Things I am Thinking!!

GSEs and Lots of Trump Stuff….but first, I need to talk about the POTUS, sorry!

Before writing the following GSE segment, I had a lengthy indictment of the months since Donald Trump was elected.

But—you’ll be happy to know—I shelved virtually all of that anger to concentrate on the bizarre, appalling, and blind ass-sucking and kissing DJT did with Russia’s Putin this past weekend to make my case how lame he is as our President.

No matter their political party or ideology, every American President for the past 75 years has mistrusted, seen through, or just detested the governments of the Soviet Union and Russia with great cause…except for our current President.

Those Oval Office tenants found Russians to be perennial liars, cheats, duplicitous, disingenuous, jealous, literal and figurative thieves, and anti-American thuggish troublemakers.

Foreign policy experts on both sides of their aisle, plus the media have compiled fact after fact of Putin’s interference in our 2016 elections and other anti-America machinations going back long before Donald Trump thought to run for office.

But Donald Trump believes Vladimir Putin and Russian are innocent of that corrupt action?  Maybe because he won the Electoral College votes owing to Russia’s help or because Trump Inc. is closer the Donald’s long time commercial lust to do business with Russia, build hotels, golf courses casinos, and sell them Trump tchotchkes?

Donald Trump has been a presidential disappointment on so many levels, but the American people have some choices before he runs again in 2020, the primary one being to vote against any official seeking public office who acts as a Trump enabler or backs DJT’s pugnacious and virulent nationalism and USA-weakening policy choices.

It‘s easy watch what those candidates do and say. Once noted, follow your instincts at the local, state, and federal levels and vote accordingly.

Can readers honestly say they ever have seen so much internecine US hostility and anger in our system of government, at every level?

For me, it is very hard to disassociate those things we see daily from the poison and license Donald Trump has spewed into our culture in the past year.

Look at how the Conservative church-going folks of Alabama, sickeningly, are trying to twist the Bible to defend Roy Moore from charges of molesting young high school aged women? Is he really as some of those people claim, “Joseph” and the teenage girls are Mary?”

What hypocrites!!

How about “dating” teenage girls, when you are 32, and hanging out at “high schools and malls,” where those kids congregate, as one of Moore professional colleagues accused him? Are those habits disqualifying?

Those are hardcore Trump supporters who can see no wrong in Roy Moore and lots else around them.

Whomever objects to my Trump comments, please send me a list of things you believe he has done well for the American people in the past year, not his billionaire buddies.

Healthcare is a mess, we are not trusted by our historic foreign allies, who are essential if we want to maintain our world leadership; the President’s turning his back on our senior citizens; his treatment of minorities is outrageous, his has no intellectual challenge in his mindset, he cannot speak to the masses or orate and uplift; he just mumbles “great and wonderful” about anything related to him.

A story circulating in DC.

During a lull during a recent White House dinner, Melania Trump leaned over to chat with Secretary of State, Rex Tillerson.

"You know, I bought   Donald a parrot for his birthday in June. That bird is so smart, Donald has already taught him to say over two hundred words!"

"That's very impressive," said Tillerson, "but, you do realize that he just speaks the words. He doesn't really understand what they mean."

"Oh, I know", replied Melania, "neither does the parrot."

Fannie Freddie, listen to the air escape!

The air has gone out—only temporarily, I hope—of future consideration of the GSEs as shareholder owned entities.

That matter has been overtaken both by greater Trump political and revenue priorities and most GSE talk has been the virtue-less variety, see recent House Banking Committee hearing, where Peter Wallison strummed his shopworn “get the government out of the mortgage finance world”—to Committee Republican huzzahs--and the GOP committee members then found some virtue in the MBA’s plan (drawn up by Wells Fargo) to gut Fannie and Freddie and put the nation’s behemoth financial institutions in charge.

Those Congressmen and women clearly do not understand how the mortgage finance world works or even how consumer demand for homeownership operates. But they respond faithfully to the anti-GSE dog whistles.

You Hill folks. If you buy into Wallison, you won’t have the Red, White, and Blue mortgage finance vehicles which provide your constituents with most of their home loans, no FHA, VA, Fannie and Freddie, Farmer Mac’s Ag loans, the Home Loan Bank System.

If you differ with Wallison and the AEI and embrace the MBA’s scheme, you endorse a systemic giveaway to the big banks with new federal financial guarantees to insure against, i.e. bail out, bank mortgage security losses.

In saluting both PW and the MBA, this embarrassing display by the committee’s R’s establishes that they don’t understand the MBA would create a major new federal subsidy for big bank security losses. (What, there’s gambling at Rick’s??) Or that, inherent in the MBA plan—is a systemic destruction and chaos that would rattle the mortgage market for years and drive up prices for everyone and that’s before congressional Republicans screw over housing and homeownership in their respective tax bills—all, primarily, to give corporate America a major tax break it doesn’t need.

Excuse me, but what goobers! That’s the only word for those tasked with trying to design some new mortgage finance operational plan and struggling, because they refuse to consider or even understand the many virtues and strengths of the current system, which just needs some tweaking not destroying.

