Sunday, June 10, 2018

Back and rested; point me toward the bad guys!

I’m Back!!

After spending 11 days in California with two of my (four) sons, my three grand kids, wonderful daughter-in-law, and my youngest boy’s super girlfriend, I have returned, revived, and ready to do battle.

I got to meet for the first time my grand dog “Angus” and help build the doggy gate to keep him from the new carpeting in the second floor; see my 10 year granddaughter graduate to middle school (she delivered the opening prayer); play in her select soccer team game;  watch my 12 year old grandson play four ice hockey games, i.e. “skate Rex, skate”; and see my five year old granddaughter at her ice hockey practice where she was the swiftest skater on the ice and a clearly budding athlete as she grows up. (She has an array of backyard athletic equipment to delight an Olympian and can use all of it, with agility. Remember the name, Seaver Star Maloni, in a few years, she going to be playing hockey, soccer, or softball at some California university.)

Did I mention my three visits to the beloved Barona Casino and the wonderful treatment I received there, although it didn’t match my delightful family experience (I love SD’s fish tacos!)?  If you a casino enthusiast and traveling to San Diego, try and visit Barona. It’s a treat, both in service and amenities (be sure and hit the Buffet)!


As usual, not much new has happened on the GSE front while I was in Cali, which mostly is good news. We’re headed for summer doldrums.

Before I left, there were rumors that this Administration might replace Mel Watt when his term is up next January with someone currently in place at another Executive spot, ala Mick Mulvaney, doubling up at Director of the Office of Management and Budget and head of the Consumer Finance Protection Board, which has been a fizzle for every US consumer but a boon for the banks, as Mick tries to scuttle as many of the internal pro-buyer/shopper CFPB operation he can.
I don’t believe that will be the situation, but if that becomes the call, IMO, the three guys who could get anointed to do double duty overseeing the GSEs and their day jobs are: Treasury’s Craig Phillips, currently Secy. Mnuchin’s chief assistant; Brian Montgomery, who now runs the Federal Housing Administration (FHA); or the mostly undesirable choice  (for my money) Michael Bright, who heads Ginnie Mae and worked for Sen. Bob Corker (R-Tenn.) and various other interests lusting to do away with the GSEs.

The Mortgage Bankers Association were still looking for someone to succeed their retiring President/CEO David Stevens, for whose long term good health we all root. House Banking Committee Chairman Jeb Hensarling (R-Tex), whom I thought would be a certain pick, claims he’s not interested and rumors are that the MBA wants a manager, not a pol for the job. We’ll see.

(As I was writing this segment on June 7, the MBA announced that it had hired Robert “Bob” Broeksmit to follow David Stevens. Bob is a neighbor and an industry vet, comes from his own mortgage management firm, but as early rumors suggested he is far more an industry insider than politician. Good luck, neighbor.)

The National Association of Realtors also is seeking a new Exec to follow Jerry Giovanello, who will retire this year. Joe Ventrone, long time DC housing maven (former GOP Hill housing subcommittee staffer, HUD official, and NAR veteran) has taken on more of the Realtors’ GSE portfolio.

Speaking of the MBA, it this week sent an eight page tome to the GSE regulator asking to be let in on the decision making process far sooner than has been the case.

Why? Did they send similar letters to the Fed, OCC, FDIC and bank regulators asking for more /more early communications and involvement in bank activities regulated by those agencies?

The trade association so worried about the GSEs—because of this big bank members—might want to pay closer attention to what the Justice Department, Treasury, and SEC are investigating related to possible “trader manipulation” (read bank trading desks and Wall Street firms) of GSE debt and MBS securities sales.

Maybe Broeksmit can/will exercise superior judgment and turn the MBA from its constant belittling and harassment of the GSEs, which I long have suggested  only benefits their big bank members as the expense of their small members whose operations rely on the GSEs.


Below is the kind of rightwing GSE hyperbole which regularly gets peddled in this town, in this case by the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW).

Very few recipients challenge these scurrilous reports and their memes fester, so I encourage any reader who wishes to, send your (critical?) comments to the two organization sponsoring this Fannie and Freddie crap. (copy your Congressperson and Senators on it, too.)

“On September 6, 2008, mortgage giants and government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were placed into federal conservatorship in the wake of the housing market crash and global financial crisis. 

“More than a decade later, neither the GSEs, the Federal Housing Finance Administration (FHFA), nor Congress have offered any viable plans to unwind these entities and release them from taxpayer-backed financial foster care. 
“More alarmingly, there are no indications that, should Congress manage to create a path to release them from conservatorship, Fannie and Freddie will be constrained to their original mission of secondary mortgage market securitization.  In fact, their activities over the past decade indicate that they will continue to overspend, overreach, and overlap into the private sector, as they did before the 2008 meltdown.
“FHFA is the GSEs’ regulator, but it has failed to act as the taxpayer watchdog Congress intended.  FHFA Inspector General (IG) Laura Wertheimer testified at an April 12, 2018 House Financial Services Committee hearing that nearly $193.5 billion has been invested into Fannie and Freddie from the pockets of taxpayers.  Rather than ensuring that the GSEs' “reduce taxpayer risk,”

“Fannie and Freddie required another $4 billion infusion of taxpayer money in February 2018, and could need a bailout of up to $100 billion in the future.

