2020,
a Major Trump Year and some GSE Politics
Hello, F&F fans, I am back.
I’ve been GSE silent—IMO---because nothing of major import
has transpired with Fannie and Freddie.
I also admit to being mesmerized and, ultimately,
disgusted with how the weeny Senate Republicans—save Mitt Romney-- pissed away
their honor and civic duty, blowing wet kisses to our President when he
deserved serious Senate sanction and possibly impeachment for his
constitutional violations.
I hope all of those who disagree with me on this are
watching the megalomaniacal behavior of the man who uses the word “King” about
himself and vows he’s above the law—as you and I know and accept conventional
legal behavior—and can do whatever he likes on any matter.
BTW, those of you buying this front page “spat” between AG
Barr and the POTUS are candidates to buy some nice Florida wetlands or the
Brooklyn Bridge.
If Bill “The Tool” Barr truly is/was offended because the
President big footed his departmental operations, he would resign. Except like many
of his fellow travelers in the Senate, Barr doesn’t want to leave the Trump
bosom, so he’ll orate emptily but do nothing.
This impacts Fannie and Freddie, so don’t click off now,
because I think DJT’s mendacious and feckless actions have a major GSE lesson
to them.
Back to why I am back blogging. Going forward this year, in
addition to GSE talk, as an outraged voter, I intend to return to highlighting
the President’s dystopia, all with my hope of defeating him in November with
whomever the Democrats nominate (although I am not a Bernie or Warren fan).
Yep, I’ll be more political.
Simply put, I think Donald John Trump’s time in office has
been cancerous to our nation, our international standing, our overseas allies, strangely super pro-Russian, and ruinous to our national institutional
expectations of how the federal government should behave … despite how much some
of you ignore his aberrance and only fixate on “his economy” or his Wall now being
built with money stolen from the Defense Department.
So be forewarned. In the future, if you don’t want to read
about our President’s lies, shortcomings, and leadership infidelities—as well
as GSE matters--don’t read the Maloni blog.
That also will save me from answering your squawks.
Fannie
Mae and Freddie Mac Issues
I don’t know what the final fates of Fannie and Freddie
will be, but I am confident in my feelings that their safety and soundness and
program director, the Federal Housing Finance Agency’s (FHFA) Mark Calabria
will do his best destructive locust imitation to ground the GSEs into husks of their old
selves and try to boost the nation’s behemoth banks because he and those same financial
institutions still see Fannie and Freddie as “bank competitors,” despite the
fact that not one major bank has entered the mortgage business as a national
and commercially active MORTGAGE GUARANTOR, which is the only role now which Fannie and Freddie can have.
Hear this and get it Director Calabria, despite your odyssey from trade group to trade group forum, the GSEs have only the single secondary market home mortgage business line
and can only operate on the United States.
Unlike major banks, Fannie and Freddie can’t make commercial loans, can’t
operate overseas, are not the same or in the same business as the banks, no
matter what you and your conservative Amen C Chorus sing.
Most observers realize that your words camouflage actions
to make GSE operational and capital costs as high as you can get away with.
Mr. Director, you should be embarrassed that FHFA and you
are12 years late in setting the GSE risk-based-capital rule and that you didn’t/couldn’t
trust your own employees to produce; you needed to hire outside consulting help to complete
the capital rule.)
And, if banks ever do want to wander into this exclusive
business, it’s because Calabria and his allies will have boosted GSE expenses
and created F&F operational hurdles to make banks look envious at that secondary market function.
Of course, Calabria's would drive up mortgage finance costs across the board making consumers less able
to afford their share of the American dream.
But I don’t believe Calabria and his posse care about that,
nor do they care about balancing the playing field so that certain economic and
racial/ethnic population segments get their shot at owning a home.
(Inside
baseball, GSE style. Your government in action or non-action? Calabria
has several hundred (600?) employees working for him, many of them new since FHFA
was re-created in 2008; yet, the Director couldn’t find enough in house talent,
with the skills and intelligence to design RBC standards for the only two institutions
FHFA employees have been overseeing for more than a decade. Just what do all of
those log rollers do, Mark? Follow Freddie's lead and cut loose about 200 or 300 of them. )
Let me add two items of some Washington reality to my
concerns.
No matter what you read, FHFA is going to hold onto the
GSEs for as long as Calabria needs to complete his hollowing out act.
Looking back, it’s only been Treasury Secretary Steve
Mnuchin carrying the torch publicly and consistently arguing for ending
Conservatorship, now in its eleventh year.
Many of us—me included—have tried to inflate an innocuous
POTUS throwaway F&F comment to the Realtors last year into a full throated glowing
endorsement for ending Conservatorship
If that was the case it was a very lukewarm one DJT never
mentioned externally again.
