Are
you satisfied, yet, GSE fans and friends?
Has
Mark Calabria showed enough true colors?
Some of us have been telling you for the better part of a year that leopards don‘t change their spots and that FHFA Director Mark
Calabria never has been a GSE fan, just the opposite. But more should have
listened when he discussed his anti-Fannie and Freddie biases and his pro-bank
tendencies.
It appears the Senate Banking Committee Republicans—with
Calabria, one of their very own former staffers--installed another fox to keep
track over the GSE hen house.
If Calabria was more adept, he would have hidden and delayed his
political cravings, but his latest risk-based capital proposal “jumped the
shark” and unmasked him for what he is and what he wants, i.e. banks in
mortgage lending ascendancy (no matter
what it costs the public) and the GSEs mortgage execution made too costly
and in retreat, thanks to his agency.
It makes clear why in his year on the job, he never has
lauded the GSEs for their mission success, low-risk operations, and revenue
generation, nor congratulated them for anything else.
Knowing where he was headed he never joined the many who
pointed out what valuable federal policy tools the GSE have been in assisting a
COVID-19 threatened nation--and its current 100,000 medical deaths (many with
DJT’s political DNA all over them)—battle the worst COVID virus housing finance
manifestations.
Instead, he's pranced by himself usurping various GSE management
techniques--which Fannie and Freddie in the past automatically and logically deployed when
tough economic times arose--implying they were his own.
He’s become a full-time poser, pretending he has concern for
housing and homeownership, while remaining quite backward-looking and very ideological.
My great joy and satisfaction will be when Calabria understands—following
broad public realization, much like Lockhart, DeMarco, Bright, Parrott, Stegman,
and other renowned “fellow travelers” did--that his discordant personal agenda has peter-principled.
It could be investment bankers schooling him or GOP pols alerting him to his political stupidity, i.e. signing up President Trump, who is in a major political year election shit storm, to ruin needed GSE efficiency and productivity to enhance the big banks. It is not “an
achievement" the President wants, with all of the other political negatives he's hoisting.
“Yay the GOP, you made the mortgage market more
bank-reliant and killed competing GSE middle and low income and affordable mortgage
finance.”
That's a great TRUMP TV ad (or one from Biden)!.
That's a great TRUMP TV ad (or one from Biden)!.
I believe for one reason or another, Calabria will back off and
retreat, eating crow all the way, when the Wall Street investment bankers,
along with those he’s wasted GSE revenue hiring for FHFA and those separate bankers, hired by each of the GSEs, explain in small words to him why his
capital numbers are vacant.
Exposing his various GSE capital bucket tricks won’t succeed, as he struggles to keep Fannie and Freddie subservient and under his thumb.
Exposing his various GSE capital bucket tricks won’t succeed, as he struggles to keep Fannie and Freddie subservient and under his thumb.
Unless he changes those RBC numbers and his pledge to end
“Conservatorship,” both will fail.
But Mr. Director, think. What are you offering those financial stakeholders for their upwards of $200 Billion down the road in the GSE investments you need?????
And where in the bank regulatory or capital statutes are all of your analogies to the GSE RBC proposal???
And where in the bank regulatory or capital statutes are all of your analogies to the GSE RBC proposal???
In several weeks or a few months, after he’s figuratively thrown up all over himself
(and the public realizes it), Calabria will walk away from the FHFA to his future
big bank job offer-- tail between his legs—another victim to the overwhelming
truth about the immense value, efficiency, and support for Fannie Mae and
Freddie Mac, because all the ersatz substitute-GSE models fail in systemic
comparison.
That’s my desired expectation, despite most in Washington not
knowing this fight is going on and why they should respond to the FHFA. But they will when their constituents start writing and calling them about and what the GSEs do or how they do it.
(For a far more substantive review of Calabria’s RBC
proposal, read Tim Howard’s latest blog, below.0
(
(
Maloni,
5-27-2020
8 comments:
"But Mr. Director, think. What are you offering those financial stakeholders for their upwards of $200 Billion down the road in the GSE investments you need?????"
Regulator's and Conservtaor's job is not fail the companies but to keep them viable.
Time and again Calabria proves that he is a total misfit to be a regulator or hold any responsible executive position.
The previous shameless directors/conservator worked to bankrupt the FnF so that FnF can wound done. Now this foolish directors/conservator has made it impossible to raise any capital but wants to capitalize and release them.
Even when all the Gov and private shareholders are (SPS, warrants, SPS and CS) are wiped out, private investors will not find that FnF are worth investing $240B dollars.
Bill....Excellently and perfectly stated.
Anon--
Preach it, brother!!!
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Unknown--Thanks for reading and writing.
Bill, very good political instincts. A few questions.
1. If big potential investors say NO, what MC will do? Mnuchin?
2. Do you think MC still ends conservatorship with consent decree regardless? Trump and Mnuchin have promised they would end conservatorship.
3. Assuming Biden wins election, what will likely happen to GSEs?
Thank you.
ANA--If Biden wins--no guaranteed day at the beach--too much support for GSEs in low income and minority communities, to zap them.
But my fear will be that all of the historic GSE success--which earned much of that support--was because of their corporate flexibility and market responsiveness.
There will be D opposition to some of that, as well as the standard GOP oppositions and harassment.
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MC either leaves or sues for peace. How he gets from here to there, mostly, is on him, except there are plenty of paths, owing to Tim Howard's ideas, Moellis's proposals, etc.
"If big investors.....?"
Negotiate and compromises (see above, especially considering how extreme his reg is. In doing so, he and his posse all will note how "this is a time to consider all comments and what various audiences are saying, blah, blah, blah...."
He may just leave it pending and allow his successor to "fix it," hoping to bathed in some sort of ideological purity to enhance himself with future employers, wasting a lot of F&F revenue on personnel and outside consultants (because his current team isn't up to his venal wishes).
Bill,
What is your guess?
1. under what conditions investor will be interested in investing in FnF
1. SPS
2. Warrants
3. Gov Credit line
4. Listing on big board
5. conservatorship
2. What is the upper limit on amount of money that private investors would consider investing in FnF.
Bill, do you have any insight on what industry groups may respond negatively to this new proposed rule (I'm assuming Big Banks will be thrilled)? Would MC respond to any of those groups by adjusting this very restrictive proposal to some more sensible capital requirements?
Anon==
It depends on whatever FHFA interference presented; right now that would be excessive and will damped investor interests. But some people will buy chicken crap thinking it's chicken salad.
As some of us have been saying for years, "There is a cost to excess capital, especially when--as MC has done--made it artificially high pursuing his empty meme that Baks and the GSEs are the same.
Don't know--until Calabria backs off or the IBs and pols back him off, but he won't get the $200 Billion he claims he needs.
Any investor would want a credit line to Uncle, but whether it's needed and how much for a return to traditional GSE/financial institution is a "pick em."
Listing on the "big board" is nice but if they are allowed to operate more traditionally, the GSEs will make money on whatever listing they are permitted and elevation to the big board will come shortly.
But my rosy comments can't happen as long as FHJFA leadership 's is so pie-eyed.
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Amadeus3512--
Funny you should ask. I just reached out to two of the larger ones before leaving town on Friday.
I haven't heard from either but will share when I do.
While they all will be affected, I think the Realtors most directly would see a sales hit and am curious if they say anything and how measured it will be.
Thank both of you for readimg and writing.
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