“Letters, we get letters, we get stacks and stacks of letters..”

Wonderful Letter, signed by a strong set of interests, but….

In Washington DC’s political machinations, it’s great to have friends and allies.

First off, congratulations to those (said to be the National Association of Realtors) who initiated, drove, and signed last week’s housing/building/community group letter --sent to acting Federal Housing Finance Agency (FHFA) Director Joseph Otting, calling on the (acting, since Calabria’s still in the wings somewhere) GSE regulator to handle with care any Admin desired GSE regulatory changes since Fannie and Freddie are crucial to the nation’s homeownership aspirations for low, moderate, and middle income families, and for all that aspirational activity means to the US economy and its citizens. (It always helps to pause and think about what means in our massive economy.)

https://narfocus.com/billdatabase/clientfiles/172/3/3325.pdf 

Lots of good and important names from a political and social policy perspective. But sometimes, all that glitters is not gold. (Wait, I think I just made up that very pithy line!!)

The letter’s true target was Treasury Secretary Steve Mnuchin, the Admin’s GSE point person, who will decide what will be in any regulatory GSE relief package and when it is offered. But, it was aimed more broadly to policymakers and caught people’s attention.

DC advocacy letters to the Hill or any Administration (this or any previous) are standard fare, often suggesting far greater common political ground among the signatories than truly exists, as in, “Sure we will sign the &%$#@^ letter but don’t expect us to do any heaving lifting, since we have our own priorities in addition to Fannie and Freddie, which are more important to us than the fate of the GSEs.”

This particular letter’s signers might wave it all over town Hill to indicate how much support the GSEs have and—possibly--not so subtlety in a message to the Hill warning Senators and Members, “Don’t mess with Fannie and Freddie or you could lose votes at home or--equally worrisome--some of our campaign contributions you’ve grown to expect.” (Truth is, with Fannie and Freddie long gone from active lobbying, these GSE allies are absent true political leaders who would follow letters with that kind retaliatory action.)

Now, even as bold/brazen as Fannie was when it lobbied way back when—absent definitive action against our interests—we’d never say those implicit words, but they were hinted. And if the letter's requested actions were produced, possibly a prompt exclusive fundraising event to which all signatories would be invited and their PACs—where they existed—and top officials leaned on to give.

Those public letters communicate more carrots than sticks.

Fine letter, very fine letter

Except for one major thing in this letter, which if you’ve closely followed the political GSE reality and the remember the distinction what “speaking with a forked tongue” or “out of both sides of your mouth” mean, as well as my just invented “gold and glitter” observation. 

The letter’s rather obvious predicate--since it both is written between the lines and stated—is the letter signers’ wish that Congress buy into whatever this Admin might do. Fuggedaboutit!

Congress couldn’t pull off this kind of policy unity when the GOP controlled the House, Senate, and the White House.

Democrats and Republicans look at the same data and reach opposite conclusions. That's why, no matter what may be going on in the courts, always subject to appeal to the SCOTUS, the fastest resolution to revive the GSEs requires a thoughtful executive/regulatory fiat.

Ed Pinto and AEI comment on the industry letter

Former Fannie colleague Ed Pinto, current AEI executive and designated holder of  AEI’s official “kill the GSEs lance” (shared with Peter Wallison, until the world hears differently) rose last week to earn his pay and do a different kind of battle with the same industry letter mentioned above, but based on the AEI’s opinion that the current market is upside down and involves Uncle Same too much. (With great mercy, AEI and Ed saved us the standard lecture on the evils of water fluidization, need to return to the Gold Standard, Communists in our State Department, the case for more flintlock rifles in every home, and no childhood vaccinations against contagious diseases.)

I originally tabbed Ed’s article for blog inclusion because of the number of people who weighed in against Ed’s rant. I’ve removed their names, but their comments are untouched (unless spell check cleaned up any typos.) As I said, it's nice to have friends in DC.

Yay all of you! (Comments to and about Ed appear after the link below.)

https://www.aei.org/publication/more-of-the-same-from-28-members-of-the-housing-lobby-as-they-opine-on-how-the-gses-help-preserve-access-and-affordability/

 (name removed) March 6, 2019

Good day,

What you seem to be missing is that the Trump administration is going to act and that these people are trying to remain relevant as things churn.

Your dog and pony show, however, continues to ignore the economics of the GSEs, just like it always has.

Good luck, enjoy your paycheck,

Reply Share

name removed) March 6th, 2019

Your alternative to is conveniently missing. I would love to see your proposal for Wells Fargo or any of the “trustworthy institutions” that would replace the GSE’s…or would that be an invite only party after the demise of the two? Where the structure, fees, and cigars are passed out with a pat on the back.

Reply Share(name removed) March 6th, 2019

People complained about federal deficit for a long time. What happened? Nothing

How many people complain about their low mortgage rate because of GSEs?

GSEs are really good for the whole country.

Reply Share(name removed) March 6th, 2019

Dear Sir,

You state the housing lobby is a special interest group as if they were misleading the public down some primrose trial to doom. Yet you and your banks are not “crony capitalists” trying to take away the businesses of two private companies in conservatorship for your own profit. Ironic the “Too Big To Fail” Banks who needed more bail out funds than the two GSE’s now seem to feel they would do the GSE’s job better than these two companies who have done it for decades. Also ironic that these two companies and the US Government had to sue many of these “Too Big To Fail” Banks for misleading the GSE’s on the quality of the loans which they were selling to the GSE’s…however we should trust them now with the health of the entire housing finance industry. That is even though their loss rates on their privately held loans were more than twice the loss rates of the GSE’s. These affordable housing groups are a special interest groups but the “Too Big To Fail” Banks are not???

Maloni, 3-11-2019