Our Opportunity is Here..

Cats and Dogs; GSE earnings, and you know what….

Congratulations to the Freddie Mac ($2.3 Billion) and Fannie Mae ($4.1 Billion) employees and management for their solid (some might say exceptional revenue, given all of standard grief and interference) 2018 Q3 earnings amidst standard GSE harassment and their leadership comings and goings.

Really Hank Paulson--and the Obama acolytes and “fellow travelers” --hardly looks to me like "a failed business model!”

And while I often tease him, let me state in an email to me sent earlier this week, Paul Muolo, Inside Mortgage Finance’s chief GSE writer, pretty much nailed the Fannie revenue number announced today. (My early guess was higher, at $5 Billion, but I then realized on an annualized basis that would be about $20 Billion, suggesting I was—and it showed—too high.)

No, Don!!

Once again, for the record, I continue to disagree with Freddie’s President Don Layton, who in his earnings call touted CRTs and implied that critics didn’t understand the interstices or capital implications of CRTS.

Later that day, Tim Howard—who has been a consistent CRT critic because of the inflated analysis of the security's claimed all-purpose value, was asked a blog question based on Layton’s statement.

I won’t repeat it here, just see what Howard said. https://howardonmortgagefinance.com/.

Recalling what I’ve written before, Freddie always has been quick to agree with Treasury and the Federal Housing Finance Agency (FHFA) GSE regulator, playing the “Little Jack Horner” part, where Jack—hoping to please his parents (think Treasury/FHFA) and get strokes, puts in his thumb, pulls out a plumb (CRT praise) and says, “What a good boy am I!”

The GSE world still is awaiting Freddie’s formal submission on the proposed FHFA capital rule. I am anxious to see if Layton and his troops acknowledge that too much capital (as the GSE critics demand)—and as the FHFA proposes—is the wrong step for two entities which only deal in quality mortgages.

Don and friends, no matter that your overseers claim, more GSE capital is not necessarily better.

There is a cost to excess capital and big banks should have much higher capital requirements because they have myriad complex investment opportunities in commercial and foreign assets—if banks so choose—not exclusively, as Fannie and Freddie exclusively traffic, heavily regulated US home loans.

Big bank Fannie and Freddie opponents want higher mortgage costs if they can impose arduous GSE capital requirements on the twins.

Back to GSE earnings…

The good Fannie/Freddie earnings story—as is understandable—will get lost in the four days run-up to November 6’s significant congressional elections.

Election Day

When you vote next Tuesday—after you remind all of your friends and family, across the nation, to do the same—cast your voice to dial back autocracy, manufactured fear and partisan hostility; vote to return some respect and normalcy to our political exchanges with one another; vote against hate speech, anti-Semitism, bigoted profiling of  US minorities and immigrants (from which most of us have lineage); assaults on our civic and government institutions which any/every democracy needs; accessible healthcare options; and, finally, vote with an honesty which evaluates the leadership position in the world we hope our country has and pray it hasn’t been forfeited by conservative extremists playing at policymaking.

Maloni, 11-02-2018