Off the Top of My Head

What this week’s election could mean for the GSEs?

“Hello Banking Chairperson Maxine Waters!!”

(Note: Blog Drafted on Monday, November 5, the night before the elections.)

When you first read this, I hope, the Democrats will have won the House of Representatives fortifying the chances that the GSEs will be kept alive, not through legislative reform, but by an executive action which Treasury Secretary Steve Mnuchin will realize he must pursue, if anything Fannie and Freddie-positive--even from this Administration confused point of view--is to happen in the next two years.

If the D’s don’t prevail in the House (or far less likely in the Senate), I’ll cry in my diet soda and engage in a gaggle of “woulda, shoulda, couldas.”

But, if the House goes D even if the GOP continues to control the Senate after Tuesday, a 2018 Democrat House success suggests the 2020 elections also could bring a Senate Democratic majority, as so many GOP Senate seats and far fewer Democrats (22R-12D) will be up for grabs, a not perfect ‘yang and yang’ (generally) of this week’s elections when more D’s and Independents (who caucus with Democrats) were up.

One possible view of 2020 shows a heavily wounded Donald Trump, still carrying partisan gashes and lacerations from his first two years in office and a major House setback, positioned to lose his own race too…….if he chooses to run again?

A D controlled House will mean lots of oversight hearings and possible subpoenas which will add angina producing stress to a President who doesn’t like opposition, especially the political/legal kind, to which you must listen or respond. The heat will only intensify the POTUS.

The latter analysis just is my opinion, but after two years of being dissed, Democrats will want some payback, which as we all know is a “b----!” (There is a pun there, too, given the large number of Democrat women running for House seats.

If the POTUS’s 2020 future darkens, I see him electing (pun intended!)  to pack it in rather than risk a national defeat which—unlike this week’s Republican setback in the House—he couldn’t dodge or blame on others, his traditional style.

Contemplating a growing possibility that he faces rejection in his second try for the presidency-- sullying his all-important (phony) self-image of “never losing”--would be a massive personal refutation THAT HIS FRAGILE EGO MAY NOT BE ABLE TO HANDLE, so I don’t think he’ll risk it.

DJT will find an excuse not to run, again, to bail, i.e. "Pence is ready"; "I had my turn and did the heavy lifting"; “heel spurs” or the equivalent. 

BTW, I’m not predicting, just noting the possibilities. 

If Democrats Control the House; Net, net Good for the GSEs

The biggest change for Fannie Mae and Freddie Mac, if Democrats win the House, is Maxine Waters (D-Cal.) will head the House Financial Institutions Committee (what I still call by its old moniker “House Banking”) and set financial agenda, tone and action in that chamber.

If the D’s are close in the Senate, then Waters will try and write GSE legislation. If that doesn’t happen, I believe she will act to preserve and protect the GSEs and possibly seek to cut herself in and deal/negotiate with the Trump White House on any executive regulatory action, which ensures prominent segments of the GSEs stay intact.

It will be fun to watch as Waters and Trump—protagonists since the President first days in office, largely because she’s a Black woman—duke it out with Waters having a much more bully pulpit in 2019 than she’s ever had before.

Don’t forget, she will be pivotal to ongoing big bank efforts to loosen controls on themselves while simultaneously pushing less consumer protection. Watch out banks!

Look for all of the M. Waters praise come gushing from the bank and financial services communities, reflecting her growing prominence.

I hope she and the D Speaker and Majority Leader carefully will add a few new Committee members who really understand housing and mortgage finance issues or want to dig into those subjects. The GSE community lost Dave Capuano (D-Mass.) when he was defeated in his primary election and no Democrat stepped up to replace him.

If anyone reading this knows of has a congressional newbie who understand GSEs and related issues, suggest to your new House Member he or she can add instant value to their congressional service by seeking to join House Financial Services.

They need quickly to convey that desire when they next meet in DC with the House leadership.

Other items, if there is a D House

I won’t go into tortuous detail about all of these possible matters, but you expect far more House oversight and hearings of previous GOP actions and future plans.

--Ways and Means and House Judiciary and Intelligence will seek access to the President’s tax records, to review if any of his past business partners were foreign nationals, with an emphasis on Russian, China, Saudi Arabia, and various Eastern European countries, suggesting violations of US laws and regulations.

--Dems will attempt move a mammoth infrastructure bill, with which the Admin might go along.

--Remembering the predicate of a D House, I expect a major movement on bipartisan opioid legislation, penalizing manufactures and tightening up illegal overseas drug imports—ideally with the opposite happening with non-opioid medication to reduce US consumer drug costs.

--Like it or not, US jobs today--and a greater number going forward--need trained and educated individuals which our school systems just are not producing. We need those successfully educated and trained people and many hardworking others who may not be educated superstars, but want to be in this country and strive as Americans, like many of our US immigrants forbears.

After all of the Democrat anger and noise, I think it is incumbent upon the D party to come up with a comprehensive immigration bill--close to which his acolytes said during the campaign that Trump would support--but also deals with many problems the current system has.

Maloni, 11-7-2018