“Despite prior and potential future bailouts, Fannie and Freddie continue to spend recklessly.  For example, the build-out costs for Fannie Mae’s new headquarters, according to a September 28, 2017 FHFA Office of the Inspector General (OIG) report, rose by 49 percent, from $115 million in January 2015 to $171 million in March 2016.  Fannie Mae’s excessive purchases included a $250,000 chandelier, $1.2 million for decorative wood ceilings, $2 million for a third glass bridge spanning between the organizations two towers, and a $4.1 million cafeteria, lavish appointments for an entity that is currently under federal control; i.e., the American taxpayers.

“Beyond the GSEs’ wasteful spending, they continue to blur the lines as to whether they are government entities or private sector operations.  On May 7, 2018, Bloomberg reported that Freddie Mac has been extending lines of credit to nonbank mortgage servicers.  Very few details have been provided on exactly what Freddie Mac is planning to do, and whether it will use its privileged status to create an uneven playing field with private businesses.

Fannie Mae is also under increased scrutiny for edging past FHFA’s lobbying ban, according to Bloomberg, which reported that Fannie has been “quietly meeting with people inside and outside President Donald Trump’s administration.” 

“Fannie denies that its executives are actively lobbying, claiming that they are only presenting “factual information on policy proposals” in meetings with government officials.   Pouring money into lobbying was a hallmark of the GSEs’ business model before 2008. 

It should come as no surprise that there are indications that they may be following that freewheeling model again, even under conservatorship…”

Let see who among my blog readers can identify and communicate with the CAGW  all of the exaggerations, magnification, embellishments, and falsehoods in this column/blog which Hill staffers and elected officials read/swallow with few challenges.

Here’s a brief Maloni starter list of CAGW blog errors/shortcomings.

-- Since 2008 and far more recently, there have about a dozen serious legislative plans to alter, reform, or restructure, as well as erase the GSEs, coming from the Hill (See products Senators Corker, Warner, Crapo, et al), not to mention House Banking Committee Chairman Jeb Hensarling. In addition the Urban Institute and AEI have authored other plans, as has the Milken Institute, with the most thoughtful bunch being the “Moellis plan.”

-- Treasury may have “given” the GSEs $193.5 Billion (whether it was needed or not, a fact currently being challenged in federal court), but the authors forgot to note F&F repaid the original 2008 $187.5 Billion given them. And have shipped an additional @$275 Billion—and still growing each business quarter—to Treasury, because their debt, in Treasury’s 2012 reshaping of GSE debt service, never gets extinguished. (To anyone who can do math, that means Fannie and Freddie have sent @$460 Billion or so to the Treasury, since about 2012, after receiving about 40% of that number in 2008 aid.)

-- The CAGW bloggers fail to explain thoughtfully that the February, 2018 “$4 Billion” was a temporary, onetime event, the result not of a GSE business failure or slow down, but of temporary tax changes made in the Trump tax reform bill—which affected Deferred Tax Accounts (DTAs, previously applied GSE tax deductions) but now are self-correcting, since the GSEs corporate tax rate will be much lower going forward with those needs extinguished.

-- Tax payer risk” has significantly been reduced for the GSEs since—at the request of banks and others--Treasury forced F&F out of the once profitable portfolio business, where they faced interest rate risk on $1.65 Trillion of mortgage loans portfolio. Mandatory reductions, still ongoing, have shrunk those portfolio numbers down dramatically to $452 Billion.

--The GSEs are prohibited by law from lobbying or advocating for their mission or business activities, which is why nobody is responding to this phony CAGW “dog whistle.”

But, this lobbying prohibition rule might be a good proposal and the CAGW and CCAGW should advocate its application to the nation’s largest banks and financial institutions, where some real waste could be saved.

Once again, until he sticks his tiny hands in the GSE business, I am avoiding commentary about our egomaniacal and destruction, history-fogged President, who is rumored to be considering pardoning Sirhan Sirhan, Lee Harvey Oswald, the Lindbergh baby killers, Charles Manson, John Wilkes Booth, and any Neo-Nazis charged at Charlottesville.

President Trump observations from others

I thought Jake Tapper’s discussion of the POTUS decision to disinvite the Philadelphia Eagles form the traditional NFL-WH visit—when no members of the Eagles in their championship year, last season ever knelt when our national anthem was played (read that line again!!)—deserves sharing.

As was this New York Times story of the President’s lawyers admitting the POTUS did draft part of the infamous DTJ Jr. statement--discussing his son’s June 2016 Trump Tower meeting with Russian representatives--after his personal lawyers and Sarah Sanders vehemently denied same.

