Monday, October 28, 2019

"Jump Start?" Come on boys, fess up?

Who is getting what from who?

When I was an active Fannie lobbyist, the affordable housing crowd consistently would rally around and lend their numbers one to another on issues they all supported.
“If we didn’t hang together, we all could hang separately.”
Inherently, we all grasped Ben Franklin’s prescience and mortal warning.
 I am sure many don’t realize it but Mr. Franklin's words have graced the front page of every blog I’ve put out (at the top of the page).
That approach collectivity served the “housers” well and you often would see, pro-housing advocacy letters sent to Congress or the White House signed by 20 or more, prominent industry or social /social interest allies, indicating solidarity among those supporting the shelter needy.
But if the rumors from inside the community are true, something is amiss.
A cadre of spoilers, suddenly enthralled, again, with the work of ex-Senator Bob Corker (R-Tenn.) are trying to revive Corker’s failed approach to fixing Fannie and Freddie, his “Jump Start” legislative proposal.—which I think went down in Senate flames when its original GOP sponsors offered “no mandatory affordable housing support” in their bill—seem to be stirring the ashes and seeking revived support for it from current SBC Senators Senator Mark Warner (D-Va.), Mike Crapo (R-Id.), and others.
Someone in DC always is trying to take advantage of low-income interests and screw them.
The handy victims are presumed to be malleable, unsophisticated, and easy to con or fool, and—invariably—people of color, who have every right to feel marginalized when put through that wringer, again, this time by faux friends.
Happens all of the time but it is more heinous when some of the perpetrators have a history as low mod friends, activists, and advocates themselves. Then, it becomes a three-level game of “who is easiest to fool,” a contest where the rules keep changing.
At these stressful times, you will discover situational friends with their own personal agenda--who decide they can shuck the rest of their traditional allies--will tell Members of Congress and their staffs whatever they want about the issues they’re pitching because those Hill types don’t understand the substance let alone nuance behind the tales they are being fed.
The entire DC Fannie/Freddie GSE scene is confusing enough, with delayed Admin promises to end Conservatorships and various no-win campaigns backing old, losing GSE schemes touted by mainly bad guys threatened by Mnuchin and Calabria and the results of the Fifth Circuit Court.
For the past six months Treasury’s possessed a solid plan to achieve that transition, given impetus by a fresh a Fifth Circuit plaintiffs’ decision--which added political cover--and a new GSE regulator, stumbling as he may be and announcing, unrealistically, his lack of fear in “wiping out all GSE investors.”
Some of what I am describing in the previous paragraphs are continued efforts from the still- seeking-relevancy “fellow travelers” of yesteryear, Obama-ites Mark Zandi and Jim Parrott and their current posse, shilling for legislative ideas from former Senator Bob Corker (R-Tennessee) and his ex-staffer, former Countrywide trader, Milliken Institute, Ginnie Mae ship- jumping Michael Bright, who landed not at the top of Ginnie—since his nomination never got sufficient support—yet earlier this year was named CEO of the Structured Finance Industry Group.
Reportedly, other pro-Head Start advocates working the case are Mike Calhoun, prominent houser and President of CRL the, Corporation for Responsible Lending and Eric Stein, CRL alum and recent aide to Mel Watt (Mark Calabria’s Democrat predecessor). With Stein, reportedly, now headed to the Milken Institute.
The current story is the tricksters have been stirring up trouble among Hill denizens and low-income groups, trying to resurrect the old Corker “Jump Start” bill, and trigger a fights/ disunion between Calabria/FHFA (now the interim “good guys”) and those who read differently the affordable housing tea leaves.
I can’t begin to divine all of the conflicting agendas of these identified principals, but first off—fearful of the recent progress the White House has made, these new opponents seek anything which slows down ending Conservatorship. In their minds, delay is good.
Pretty crappy show of support for the other affordable housing interests—who root for Conservatorship to end, “right *&^%$#@ now!”
Not to mention stabbing in the back the Fannie and Freddie senior staff which have sent lots of corporate financial support CRL’s way ($$$).
People on both sides of the aisle and both sides of the Hill know—because of the wide ideological gap between the respective Financial Services committees—no GSE common legislation can emerge in this Congress.
So, the mischief-makers go for a procedural halt, any dispute to gum up the process.
Ending conservatorship sits on uncertain ground, which delay hurts.
Worse, matters easily could be vaulted into 2020, slowed down by the quadrennial election and then, tied up, over the anticipated D or R challenges to those results and/or any legal challenges to FHFA’s Constitutional viabilities.
A Democrat presidential victory wipes out current Treasury leadership and possibly FHFA, too, depends on a legal decision as to the constitutional viability of FHFA. 
But, why is CRL’s Mike Calhoun or anyone else in the low-mod housing community trying to frustrate the GSEs which just want to get back doing their previous excellent work in the neighborhoods?
What does he/CRL stand to gain?
Activists, question him; if he wants your support ask him to explain, exactly, why Bob Corker’s old legislation, never thoughtful or strategic, suddenly is? Be careful who you follow and for what you sign up. Make sure those “past friends”--who come a calling--hold your interests as high as they hold their own?