Please Congress remember: The big banks don’t do good things. They don’t do housing policy, are not illiamsibnary; they do things for money. There is nothing, nothing wrong with that but Congress shouldn’t’ confuse the major banks economic function and role, as well as their sorry history of violating federal laws and regulations in just the past 10 years. (See more than $200 Billion in fines and penalties.)

GSEs and the recent Election Results

Let me draw a small link between last Tuesday Democratic wins in Virginia, New Jersey, and elsewhere.

While wishing and hoping they are, I don’t think they yet represent a significant rising rejection of the Trump phenomenon, although it’s folly to ignore them.

Next year, 2018, is a congressional election year when every House Member is up, plus a handful of GOP Senators (and more Senate D’s).

Even without having to carry the Trump albatross, the GOP will be reluctant to risk controversy and dramatic change by further hampering Fannie Mae and Freddie Mac, wounding more the nation’s conventional mortgage finance system.

You can double underline that, if the tax bills tear up years of homeownership friendly provisions in current tax law.

A huge gaggle of House and Senate R’s will freeze, kick the can down the road—again—and will not move on killing or shackling the GSEs, more than they are now, when control of the House is at stake.

Certainly not because the MBA and others—including some Senators and Congressmen--push a big bank controlled “mortgage system pig in a poke,” which they’ll argue is better than what exists today because Fannie and Freddie largely controlling what occurs in the primary mortgage market, where borrowers go to lenders for loans, using the GSE secondary market guidelines for underwriting specs.

But that’s precisely why the current system is better, the GSEs do act as a governor on what the big guys would like to push onto consumers. But, to appreciate that, you have to understand how the mortgage market works and why borrowers make the loan choices they do?

Near term, I don’t believe the anti-GSE market destroyers will succeed. It won’t happen.

But that doesn’t make me happy, just disappointed in Mnuchin his pals and plans, which—as noted have been overtaken—by the many other higher priority items on his plate, like tax reform, the federal Budget deficit, helping the big banks, and a variety of international issues on which he must have an opinion.

Obviously, that leaves matters with the courts where things are moving glacially and most experts say we are two years from anything definitive, including a possible Supreme Court review.

But—as I’ve written before—if the Trump Administration finds it desperately needs a fresh $100 Billion or more, it has the Treasury warrants which gives the federal government  90% ownership of the GSEs and which could be monetized quickly into much needed cash, although at the expense of keeping Fannie and Freddie alive.

As the next few months unfold, the GSE issue—because of the “big casino” nature of the warrants—will be fascinating dilemma for Mnuchin and the POTUS. We all should hope they both are pragmatists not ideologues.

Tax Reform and housing issues

Here’s a suggestion which some major Republican might want to consider, plus it might add credibility to their tax efforts.

Yes, cut corporate rates but make it contingent on recipient companies, first, making the capital investments in plant, equipment, and technology which will produce the fresh new jobs they all promise. Let them take the mandatory steps to invest desired capital in people, process, and places and then reward them.

Pretend you are from Missouri and tell the major corporate recipients, “Show me” and then we’ll cut your tax rates.

Also, at what point—if Congress succeeds in cutting the MIDI deductions for most homeowners and doing away with the deductions for state and local taxes, and then also attempt euthanizing Fannie and Freddie, does the public stand up and say those anti-housing GOP policies aren’t’ going to help me buy a home or even keep the one I have, let alone live on any equity I have built up?

The National Association of Realtors sent a very strong letter to GOP Members last week opposing the tax provisions in the House bill.

https://www.nar.realtor/newsroom/op-eds-and-letters-to-the-editor/gop-tax-reform-will-mean-tax-hike-on-middle-class-homeowners-nar

The NAR and the National Association of Homebuilders each will have hundreds of their association member fly-ins this week, visiting every House and Senate office making their views known on these changes.

A Big GSE Loss, Gretchen Morgenson

When Gretchen Morgenson announced a week ago that she was leaving her “Fair Game” column on the front page of the Sunday New York Times business section—after 20 years--and moving across town to the Wall Street Journal, IMO, it was a trip of a million miles to a new publication whose editorial board vilified Fannie and Freddie for the past 25 years, with no let up.

The WSJ ownership and senior management will not look fondly on someone writing as constructively and insightfully about the GSEs and about what trials and tribulations they have faced at the hands of bad government policy as Gretchen has.

Morgenson’s a smart, powerful woman with a grand, hardnosed perspective, but the reality is that her new professional home won’t welcome her GSE sympathies nor should we expect her to continue writing about Fannie and Freddie as she did when working for the NYT.

We GSE fans should thank her for what she accomplished on our behalf for championing certain matters in her much read column.

To the world of journalism and journalists, currently there is a vacant media position at the top of the GSE heap, waiting for someone to seize that mantle and write accurately and forcefully about what Fannie and Freddie have offered and still can, if policy makers can cut through the Gordian knot of lies and falsehood which still surround them today.

Maloni, 11-14-17