Congress is back, hide the women and children

 

Cats and Dogs to the Second Power:

Some silly GSE stuff and other matters

OK, let’s get right to the Fannie/Freddie issues of the week, of which there aren’t too many since Congress is returning from its Spring break and needs some time to decompress. 

Bulletin, Bulletin, Bulletin: “Federal Reserve Board Nominations...” 

This social media flash just in: After hearing President Trump announce he planned to nominate to the Federal Reserve Board both Stephen Moore, conservative commentator without portfolio and admitted federal tax scofflaw, and wealthy pizza magnate and briefly 2016 GOP presidential candidate, Herbert “999’ Kane, former Alaska Governor and John McCain’s 2008 vice-presidential choice Sarah Palin announced her availability, too.

The latest, in this already confusing story, came when Palin today told the media--in a hastily generated Hopscotch, Alaska, press conference (attended by two reporters and an unemployed Iditarod mush dog)--if there is a third Fed vacancy she, too, is ready to serve on the nation’s central bank’s Board.

She reminded the gathered reporting pair (and, presumably, President Trump) of her pluck, reprising and updating her self-comment from 2008, “I can be a sycophant, too. If Trump wants me and has the monetary rifles, I have the rack!”

(Why not Sarah, Herb, and Stephen? Moe and Curly had Larry??)

Just because the Hill mostly is GSE comatose, there still are some major events to keep an eye on, like the..... 

“Button, Button, Who’s Got the (GSE) Button?” competition

(Cue the GSE stuff..)

Okay now, participants, this is FATE asking if everyone is in place for a fierce elbows-up match of “Button, Button, who’s got the (GSE) button? (Youngsters, go to Google and review the rules.) 

Clerk, call the toll.

Senator Crapo? “Here Fate”;

Chair Waters? “Here and hear Fate”;

Secretary Mnuchin? “Here Fate”;

Messrs. Otting and Phillips? “Here, here, Fate”;

Director Calabria? “Right here, finally, Fate”;

Mr. Kudlow? “ZZZ. Yo, here, Bro”;

President Trump? Mr. President?? “I am “%^$#@*& here, but I don’t want to be; don’t ask me again, just talk to “Newstein, Nuisance” or whatever his name is; you know the one with the ditzy Limey wife, he’s our numbers maven? (I only hire the very best in lawyers and accountants, but I never can get this guy on a Sunday night, he’s always “out for Chinese?”)

Fifth Circuit Court judges? “Collective roar, HERE, Fate.”

Chief Justice Roberts? Chief Justice Roberts? Silence. (Clerk, report the Supreme Court is biding its time, watching but not playing, right now.)

Now Fate,  will walk among all of you—as you have your hands pressed together, as if praying (as we know all GSE investors are)--and will deftly drop into the clasped hands of one of you, the GSE Magic button which opens the door to the GSE future.

Ready??

Game/Landscape Observations

Now those keen of eye and knowledge will note that neither the media nor the big banks are actual game participants at this stage, although everyone knows they easily can influence the Magic Button recipient.

So keep an eye on them when the game begins and play moves forward.

Maloni—not Fate, this time—will set the current game’s political terrain.

SBC Chairman Sen. Mike Crapo (R-Idaho) held his GSE hearings—which got him a lot more (thumbs down!) than he bargained for—and those sessions are over. Enough people questioned Crapo’s “GSE principles” that I suspect he won’t return to them for a while, save rhetorically.

I don’t think HBC Chair Maxine Waters (D-Cal) will do more than hold GSE hearings, emphasizing her interest (need for more affordable lending) but not try and write new legislation for which there likely is no Senate audience.

Although she always could borrow Maloni’s idea to boost low-income lending by giving all mortgage lenders some housing goals statutory requirement on loans which the GSEs then could acquire or securitize. Maybe as soon as Wednesday when she has a gaggle of bank CEOs before her committee?

Everyone assumes there is a Treasury “GSE fix” awaiting public unveiling, but still has some “missing jots and tittles”—likely because of uneven internal GOP support--which possibly new FHFA Director Mark Calabria can add?

Wildcard

Sometime in the next couple of weeks, we’ll see a decision from the Fifth Circuit Court’s en banc consideration of initial Collins decision which could accelerate action, decide much of the future action, or just leave behind the slackers. 

I won’t/can’t predict who among the above button seekers, preemptively, will move first and when, but will caution an announced Fifth Circuit Court decision would have massive political impact--on GSE structure, revenue allocation, and procedure—especially if the judges rules for the plaintiffs, possibly taking away much of the current “screw the GSEs”  ardor.

That also puts most of the players chasing the dogs in front of them, sniffing…..!

If that happens, the DC pols will scramble to get in front or accommodate the court’s legal implications in any way they can. (If the Court majority rules for the government, the issue, likely, is headed to the Supreme Court.)

Not being a lawyer (what a great defense when you discuss the unknowable!) and not knowing what flexibility (I assume a lot!) the Fifth Circuit has if it overturns Lamberth, I’ll ask does this Admin—apparently once inclined, before adding so many chefs to the policy kitchen—wake up and smell the Spring flowers, finally move and introduce an executive regulatory package, which resurrects, sans restraints, much of the quite well regulated, very successful GSE structure and operations by yanking back the unjustified Conservatorship? 

The Devil always is in the details—and even though major, major big dollars are involved and deep unfounded GSE animus exists that most in congressional R's have but can’t exactly identify, save, “They were run by Democrats, they made it too easy for poor (read minorities) to buy houses, the big banks tell me Fannie and Freddie are the Devil, etc. etc. etc.” 

Probably won’t hear too many knowledgable observers loudly declare: the GSEs operate fairly, with great efficiency, keep down the price of financing a home; they stop the big banks from discriminating in mortgage pricing and mortgage availability; operationally, they are very transparent; they work and have worked for years; there is no mortgage market emergency, except in the minds of those who will use any argument to replace the GSEs with wasteful, uneconomical, and unproductive—in comparison--Fannie and Freddie, so why waste even more time and money attempting to squash them??

Hopefully, long-suffering GSE fans—not to mention the nation‘s future homebuyers--will get answers to these matters, when the Magic GSE button settles in the hands of an interest that will use it…wisely?

Maloni, 4-9-2019