Topping my list of Trump commentaries is Alexandra Petri’s hilarious column—Saturday, 6-9 Washington Post--about President Trump’s week.



After thoroughly reading through the flotsam and jetsam reporting of the G-7 meeting and the US President’s disrespect (not to mention his “Putin embrace,” again), I only can encourage everyone who has a grievance with Trump’s actions, ethics, attitude, persona, behavior personnel choices, and policies, to vote against every congressional candidate in November who claims to support DJT or who claims he/she is “more Trump than Trump.”

It’s one way to end this nightmare!

(I hope the Canadian-born Washington Caps hockey players boycott the WH Stanley Cup celebration as their one Canadian born Black teammate, Devante Smith-Pelly, already announced.)

Congratulations to Doug Bibby and my other long suffering Caps-fan friends. As a Penguins fan, having been to that NHL pinnacle five times, I know how good you feel. Enjoy it all! You and your team earned it!

Maloni, 6-10-2018

Sunday, May 6, 2018

Slow Going, Not Many GSE Cats and Dogs

Heartless/Clueless  HUD Secretary

The Cabinet Secretary--with the wife who strongly believes her husband needed a new $41,000 dinette set for his office—just came out with the Trump Administration’s stringent scheme to save HUD money and demanding low income and poor Americans to pay more for their federal shelter benefits and food stamps they receive.

The very intelligent, but poorly cast as a “houser,” Dr. Ben Carson—former brain surgeon, now head of the nation’s Housing and Urban Development agency---thinks both raising rents and forcing recipients to work to get their rental assistance will improve the lot of the poor, elderly, and mainly Black and Brown residents—by leaving more money in the Treasury’s General Fund for other Trump priorities (like dinette sets?).

Or, as some have observed…
While the President keeps talking about the common man and woman, most of his economic policies, such as his tax overhaul or financial deregulation, have aimed to provide relief to corporations, investors, and families in the upper income brackets. But it is key to understand that his legislative actions are happening simultaneously with his continued rhetoric -- attacks on immigrants, civil rights, gender equality, and anyone who dares to stand up for the ideas that he likes to deride as "political correctness" -- that secured the support of his base to begin with.”
Julian Zelizer, history and public affairs professor at Princeton University 

Again, I am struck by this Administration which has given so much to the wealthy and well off but would pay for it by squeezing pennies from the less fortunate.

Way back in the GSE Dark Ages, when the GSEs (including me for Fannie)  and others worked on the 1992 Housing Act and created a new independent regulator for Fannie and Freddie in the statutorily created Office of Federal Housing Enterprises Oversight (OFHEO), we gave HUD authority over the GSE housing mission, since we—and the (senior) Bush Administration at the time-- assumed that most HUD secretaries would be advocates for the low and moderate income Americans and support homeownership and enhanced rental opportunities.

That’s not the way it is today, unfortunately, but fortunately Secretary Carson has no real GSE role and nobody really listens to him, anyway, except for maybe dinette salespeople.

Hits from the past…..

The always excellent GSE legal reporting done by Peter Chapman noted this week the federal government (“yawn, yawn, what else is new?”) has asked for an extension in the Jacobs-Hindes case in Delaware. When the case first was filed, many of us hoped, wrongly, for a slam dunk, given the state laws violated and the fact that the plaintiffs were represented by Myron Steele, a former Delaware state Supreme Court judge.

But, alas, no “soup for us”…yet.

As we wait, a true value for us all is the J-H “amicus brief” (friend of the court) which Tim Howard submitted two years ago in connection with the case.

I read Tim’s amicus brief again, just recently, and I encourage all of you to avail yourself of it because Tim Howard wrote the most clear headed, easy to understand, non-foggy description of who did what to the GSEs and when, which should propel an unbiased Judge to rule for plaintiffs against the US government.
Remember, Tim’s entire life was forced into this matter when federal regulators in 2004, unjustly, put him (and former Fannie CEO, Frank Raines and Fannie Treasurer LeAnne Garmon Spencer) under a huge hostile black cloud, falsely suggesting they engaged in securities fraud.

Eight years later, in 2012, federal judge Richard Leon rejected the bogus allegations, formally scrubbing away this heinous lie.

As many know Tim then wrote a book and continued his work explaining the workings of the GSEs, their political and industry opposition, and collaborating with those who seek support the Fannie/Freddie mortgage model.

When the many lawsuits emerged in the wake of Treasury’s hostile takeover and subsequent “net worth sweep,” Howard authored AB’s  in conjunction with the Perry Capital suit and later the Jacobs-Hindes case in Delaware.

His amicus is a must-read for GSE newbies and a “re-read and read again” for those of us who need reminded of the many ghouls and financial berserkers (the banking interests and their congressional friends) who long have agitated against and seek to scuttle Fannie and Freddie.