Maloni, 10-28-2019

Friday, October 18, 2019

One man’s opinion

FHFA = “Wasting Money Is Us!”

I am PO’d but not surprised.
The current GSE regulator (not OFHEO, the original one, born in 1992)—the Federal Housing Finance Agency or FHFA--has been around since 2008's Housing and Economic Recovery Act (HERA) 
It boasts some 600 or so employees.
There have been very few departures from this do-little-but-get-paid-a-lot agency. In researching something on FHFA’s website, I saw the various available rich-looking employee benefits, which makes clear why few people bugout, if they are not canned.
It’s another sinecure and with a track record, a lame one at that.
And now, Director Mark Calabria’s agency is seeking outside investment banking advice to consult on how to end  F&FConservatorship at the right capital levels, paying somewhere between $20 and $30 million dollars (more?) for that advice, according to Paul Muolo writing in Inside Mortgage Finance. 
In an email with Tim Howard I ruefully suggested Tim could do that job, start to finish in about 12 weeks, saving the GSEs a lot of money which could be put to needed capital.
Just what have those 600 people been doing for 11 years, if not studying how Fannie Mae and Freddie work and what they do?
We know FHFA cages as much customer information from the GSEs as it can and then reissues it in a variety of formats, pretending its original FHFA work.
Does anyone down there understand how their regulated entities operate and what capital protections are needed to make them safe performers in the international markets, where the sole GSEs assets-- being securitized, then bought and sold--are exemplary and highly liquid US single and multifamily mortgages?
Fannie and Freddie have achieved a highly enviable 10 year track record of minimal losses (not to mention scoring sterling “stress test” results which FHFA just published). How about how Fannie and Freddie each manage their growing low risk securities business, simultaneously, while shrinking their legacy higher risk portfolio businesses?
Seriously, how do FHFA workers spend their days? And what corporate understandings/intelligence have they gleaned from their past decade-plus of close supervision of the two mortgage giants?
If the answer is “not many,” then Fannie and Freddie—which cover all FHFA costs—are paying a lot of sloths to shuffle through the halls and spend time in their regulators break rooms.   
Don’t forget, either someone at FHFA  has been faking it or all of the prep the agency conducted for months and months before they issued its much-touted pre-Calabria GSE capital plan, which didn't seem to impress the new boss wasn’t worth very much. (Probably because it didn’t hurt the GSEs as much as some insiders wanted/hoped.) 
It is not quite like the President taking bows and saying “ISIS is defeated,” then flip-flopping and crafting a torturous rationale to let Turkey slaughter the US’s Kurdish friends/allies and turn loose upwards of 10,000 ISIS fighters to go back and rebuild a new a caliphate, drawing inane and ridiculous analogies out of sync with international political reality and the historic US role as an honest broker.
Oh and come stay at my hotel, do I have a room and board deal for you?? 
But Calabria didn’t do that, his boss did.
He just wants his staff to go back and work with his new consultant to establish the as close to correct set of capital numbers and circumstances to end Conservatorship.
So why not try and CUT the cost and seek Treasury's assistance or ask the Fed for help, don’t just spend another $30 million, coming from GSE coffers—just like the unneeded Common Securitization Platform, but not as expensive—which denied Fannie and Freddie some $600 million in possible capital, which was the unnecessary project CSP cost?
Bringing in outsiders has value but it also produces a variety of ways to throw sand in the gears of the goal to end Conservatorship, while creating delays and new hoops for the GSEs to run through. Whatever deadline the consultant gives, assume it will go longer and the same thing with whatever the initial cost will be. That’s why they call them consultants.
(Here’s a suggestion: Since the winning firm will have history in investment banking business, ask those competing for this new FHFA contract to take a fee “ haircut” (less money)  based on future profits the broader IB industry will earn when the GSEs start paying investment fees—under the new rules--to raise equity and to issue their MBS.)
The bad news here is this delay gives Mark Calabria more time to figure out where his and the agency’s self-interests are, as well as an excuses to thrust this whole exercise into a presidential election year politics--which likely will, now, feature impeachment issues--solely because the 600 employee agency which is supposed to know the most of Fannie Mae and Freddie Mac doesn’t and comes up short in more ways than just providing available staff parking spaces.
To test FHFA staff learning or GSE skills’ retention, maybe the GSEs should conduct tests of FHFA personnel on various elements of the GSE business and report those results to OMB and the two congressional Banking Committees to share who knows what and who is idling in place just waiting for their federal retirement dates.
And don’t forget the obvious, this drill delay also gives the many GSE mischief makers (whose hearts are not in turning the GSEs loose) more time to drive up GSE costs—including to higher bank like capital—and building in other product and mortgage ceiling impediments (as Calabria has been predicting for weeks as he runs around touting the flawed Treasury Report).
Leopards don’t change their spots!

