Dad said it's my turn to drive, not yours; it's mine; No, Dad said.....

Mark, Steve, maybe Edith (?),

Who’s leading this GSE dance?

It’s fun and enlightening to read the various GSE blogs, websites, and commentary to read the intensity of the many folks who just flat out disagree with each other over what is or may happen, but are certain that their view of what’s coming is the correct one.

On any one of them you can read a gauntlet of opinion, from hugely optimistic to “bigly” pessimistic, with nobody consistent in their position, plus hoping people won’t remember what most said a week or a month before.

The bottom line on GSEs seems to be that nobody knows who has the cudgels or what’s going on within the ADMINISTRATION, WHICH IS WORRISOME.

I got that vibe last week in talking with some GSE “thinkers” and media, whom I consider well-tuned into the various shakers and movers on both sides of the GSE question.

I’ve blogged before about the various red flag stances of Treasury, the FHFA via Director Mark Calabria’s latest public rhetoric, which has produce d a lot of hot air, but no action.

Plus, we had the President’s near vacuous comments/promises when he appeared at the NAR conference postulating how important Fannie and Freddie are and the need to fix them. Still waiting.

Using the only measuring tool the average man or woman has—stock values—the current look is a bit bleak, as last week GSE stocks showed red ink, after weeks of forward movement.

People are asking themselves—and speculating—“What in Calabria’s statement and those of Mnuchin have I missed?”

You could start with both of them calling on Congress to act, when the world knows Congress ain’t acting on any GSE legislation as we cruise into an election year?

As one very bright/capable GSE solon said of the Administration and their business ideological, business, and media allies, “They don’t give up, do they?”—since most of the recent reporting has been GSE-negative.

Nope, my friend, they don’t.

Maybe, the nation/world needs a bold, new book, which convincingly shows Fannie’s and Freddie’s public and systemic value??

Looking back, I had and still have a feeling that Treasury’s Steve Mnuchin had (and still possesses), a pragmatic, workable, mostly cooked GSE fix which might have been dealt some blows when his deputy Craig Philips was dispatched and Mark Calabria arrived. Pretty suddenly, the new FHFA Director showed himself to be much more pro-big bank than most of us hoped (Mnuchin, too?).

Have the GSE stocks hit a stone wall?

It doesn’t take much of Calabria talking/preening attaching bank size capital for the much lower risk GSE business activity—indicating his bias-- or asking, not so slyly, for more congressional-mandated power, all of which screams to investors and others--“PROCESS SLOWDOWN, TAKE YOUR MONEY AND RUN!”

With no powerful political "housers" demanding an end to conservatorship, you get delay which means different things to people, depending on whether you are pro-GSE (bad) or anti-GSE (good).

If the more pragmatic Mnuchin prevails and there is an end to conservatorship, I believe Calabria and friends still will seek to create as many operational impediments as he can, obstacles to GSE success as his sentiments clearly communicate.

Remember, there is nothing clean in DC where one side prevails and their very powerful opponents get totally shut out.

It’s not difficult to see Calabria publicly wishing/hoping to end conservatorship but, simultaneously, seeking GSE operations-killing bank capital as well as a bunch of new competitors, so he can light his victory cigar.

[Quick non-GSE comment. Not dumping of the POTUS (Anon1!) but there appears to be a lot of major issues—far more compelling than the GSEs--where nobody is sure who is in charge and what is the plan, with Iran, China, Russia, immigration, healthcare, abortion, being just a few of those. It’s how business gets done or not done, today.]

But, will Calabria’s ideological leanings cause him to gloss over and ignore other systemic problems/inefficiency/delays his possible actions might produce?

That’s why some people in those senior managers often are called ideologues!

What I would love to see is Director Calabria appear on a panel of two, debating with a capable GSE advocate, in a true test of who best can make their case and/or factually blow holes in the other guy's position.

But that won’t happen, since a legitimate open forum and debate would reveal the emptiness of some of the Director’s ideas and the inherent market principles clash or unworkability of what he promotes.

For instance, clever people are doomed when they seek to attract “new money” (as if institutional investors are broken into young and sophisticated and old and dumb) to their future mortgage finance system while waxing about their real preferences to deep six the model they’re pitching!!

Possibly, House Banking Committee Chairwoman Maxine Waters (D-Cal would be open to hosting this exchange/discussion?

I keep sensing Calabria daily is playing mental tennis with his policy and political choices, going back and forth in his mind  where to lob his next shot—or offer his latest pronouncement--and still uncertain where he wants it to bounce.

Adding to the uncertainty is the much-discussed Fifth Circuit Court hearing on the Collins appeal, the size and scope of which is unknowable, yet, but which could give Mnuchin cover to push his GSE hope.

Much of the speculating on the en banc panel focuses on the leadership of Judge Edith Jones and her history of expertise on FDIC matters of conservatorship and receivership—which are the Collin’s case core issues--that could produce a dramatic, timely, and consequential decision rewarding plaintiffs and pre-empting Administration options or at least making them tougher.

Maloni, 6-17-2019