Tim’s discussion is fabulous, educational, spiriting, and a reminder to all GSE fans just who did what to whom and how, to create the current unhappy GSE moment in which we find ourselves.

Just keep hoping the government is greedy for a fresh $100 Billion plus it could realize if the WH seeks to utilize its 79% plus ownership of the GSEs and monetizes its warrants.

But Treasury Secretary Mnuchin now claims 2019 or even 2021 could be the best time to bring back a re-privatized Fannie and Freddie, administratively, albeit with more housing finance limitations.

Although that could be just in time for new Democrat congressional majorities to truly revive them.

(Help yourself, twice, and read Tim's newest blog post discussing  low and moderate income housing needs, goals and history and how best to address them going forward. Once again, you see the ugly hands of the nation's large commercial banks trying to twist those needs to benefit themselves not the people and communities they need to serve.

New GSE Reform Legislation????


Sen. Mike Crapo (R-Idaho) and Rep. Jeb Hensarling (R-Tex)—Senate and House Banking Committee chairs, respectively--can talk all they want about new GSE bills to upset the mortgage market and reshape it to their liking but it ain’t happening, beyond mere introduction of same and some possible hearings as this election year quickly unfolds.

Financial shrimp on the Barbie, mates??

It has nothing to do with national borders, a little something to do with national banking regulation, and everything to do with a bankers’ DNA.

The latest tales of large bank perfidy from Australia show it’s the nature of banks to try and cheat, steal, and screw their bank clients until someone stops them.

Please remember, when you go to the polls in the nation’s primaries and the November general election, the GOP and the Bush White House has been chomping at the bit to restrain or do away with remnants of the Dodd-Frank financial services legislation and the Consumer Finance Protection Bureau (much as they have been trying to gut the GSEs).

The bank behavior provides all the justification ones needs for an active and aggressive CFPB, which is why the banks and their R congressional protectors abhor it!

GSE Earnings

As I predicted two blogs ago, the GSEs had super 1Q 2018 earnings, with Freddie generating $2.9 Billion and Fannie adding a whopping $4.6 Billion to Uncle Sam’s General Fund.

The naysayers can keep chanting “failed business model" and "GSEs swirling down the drain,” as the GSEs walk to the bank, because Mike Stegman, Jim Parrot, David Stevens and the Mortgage Bankers Association used those barbs to do their best to screw Fannie and Freddie and are still are trying.

Ain’t happening this year, dudes, as the GSEs payments to Treasury for the $187.5 Billion their boards were forced to accept in 2008 now has been returned with about $280 Billion in excess of that $187, since as we know those Bush and later Obama  guys fixed the deal so only the GSEs would not be able to pay off their federal financial support debt but be in perpetual financial servitude.

Rudy Said What? Daniels and Her Lawyer Applaud

Let’s see Sarah “Biscuit” Sanders spin Rudy Giuliani’s statement to Fox and Hannity that President Trump repaid Michael Cohen for something about which, previously, the POTUS declared he knew nothing, i.e. a $130,000 hush money payment to adult film/porn star Stormy Daniels so she wouldn’t go public that she had an extra-marital affair with President Trump, shortly after Melania got pregnant with Barron Trump.

Yay Rudy!!!

Did Michael Cohen attend “the worst law school in the nation?”

Maloni, 5-6-2018

Tuesday, April 17, 2018

Duck Folks, they are throwing marshmallows at us!