Maloni, 10-18-2019

Sunday, October 6, 2019

Not much GSE content, but something quite important commanding your attention, if you are a voting citizen

Today’s blog is not a GSE blog, but something very much worth reading. It’s a column by Dana Milbank, which should help you make more sense as you seek to understand President Trump and his disturbing gyrations involving Ukraine and related subjects.

Briefly, on GSE matters, I also have to acknowledge that the Trump Administration has done more to free Fannie and Freddie from Conservatorship than 8 years of President Obama and his band of his WH and agency bloodsuckers, who first hoped to use Fannie and Freddie first as cash cows and then to turn their out of government careers into rewards for being anti-GSE.
Those “Democrat fellow travelers” are on the shortlist of people my late mother’s only living son (me!) hopes require Kaopectate every day for the rest of their lives.

The Milbank article is below.

Maloni, 10-6-2019

Wednesday, October 2, 2019

Such a deal??!! Fool me once, shame on me, fool me....

Le plus ça change, plus c'est la même chose

Yes, I have one…too!!
My cover has been blown and now everyone wants to use my top secret listening and transcribing device (I nicknamed it “Big Ear” and "Little Transcript)).
I’ve used this unique tool to propel my career as an “ace” GSE commentator and, now, it has been outed by those White House clowns advising President Trump, opening him to all sorts of political grief.
It's partly my BAD, I never should have permitted this POTUS to borrow the contraption when he was calling Ukraine, the Saudis, and Russia. I’ve been using mine for years to listen and never got caught “researching” politicians in the nation’s capital. I don’t employ it often, but often enough to maintain my GSE primacy chops!
Then, Huzzah! After two visits last month to the nation’s last remaining Radio Shack, they torqued mine up. What I have now allows me to capture what my subjects are thinking before they say or write it.
That’s why I appear so casually prescient when describing what any individual truly has on his/her mind before they utter it, especially the anti-GSE crowd.
For instance, this weekend Big Ear picked up some juicy morsels from what FHFA Director Mark Calabria’s was thinking before Treasury announced on Monday new mandatory capital deals with both Fannie and Freddie.
Anyway, here are some of MC’s weekend thoughts. 

