mortgage security follies and took more than twice as much
taxpayers dollars than the $187 Billion foisted on Fannie and Freddie in 2008
(banks took home over $400 Billion of Uncle’s TARP money in 2008-2009)?
So, exactly who or what
did (and still does) engage in private gain and public loss with their pre-2008 shenanigans (and post facto bailouts) which led to our national
financial woes nine years ago?
Rocky Top and Now Alex
Jones
The other thing which
bothers me about those two are the unresolved question of whether they
personally profited selling GSE securities based on insider information coming
from their Senate Banking Committee service?
Corker has a pretty
shaky past with his personal investment and big bank-supplied (Wells Fargo)
favors and has become a wealthy man. That was before he told a national
television audience they should “short" Fannie and Freddie, advice he may
have followed himself, bringing Warner along.
Sometimes identified as
the chamber’s wealthiest Senator, Mark Warner name's came up, too, in reports
of the same activity. (Why would a Senator, with a reported near half
billion net worth engage in penny ante trading based on insider info about two
major entities which are constant issues in the Banking Committee?)
RockyTop News did a five section report series on
Corker’s financial activities and despite objections made about Corker to the
Senate Ethics Committee—does it still exist?—no report on either Senator has
come from the Committee.
And now Alex
Jones and James Corsi have picked up the scent and
are articulating the same Corker (and Warner) allegations. Maybe these
crusading Conservatives will prove some fire exists from all of this
smoke.
https://www.infowars.com/obamacare-corruption-senator-caught-shorting-stocks-he-demonized/
What are the chances
that the two Senators would clear the record and open their tax returns to
prove they never acted in that manner nor profited from GSE stock trades?
Probably not too great,
huh?
GSE News from Around
Town (DC)
Speaking of Senator
Corker, his former aide, Michael Bright has come up in
discussions about who might be nominated to head the Government National
Mortgage Association (Ginnie Mae), the securitization operation in HUD which
handles FHA and VA?
Those graybeards among
you will remember that Ginnie Mae was created out of Fannie Mae in 1970, to do
what the “old” Fannie Mae had done, issue securities with government loans (FHA
and VA) backing them.
The 1970 Lyndon Johnson
legislation “privatized Fannie” and charged it to provide liquidity (buying and
securitizing non-government insured mortgages or “conventional loans) to
mortgage markets throughout the nation. After first exclusively serving the
savings and loan industry, Freddie came along 10 years later and was given
Fannie’s same broader market mission and lender custiomers.
Bright has bounced
around various financial institutions and consulting spots, since he did Corker
staff work on the Senators first legislative effort to destroy the GSEs.
That bill died of its
own weight because it gave too much authority to the big banks and offered no
mandatory affordable housing by financial institutions.
While his paid positions
have changed, regularly, Bright’s GSE objectives haven’t.
He and Ed DeMarco—much
more on Eddie D in a minute—produced a “get rid of the GSEs” discussion draft
while toiling for the Milken Institute.
DeMarco took a new job
last week as President of the Financial Services Roundtable Housing Policy
Council, from which he no doubt heavily will lobby to kill the GSEs.
I hope Ed enjoys the same
policy success he’s had since leaving his old job, as acting-head the GSE
regulatory, the Federal Housing Finance Agency, where he also tried
but failed to kill the GSEs. They are still here and Ed’s into his third or
fourth post FHFA job.
Surprise, surprise, last
week, the FSR sent a letter to the Hill “complaining about the GSEs and the
legally still being heavily questioned legality of the forced $187 Billion
financial support from Treasury. But nowhere in the letter is any
reference that the FSR member big banks sucked up $400 Billion of taxpayers’
dollars (aforementioned TARP) because of their ruinous PLS habits. (Darn those readily available
facts!)
Just as I asked about
Corker and Warner adopting a new tack, I wonder if the FSR (and Ed) can
consider a world where they actually cooperate and work with a GSE-centric
mortgage model—which is what they have today and apparently from which they
make lots of money—instead of chaotically trying to replace them.
The housing policy world
knows the only way banks can work successfully in mortgage finance, long term,
is when they have a strong or stronger entities (the GSEs) enforcing reasonable
bank mortgage lending behavior regarding loan products, market access, and
prices???
It’s All about
Homeownership and what that means to Americans and America
In looking at my blog
work this week and dozens of other articles and legal and political related
issues, we can sometimes forget—if we even knew—about how and why the federal
government supports homeownership and the resulting national and societal
benefits that flow to American families and communities from what is measured
as close to 20% of the United States’ Gross Domestic Product (GDP).
That all came back to me
when pouring over an article sent to me by my former Fannie colleague
and friend Gwenn Hibbs (the world’s best financial services lawyer).
It’s an excellent
history lesson for those who haven’t spent years delving into the “whys” behind
all of the “what’s” we see in the national mortgage policy ideological,
industry, consumer, and political disputes.
(Super read, Gwennie!!)
Maloni, 4-17-2017
6 comments:
To use another golf reference,when it came to mortgage business the Banks
SHANKED their tee shot out of bounds, and still posted a par.All the
spectators saw the ball go out of bounds, but decided to look past that fact.
Its getting to be more than frustrating to see the inability of the courts
or the politicians to see the wrong done, and do something about it.
Thanks for what you do, Maloni for Prez?? I wouldn't wish that on anybody,
but maybe some levity will help.
Thanks for reading and commenting Michael--
I don't know how we recapture that past quality our nation enjoyed, when people were responsible and rose above their partisan perspective, could identify right and wrong, and would speak out.
It all can't be blamed on Trump, because it started long before him, although--IMO--his campaign and presidency have added to its demise.
This is where the media and we citizens just need to strenuously exercise our First Amendment rights and hope enough thoughtful Americans can establish, once again, some semblance of national respect for facts and the truth.
That sounds aerie faerie but I don't know what else we can do at the grass roots level since we are not sending to Congress candidates who qualify for "Profiles in Courage."
It won't be easy or happen soon, but the alternative just screams "banana Republic, armed with nukes."
Thanks, Good analysis.
Anon--You're welcome, any time!
Hey Bill...I noticed Celeste Brown, MS' global treasurer is moving to Fannie. Seems like she was arguably a rising start in Morgan's hierarchy. Of course, I have no idea what her specific circumstances are, but seems like an interesting move considering the headlines are fairly terrible on the GSEs right now. Any thoughts on something like this ?? Seems bizarre to me.
Anon--
With all due respect to Ms. Brown--whom I don't know--the coming of anyone to a GSE post or going from a GSE post doesn't mean much, right now.
The management teams are not driving the ship. Neither company is permitted by FHFA/Treasury to be entrepreneurial.
The scary thing is some of the needed legal maneuvers in this campaign are in the lap of a man who didn't know Hawaii is a state and part of the United States, which he is sworn to protect.
Psst, also told the AG pronounces the "t" in "mortgage."
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