GSE Cats and Dogs

In my 35 GSE years, first  working at and then writing about them, I have seen Fannie and Freddie (always more the former than the latter) accused of not serving low income American; serving low income America too much; putting profits over mission; only writing risky loans (subprime) in the decade of the 1990’s; ignoring greater corporate returns because the companies too much wanted to help the poor realize the benefits of homeownership; bamboozling their regulators and the Congress; Fannie executives committing “securities fraud”; violating “bright lines” between the primary and secondary mortgage markets; putting the nation’s financial economy at risk, and on and on.
Most of these allegations were false, yet still perpetuated by the “financial establishment”—Tim Howard’s descriptive phrase for the nation’s big banks and their allies—which have never stopped lusting for the GSEs’ demise so they could posit themselves in Fannie’s and Freddie’s place and control the secondary mortgage market and acquire the GSEs annual income.
As a GSE employee (and later as a blogger) I aggressively fought those falsehoods building a tough exterior and a huge defensive capacity, i.e. “G-r-r-r-r-r,“ but now I sense some “bad guy” desperation as they grasp for new incendiary charges.
Something has changed (maybe they’re running out of oxygen?). Their hopes of obliterating Fannie Mae and Freddie Mac seem to be slowly, slowly swirling down the porcelain policy commode.
My evidence…sparse, but…?
Recent complaints, instead of verbal cruise missiles today seem more like hard-thrown powder puffs.
I am talking about the Right’s outrage over the cost overruns in constructing the new Fannie Mae downtown DC headquarters, as called out in a recent FHFA IG’s report then picked up by the usual GSE alarmists.
These indictments cite expensive chandeliers and decorative wood, which could add to the already government approved cost of the building!!!
Wow, they’re huffing and puffing over expenses for lights and veneer at a company/agency which generates about $10 Billion a year???
We all have been so conditioned and battered by the big bank/AEI/Cato/MBA etc. flood of Fannie and Freddie accusations—predicting hellfire and damnation to the world (and bank bottom lines!)—because of this or that GSE infamy, that the most recent GSE assaults (mainly aimed at Fannie) seem innocuous, as when your enemy runs out of dumb-dumb bullets and starts throwing paper wads at you.
A construction cost overrun?? Oh my goodness, has that ever occurred anywhere in this nation? How about examining GSE cafeteria vegetable and milk cost deficits or bitching about rising janitorial prices??
Over the years, I’ve read and responded to myriad GSE indictments—helped build powerful political coalitions and media campaigns to battle the assaults--but now their faultfinders and opponents are going to the mattresses over a million dollars of questionable decorative spending from a company that brings in several billion dollars a year in earnings to Treasury, plus what they pay Uncle Sam in federal taxes????
Surely GSE denigrators you jest over those paltry numbers—and, for spite, I did just call you “Shirley”—since, despite being de minimis, every business decision Fannie and/or Freddie makes is PRIOR BLESSED BY THE GSE REGULATOR AND VARIOUS US TREASURY OFFICIALS, the institutional home of which gobbles up every dollar of annual Fannie and Freddie profit.
These are not private corporate management decisions hatched in dark boardrooms by covetous dollar hungry employees—as the conservative “broad siders” imply--because everything, the GSEs do is approved, first, by their government overseers.
And it has nothing to do with GSE mortgage operations or how Fannie deals with its lender network or other stakeholders.
Suffice to say—since Fannie Mae is making money and will for the near term until their circuymstances change, i.e. the net worth sweep is rejected—whatever earnings Fannie (and Freddie) fail to spend on overhead each year now is sopped up by the US Treasury.
So, pro-GSE elements need not fear these puppies yelping over office decor costs?
Yet, if that’s all the “bad guys” have to throw at the housing finance giants, unleash those penny-ante fusillades!
And good luck getting those GOP Hill denizens to worry about a few millions dollars, now that their DNA is all over a TRILLION DOLLARS in red ink and deficit spending from their recent budget buster spending bill and the separate tax reform package.
Bitching about cost overruns on new construction, frankly, it reminds me of Claude Rains’ portrayal of Captain Renault’s in the movie Casa Blanca—when he’s handed his winning gambling chips—and announces, hypocritically announces, “I am shocked, shocked to find out that there is gambling at Rick’s.”
Hostilities based on chandeliers and decorative wood?
What an embarrassment to we warriors of yore!!
As former Steeler linebacker Jack Lambert—a front toothless, vengeance seeking professional football specimen--once said of excessive rules to protect Quarterbacks, “Maybe we should have them wear dresses?”
Anything new and exciting staring at Fannie and Freddie??  
Yes, there are a few new court cases charging the Treasury with variations of the GSE violation with which we all are familiar and some of those have been sent to Judge Margaret Sweeney, who has been sitting on her other GSE “case-eggs” for so long that some of those cases are kindergarten age.
Who knows, those still could hatch and the emerging peeps make the “good guys” happy.
Or, possibly, Judge Lamberth could awake and find out that he was flimflammed by government lawyers and pressured to decide a mammoth case, absent all of the facts which the DOJ and agency lawyers failed to provide. Worse yet, his honor was lied to by those same attorneys.
Wouldn’t a mini-reversal be a fun result, with red faces all over town and maybe a lawyer-rendition or three?
But, there’s some hope for the GSEs as the GOP Congress begins to get loose bowels in this election year over their humongous generation of red ink in their spending bills and their “tax reform” package, which is slowly producing very few benefits for middle income tax payers which many of us predicted….not to mention gobs of anticipated red ink projections.
Recent news stories has the Congress relooking at their past spending decisions to slow down some of that deficit spending to show a better face to November’s voters.
If the Congress wakes up to the $100 billion or more just waiting for the US Treasury, if Secretary Mnuchin wants to take advantage of the inherent value in monetizing the government’s GSE ownership warrants,  we still could get some congressional-blessed executive action that keeps Fannie and Freddie alive and functioning as privately owned financial institutions.
Not predicting, just sayin’.

Ooops: MAGA soon could stand for “My attorney got arrested!”

Maloni, 4-17-2019

Sunday, March 25, 2018

The more things change, the more they stay the same

Same-o, Same-o

The bad guys keep whacking and hacking at the GSEs, but they are using some strange tools and tactics.