Zippity doo-dah, zippity…I can’t wait for Monday and those letters go out binding them to yet unwritten to our "other conditions."
It’s all set, Mnuchin has stepped back on GSE issues and I stepped up. Zippity doo-dah. I need to practice what I’ll say to my fans and the others.
Let’s see? Here, here, get them while you can. They may be lightly scratched and dinged—yet we still will call them Fannie Mae and Freddie Mac--they still will be in the mortgage business, but I have a few changes in mind because of which they must signup before I let them apply their skills and talents to supporting America’s low, moderate, and middle income families eligible to qualify for reliable GSEs mortgage loans.
But, don’t ask me for details, as I need to add more scuffs and nicks to them while I can. Just wait until you leap at those first few GSE public offerings of entities, which won’t look just like today’s version—let alone the pre-2008 version. (Weren’t those spiraling down somewhere?)
Let’s face it, despite my breezy language to those naïfs on the Senate Banking Committee, who approved my nomination, I really have little liking nor respect for the GSEs. I know I begged to get a regulatory job with the Trump Admin—anything to get away from Pence-- and my big bank buddies insured me that any damage I can do to Fannie and Freddie will be appreciated (and rewarded) by those same GSE critics and opponents. I know Steve Mnuchin and the POTUS want the GSEs put back in the hands of private ownership (that’s you Mr. and Mrs. Investor). But, yak, gag, barf, whoever heard of a government agency with shareholders??
Yes, they are efficient and better run than the banks. Yes, they stunned everyone in DC, including me, when they paid back more than $310 Billion for Hank Paulson’s 2008 $190 Billion gift and then strapped and carried on their shoulders the nation’s entire conventional residential (non-FHA/VA) mortgage markets, single and multi-family.
But, B.F.D!
Unless I try now to cripple the GSEs, when given this opportunity, who will push them out of the government’s door and hobble them enough so that they can’t still help millions of mortgagors going forward, plus set their new investors up to make billions?? Best of all, with Mnuchin’s help, I’ll make sure Fannie’s and Freddie’s execs will have to comply with all of the “sand in the gears” bells and whistles Kudlow and I placed in the Treasury Report before anything real happens with ending “Conservatorship.” Plus we can snap the regulatory whip going forward to make sure they stay in line.
How can those schmucks stop me or say “no,” I’m their regulator and the Conservator!!
Thankfully, I anticipated this first “public step” to satisfy my longtime goals and helped load up the Treasury’s “Report to Congress” with just the right mix of major new internal costs and delay procedures to achieve my real objectives, had Treasury—with my humble assistance-- demand the GSEs sign up to cooperate on those steps, so nobody can say the Trump Administration blackmailed the GSEs. (I 'll love my new powers and  additional staff  I’ll get out of the deal, because there it is right in the Treasury Report. Screw you Fed, OCC, and FDIC!) How did my big bank buddies put it when I got this job, “Don’t be inconsistent? You need to keep trying to help your friends and destroy our enemies!
”Yep, this Boy Scout is large, in charge, and walking tall! That’s why I insist my FHFA team call me “Buford Pusser!” (Let them look him up!)
Soon I can shrink Fannie’s and Freddie’s size, impact, and foodprint, with nobody in Congress saying “boo,” because they don’t really care or understand the myriad mortgage or capital issues and players running the game today. Some will gripe about “low-income goals,” but Hell the banks don’t want that business anyway so I can give in and make them 50% of the GSEs total annual business, which they were back in the 90’s.
Working on a package of bank-like capital requirements, too, despite the fact I know F&F don’t look or operate as banks will drive up the GSE cost of doing business. And, I can easily hide behind “safety and soundness” concerns, when I explain, With the GSEs, since so many in this town have no idea about the role of capital, one never can have too much capital. (It’s not my job to worry about consumer mortgage costs which obviously will go up.)
And—to my great joy-- it will cost F&F even more when we tell the world the net $120 Billion or so the GSEs have paid back since 2013, on top of the original $190 Billion, just isn’t enough to repay the nation for its GSE support since 2008 and they have to pay us an “exit fee.” Hot damn, that will cause a few sphincters to tighten up!
I hope those Lefties don’t give me any sass about trying to offset those costs by trying to monetize the reverse value the GSEs represented for their liquidity role post-2008 which produced huge affordable mortgage volumes without generating any losses (which—duh-- was how the GSEs paid back all of that money to the taxpayers).
But, as I believe, there will be nobody making that GSE case nor any other when we force them to “negotiate.” There won’t be any give-and-take in those meetings, just us giving them orders and Fannie and Freddie taking them.

(Don't you love the way my targets think in highlights and punctuation marks! WRM)

Maloni, 10-2-2019