We’re Seeking answers, we’re seeking answers

Questions for FHFA’s Mark Calabria

Since Mark Calabria was approved as director of the Federal Housing Finance Agency (FFHA) last year, his congressional hearings seldom delved into major policy issues. There may have been a few substantive questions asked and answered, but little major follow-up. (It helps witnesses who understand a little obfuscation can eat up the congressional “5 minute rule,” especially when few of the questioners comprehend the history and nuance of the issues at hand).

I have several questions for Mark Calabria, which I hope he answers to this blog (fat chance!)

Any Calabria/FHFA answers will faithfully be reprinted without any edits.

If the Q’s appeal to them, the same questions could be used as a primer for Senators, MoC’s, or congressional staff, the next time the Director testifies on Capitol Hill, or engages media following a major industry speech. 

--What is the total headcount at your agency and what was it when you came on board? Do you anticipate it remaining stable at that level?

--Specifically, by function, what do those workers all do? How many have been there 10 years or longer? Does FHFA need additional employees, as you have suggested? If so, what roles would they perform?

--Would you—as Freddie Mac management has announced it will—audit your employees to see if their numbers still are necessary and have the contemporary skills required to perform oversight responsibilities?

--It’s been suggested that you slow walk, most issues facing the GSEs. Why is that inaccurate?

--You have been disinclined to praise the GSEs for their mission success and very low losses (much of it accomplished without regulatory support and some time with regulatory hostility). What is your reluctance?

--With the significant managerial strength at each company and systemic problems rising in the mortgage market), why do you seem chary to endorse the various ways Fannie and Freddie—besides mortgagor forbearance-- can support borrowers, lenders and others currently stressed in the mortgage finance chain, as per David Stevens’ suggestions? (BTW, I suspect the Fed and Treasury will solve the servicer illiquidity.)

--Was it a coincidence that your hired two execs—with conservative credentials—shortly before FHFA began clomp, dragging most GSE deadlines and extending those target dates? Is there a connection between those events?

--How closely did you work with Craig Philips, Steve Mnuchin’s former Wall Street assistant, before the latter was removed from Treasury and departed DC?

--Is it true before leaving his Treasury post, Philips largely put together an “End the GSE Conservatorship” plan? What happened to Philips’ GSE recommendations?

--In your opinion did Philips possess the experience, skill, and expertise which you later sought in outside consultants you hired to complete the capital and “Conservatorship” exercise??

--Other than being large financial companies, why do you insist on claiming big banks and the GSEs need the same capital rates, when they are so disparate re mission, function, and risk? Banks conduct domestic and international commercial and residential lending, while the GSEs are limited primarily to insuring securities composed only of US residential mortgages??

--Do you believe major banks and the GSEs can be safe and successful, working in conjunction with one another, while having varied capital rates, or are you stuck on the meme, “more capital is better?”

--Do you recognize there is a cost, i.e. higher consumer mortgage rates, to excess GSE capital? Does that concern you?

--When/If the GSEs ever are freed by ending their Conservatorship, have you thought through your changing (reduced) responsibilities and will you recognize the primacy of the GSEs’ private owners and boards of directors in corporate matters??

--Will that recognition cause you to reduce your agency headcount, since theoretically FHFA will have less work?

--As a sign of goodwill to GSE shareholders, do you have any plans, to facilitate relisting both companies on the major stock exchanges?

Maloni, 4-11-2020

Happy Easter to all who celebrate!!