In a recent American Banker article, Ed Pinto, AEI’s resident myth builder, and John Ligon, a Heritage Foundation wonk, argued that American mortgagors should ignore their better consumer instincts--opting for long term fixed rate financing, like 15 and 30 year mortgages--and instead do what the nation’s largest banks would prefer, that is choose only adjustable rate mortgages (ARMs).

Now who do you think that selection would benefit the most, borrowers or the banks? I wonder who/what goosed that fun pair to write the article. No fair guessing the “financial establishment,” i.e. nation’s largest and most vocal financial institutions.

The duo’s piece went on to indict the nation’s secondary mortgage market (guess who those folks are?), for what the authors say is a hefty business reliance on Uncle Sam, except a close observation will show Sam’s ties to banks is far, far deeper for banks than it is for the GSEs. (Please, someone other the usual suspects explore and discuss this reality of major bank subsidies and exclusive Red, White, and Blue depository benefits.)

Here’s some Pinto’s and Ligon’s verbal anxiety, angry rhetoric,  complete with their disdain for the public’s long standing support and preference for fixed rate financing.

“Like clockwork, a recently released discussion draft of a Senate housing finance reform bill says the ongoing “guarantee backed by the full faith and credit of the Federal Government” will lead to the “continued availability of an affordable, fixed rate, pre-payable, long-term mortgage loan, such as the 30-year, fixed-rate mortgage loan. Unfortunately, the scare tactics that federal policymakers and affordable housing advocates repeatedly use to try to preserve the 30-year fixed mortgage and federal guarantees of the mortgage market rely on misleading narratives and not the experience of history.”

Whatchu talkin’ bout Eddie?

Ed and John proceed to try and correct what they claim is “misleading” about the buying public’s preference, but what they call misleading is a wise public’s overwhelming desire to opt for FRMs over ARMs—because fixed rate loans aren’t subject to periodic change or possible bank tampering (remember the big bank LIBOR manipulation!), which makes pretty hollow the Pinto-Ligon contention the public’s preferred FRM choice is based on consumer misunderstanding.

What is even more undercutting in the Pinto-Ligon meme is their sideline cheerleaders--the Mortgage Bankers Association, the American Banker Association, and the Financial Services Roundtable—which hope the public will buy (pun intended!) the AEI and Heritage mortgage preference (which isn’t going to happen unless Congress outlaws FRMs)—also demand any GSE-killing legislation emerging from Congress give the big financial institutions the same federal guarantees for which Pinto and Ligon mock Fannie and Freddie.

So that securities linkage is “wicked bad” for the GSEs, but  the banks want the same? (Doesn’t that make it wicked bad for the banks, as well?)

Despite what GSE foes claim, Fannie and Freddie outstanding debt and MBS don’t show up as federal liabilities on any US Budget document, even with the imposition of “conservatorship.”

That phony excuse/justification for Fannie/Freddie opposition exists only in the minds of the Conservative polemicists, making this article more GSE balderdash in the long line of same from the Pintos, Pollocks, Ligons, and Wallisons of the world.

Sigh, sigh!

Ironically, Ed Pinto joined a recent Urban Institute panel discussion (Tim Howard and notable others also participated) in which a majority of the nine principals agreed that a federal role was needed in the nation’s mortgage finance system to make sure that lower income families and minorities would get served by lenders. Ed’s opinion wasn’t recorded but not sure where to put him, given this article and what his big bank allies are demanding legislatively??

GSE Lawsuits

In the meantime, more GSE lawsuits over various Treasury/FHFA misdeeds continue to show up in federal courts, in hopes one of these federal judges will closely review previous opinions, i.e. Lamberth, and reach a different conclusion, i.e. the federal government cannot do whatever evil it wants to the GSEs and their non-government owners.

As the spring blossoms bloom, hope springs eternal, so more power to those plaintiffs.

GSE La-La Land

During a HUD hearing with witness Secretary Ben Carson, Senate Banking Committee Chairman Mike Crapo (R-Idaho) whistled past the Capital Hill graveyard insisting GSE reform still was a high Committee priority. The Chairman would have been better served hammering the Secretary’s (wife's)  furniture requests.

While that discussion could have proved embarrassing to Dr. Carson, it would have been worse if Crapo or any other Senator grilled Dr. Carson on Fannie’s and Freddie’s roles, what the GSEs do and did for the United States, and how the nation’s senior federal housing executive sees the secondary mortgage market operation in the context of his job and HUD’s responsibilities??

Not as sexy as high priced dinette sets but possibly more revealing?

And in related legal news…..

Worth noting that Ted Olsen, former US Solicitor General for President George W. Bush and prominent GSE plaintiffs’ lawyer, week turned down President Trump's request to join this President's ever changing legal team to fight against whatever Special Counsel Robert Mueller produces with his investigation of Russian election interference. Yay, Ted.