Also, President Trump walks away from more promises than a sailor
on shore leave visiting a women’s college. His broken vows with allies, trading
partners, state and local governments, and the electorate litter the
landscape as he lies about his plans and intent. So, I’m not holding my breath
until he says something GSE positive about freeing Fannie and Freddie.
Mnuchin is the only senior official with GSE support on his record and
I worry he is a short-timer.
He’s been in his cabinet job for the entire Trump term and
generally is brushing against the normal planned departure schedule. His wife Louise hates DC and
the DC crowd—with the suggestion it’s mutual-- and hopes to move permanently to
LA/Hollywood, New York, or elsewhere. (Notice her opposition to the Admin’s
climate change position, which promptly got taken down from Twitter.)
Who will carry the GSE when Mnuchin leaves? Nobody on the Hill has anything vested in Fannie and Freddie, although most would hope to use them if they survive their current unloved circumstances.
Who will carry the GSE when Mnuchin leaves? Nobody on the Hill has anything vested in Fannie and Freddie, although most would hope to use them if they survive their current unloved circumstances.
That leaves us with the courts and, ultimately the Supreme
Court (SCOTUS).
For those who haven’t already read it, here’s a quality
article by a very smart lawyer, who uses the nom de plume of “Rule of Law Guy,”
and contributes regularly to Tim Howard’s blog.
Unless it is prohibited, even a positive court decision for
the plaintiffs may not stop FHFA from its ideological GSE plastic surgery.
Maloni,
2-18-2020
18 comments:
Good to see you back in the saddle, Bill.
Hi-Yo, Silver! Away!
Struck by your negativity (realism) though it seems we have made progress in ending the conservatorship there's no doubt that Calabria has been dragging his feet and everything takes 3 times longer than it should. I guess this is a case of watch what they do rather than what they say - and as you allude to " a leopard doesn't change his spots) and Calabria is definitely an ideologue first and public servant second. The question I have is why would they says they want to gt them out of conservatorship etc. if that is not really their intent. Seems like they are also running out of time with the election coming up fast.
Thanks for reading and writing "Un."
Because it gives the Admin a patina of mortgage finance moderation, but....
They've been saying it for three-plus years now and what's happened or--except for some court action--what do they lose, especially if it is said with a wink and nod toward the omnipresent anti-GSE crowd.
As both you and I have written Calabria's heart isn't in this task, but who complains--effectively--if his action cores them like an apple as he goes about his tasks???
Bill,
Well realizing this is your "blog" and your opinion. But, can we please stick to the topic of FandF as opposed to political unpleasantness. Over the past 40+ years or so there have been various folks occupying the executive office, congress, and other places of influence frankly unqualified to hold the position or do the job and many that utterly failed or had other issues that prevented them from doing a good job. I won't say who is who; my focus is on what is good for FandF and the owners of the companies that have been so screwed.
I want the two GSE's released. It really should not have been that difficult and could have been accomplished in a day maybe two. They went in that way, it could have been undone that way, the law was already written.
Its all the things that have occurred; the unnecessary taking of money, the corruption of the government and the repeated theft that needs to be unwound. There has been a lot of unnecessary waste that frankly has been beyond belief.
There is really no good reason to continue to drag this out. Its only going to cost more and inflict more pain. Let's get it done already.
First Anonymous
First Anon--I agree with you, but look behind most of the things you cite.
As I wrote to someone who sought to shut down my political commentary, I reminded him that virtually everything which has happened to the GSE in the past eleven plus years, including the past three, is because of D or R politics.
It's not company problems since F&F still are supporting the market, facilitating serving all eligible demographic customers, who met their underwriting guidelines, making money--not for their shareholders but for the Treasury.
Calabria and his posse don't want to turn the GSEs loose, despite his and their knowledge that none of their "replace the GSEs" do anything better than the current secondary market system.
A disruptive transition from the core model to something new and different injures many and serves on the new commercila replacement.
I still think DEM will win Presidency in Nov 2020 even if Sanders is the candidate, because DEMs are so upset. Then Calabria will have to go in 2021. His strategy is to look good to financial Establishment before he leaves.
Assume capital rule is published on 3/31. 60 days of comments. Then 30 days on revision. It gets to 7/1. Then settlement talk starts. Before it finishes, he is gone.
Man, you are GSE jacked up.
Bernie could win the D nomination, but a lot of Dems won't vote for him for many of the reasons you saw in the South Carolina "debate."
The GSE player here is Mnuchin, not Calabria. He needs to assert his will.
Someone needs to remind that little FHFA jerk, complaining about the GSE business models that they have produced well over $200 billion in the past 11 years, with negligible mortgage credit losses in that period.
Which of his favored banks have come close to both those two indices?.
Post a Comment