Michael Avenatti

I have been very impressed with Stormy Daniels new lawyer, Michael Avenatti, suing President Trump and his attorney Michael Cohen on her behalf, trying to undo a non-disclosure agreement his client initially signed in 2016 (and for which she was paid $130,000) shortly before that year’s presidential election, seemingly employing Trump tactics. The agreement in question seems to contain pseudonyms for all parties involved, as well as an LLC created to facilitate the payment to Ms. Daniels (real name Stephanie Clifford).

Avenatti, a 47 year old California lawyer, is a Penn undergraduate with a law degree from George Washington University. He’s also an amateur race car driver and has worked on several high profile cases. Avenatti has been very aggressive—showing up on TV networks regularly--boldly proclaiming his client’s case against the President and Trump’s attorney.

His “in your face” tactics are as brutish as our President talks. Avenatti more or less is goading the White House, “If you are going to fight us, bring your lunch, because you are going to be here a long time!”

From Wikipedia.

“After law school, Avenatti worked at O’Melveny & Myers in Los Angeles, California, alongside Daniel M. Petrocelli, who previously represented the Ron Goldman family in its case against O.J. Simpson.[18] He assisted Petrocelli on multiple legal matters, including the representation of singer Christina Aguilera[19]and litigation surrounding the movie K-19: The Widowmaker,[20] and worked extensively for Don Henley and Glenn Frey of the musical group The Eagles, including in a suit brought by former bandmate Don Felder against the group and Irving Azoff.[21][7]

Avenatti later joined Greene Broillet & Wheeler, a Los Angeles boutique litigation firm. While there, he handled a number of high-profile cases, including a $10 million defamation case against Paris Hilton,[22] a successful idea-theft lawsuit relating to the show The Apprentice and against producers Mark Burnett and Donald Trump,[23] and a $40 million embezzlement lawsuit involving KPMG.[7][24]

In 2007, Avenatti formed the law firm Eagan Avenatti, LLP (formerly known as Eagan O’Malley & Avenatti, LLP) with offices in Newport Beach, California, Los Angeles and San Francisco, California. He has since appeared on 60 Minutes twice in connection with cases he has handled.[1][25] Avenatti has also served as lead counsel on a number of historically-large cases, including an April 2017 $454 million verdict after a jury trial in Federal Court in Los Angeles in a fraud case against Kimberly-Clark and Halyard Health,[26] a $80.5 Million class-action settlement against Service Corporation International,[27] a $41 million jury verdict against KPMG, [28] and a $39 Million malicious prosecution settlement. [29] In 2015, Avenatti prevailed against the National Football League following a two-week jury trial in Federal District Court in Dallas, Texas after cross-examining Jerry Jones at trial.[30][31]

In March 2018 Avenatti filed a lawsuit on behalf of adult film actress Stormy Daniels seeking to invalidate a 2016 "hush" agreement regarding a 2008 affair with Donald Trump. The nondisclosure agreement had been negotiated in the final days of the 2016 U.S. Presidential campaign.[32][33]”

Speaking of the POTUS…America, please stay mindful of these musings

(CNN)A high-ranking official from former President George W. Bush's State Department shared a dire assessment of the current geopolitical state of affairs, calling it "the most perilous moment in modern American history."
President Donald Trump "is now set for war on 3 fronts: political vs Bob Mueller, economic vs China/others on trade, and actual vs. Iran and/or North Korea," Richard Haass tweeted Friday. "This is the most perilous moment in modern American history -- and it has been largely brought about by ourselves, not by events." 

No need for me to add anything to all of the news about our struggling President, with Mueller, ex-girlfriends on national TV telling all, forced departures from his Cabinet, appointments of extremist replacements and other department heads nailed for wastes of taxpayers’ dollars.
For the Trump loyalists and apologists out there, sorry, what we and the world are seeing is neither normal nor desirable presidential behavior.


Two CNN same story headlines from the day after the protest marches.

“A day after March for Our Lives, Pope urges youth to speak out”


“Santorum: Instead of calling for gun laws, kids should take CPR classes”

Maloni, 3-25-2018

Tuesday, March 13, 2018

GSEs and that damn hotel in California

Welcome to the Hotel California……..

Stacked in my car CD player, right now (even after—parked in my driveway--the vehicle was rifled by a thief who got my roll of quarters because I don’t know how to use my cell phone for parking meters) is “The Eagle Greatest Hits,” along with my CDs featuring the most famous R&B groups of the 60’s and 70’s, Drifters, Temptations, Four Tops, etc.

The Eagles monumental hit “Hotel California” is the GH’s album’s first cut.

It’s a song that has as many “I swear to God” interpretative connotations as there are suggesters, all musing about the meanings in this anthem to the Left Coast, drugs, Hollywood and the entertainment industry. (Editorial Confession: my youngest son is employed in LA as an animator on “Cosmos,” a network science show aimed at the entire family.)
The most accurate explanation I find comes from a long-lost interview with original Eagles founders Glenn Fry and Don Henley who said the “California” story is about the wild and hyperactive, swashbuckling and uncontrolled LA music scene/industry, which gobbled up and signed new acts right and left used/abused and then kicked them to the curb with barely a thank you or compensation for their original and occasionally successful efforts.

The most haunting line about Hotel California is, “You can enter anytime but you can never leave.”

That line was used last week, again, this time in court, by an appeals Judge hearing the Collins GSE case to analogize the federal government conservatorship requirements and Fannie’s and Freddie’s inability to escape them, no matter how good the plaintiffs’ legal arguments or how successful is the GSE operations.

The irony here—given my belief that no federal judge will rule for the GSE plaintiffs unless and until the Trump Administration (Mnuchin and the POTUS) indicates its desire that the GSEs remain functioning and in control of entrepreneurial managers as well as their private shareholders (even in “utility mode”).

The judge who made the seer like observation about the trapped mortgage providers/guarantors is one of a troika of jurists who could bust the GSEs out of that evil hotel, but I doubt ill it will occur, until something like the triggering mortgage market signal is indicated by those who control our government.
Regarding the latter possibilities, as I’ve stated so often, it falls on Mnuchin and FHFA Director Watt—more the former and less the latter—to drive an executive/regulatory action to free the GSEs and return then to real functionality, keeping their earnings and building capital.

Mnuchin’s Future? No worse than other cabinet officials, but….

But, just this week a slight shadow crept over that wished for but not quickly realized hope—as Secretary of State Rex Tillerson just found out today and Gary Cohn learned a week ago.

Cabinet status in the Trump Administration is not a long term sinecure (are you listening Betsy DeVos, Ben Carson, Steve Pruitt, Kellyanne, et al).

Mnuchin by all reports is OK with DJT, says the right things about the GSEs, but he is not a favorite on Capitol Hill (see his outrageous exchange with Rep, Maxine Waters (D-Cal.) where he clearly tried to fill his non responses with not-on-point formal oration intended to run through the allotted five minutes each Member gets to ask questions. The 300 seconds also includes a witness's answers. If you prattle, intentionally, as SM did, you choose “run the procedural clock” disrespecting your questioner.

Added to his dournessindividual lack of appeal/winning personality, the Treasury Secretary’s Scottish actress/model wife, Louise Linton--has displayed qualities which are the equivalent of “nails scratching on a DC blackboard,” with her bragging mention of the couple’s financial success, major tax requirements, her designer clothing, and  Marie Antoinette approach to DC life.

Unfortunately, those things matters for cabinet, if your goal is to keep your job and not to wind up on Trump’s bad guy list (Tillerson, Cohn, AG Sessions?).

Bottom line, will Secretary Mnuchin be around/last long enough to rescue the GSEs? Hoping so.

Speaking of Gary Cohn….

When Gary Cohn walked out of the White House’s top economic job over his dispute with the POTUS over Trump’s demand to impose steel and aluminum tariffs, and Cohn’s concerns over starting a trade war, the name of Larry Kudlow, TV talent and former Bush Treasury officials was named as a possible replacement. That noise has increased in DC.

Initially, I took to my small group of GSE friends and mentioned my opinion why I thought Kudlow would not be good for Fannie and Freddie, remembering his comments and op-eds over the years, suggesting he was not a GSE fan.

However, I was corrected by some GSE graybeards, whom I respect, pointing out Kudlow has strongly suggested that GSE shareholders have been treated unfairly/poorly, as well as Kudlow being a major fan of Josh Rosner, a pro-GSE stalwart for the past several years.

If Kudlow gets Cohn’s job, I am rooting for the graybeards!!

Pennsylvania’s 18th Congressional District

By the time most of you read this, we’ll know if Conor Lamb—33 year old ex-Marine and former assistant US Attorney, plus Democrat candidate for Congress in today’s March Special Election—has prevailed against his GOP opponent and pulled off a stunning political upset.

Republicans have thrown $10 million into this race for a House seat President Trump won by 20 points in 2016. If Lamb, whom I’ve met and support, can triumph, it will add to the recent election rejections of Trump and the Republicans, happening so far only at the state level. Now it’s a House of Representatives seat.

Conor Lamb is sharp witted, very bright, articulate and more conservative than most House D’s.

This is a white collar congressional seat, south and east of Pittsburgh, where Trump, twice, VP Pence, the notorious Kellyanne Conway, and other GOP bigwigs have crisscrossed to try and boost their lackluster candidate. The POTUS’s embarrassing 65 minute speech in suburban Pittsburgh last weekend, was filled with spurious comments, putdowns, and the usual Trump untruths about his performance as President.

As POLITICO observed, If Lamb wins, or even comes close, it will be a signal that Republicans are in danger even in districts where Trump was won handily in 2016, and raise Democratic hopes of capturing the House and Senate this fall. The race would also serve as a model for Democrats running in deep-red districts across the country.”

Maloni, 3-13-2018