George Floyd, Donald Trump, and Mark Calabria

My GSE thoughts will follow, but first, a discordant presidential note

For those who care, last Friday was not a good day for George Floyd, no matter what the POTUS claimed.

Floyd still was dead; his family reeling from his ghastly killing; protests over his death raging in major US cities; more than 110,000 of his fellow Americans dead in five months--not from police brutality like Floyd--but COVID-19, a virus which continued to infect and take lives; unemployment still hit 13.8% (meaning millions of his fellow citizens still were without but sought jobs); our President continued his lying and campaigning for office failing to offer any succor to US demonstrators, but trying to suggest he was responsible for fewer unemployed. 

In violation of the Constitution, DJT wanted US troops to patrol US cities. (Someone sounds politically rattled and desperate.)

Hiding and Ignoring Facts, FHFA Produces a Predictable “Snooze-in-ar” 

Two days earlier, one of President Trump’s more recent appointees, Mark Calabria who heads the Federal Housing Finance Agency,  presided over a farce agency “webinar” about the new risk-based capital regulation pre-sold as open and transparent but with no revealing information or answers to the question about how the agency put forward this controversial regulatory order which seems to diverge from history and conflict other promises Calabria made—when he was nominated-- about returning the GSEs to health and private ownership, once they raise additional capital.

After waiting nearly a year, spending millions on outside consultants, FHFA’s Director all but crapped his pants and unloaded a wholly made up new capital design consistent with very little except his goal to injure the GSEs vis-à-vis commercial banks.

Check the facts not just his rhetoric.

He did so with a draft  to set fresh capital standards for Fannie and Freddie as they return to some semblance of their pre-2008 status quo, instead. But he did so with ill regard for low, moderate, and middle income people who the two serve and who most in Congress would choose to support, since it is those would-be mortgagors who will pay for Calabria’s capital enhancement or “buffers,” as he calls them.

Some smart staffer must have suggested that FHFA hold a public “webinar, presumably to field questions about all the bizarre twists and turns, MC’s draft regulation took. But none were explained or simplified. Few listeners were enlightened.

After FHFA blah, blah, blahed about transparency, the agency must have handed out “No Doze” pills to its audience, after pre-approving all questions, so FHFA execs and Director Mark Calabria would not be surprised by questions/questioners for which they had not prepared or had no answers. FHFA then presumably achieved “webinar” Valhalla, when boredom caused most listeners to hang up and check out.

One could almost hear the wafting soon-taken-back salute, “Way to go Brownie," or Markie.

I’m told insomniacs have made requests for the FHFA event tape to help with their sleeping difficulties.

From Calabria’s perspective, that result was a lot better than having to stand up and answer why he contends the GSEs and behemoth banks are close enough from a risk comparison to capitalize each other similarly, even though they have dramatically different charters and do not compete with one another in their standard business lines. Fannie and Freddie are monoline companies and only can guarantee mortgage credit on US homes, while the leviathan commercial banks can operate all over the world offering a variety of complex commercial products (loans). The GSEs do single and multifamily mortgage credit, domestically and--unlike the big banks-- have generated more than 10 years’ worth of superb very low credit losses. 

People who understand the FHFA scheme will see the possibility that Calabria’s rule could end up costing low-moderate-and middle income families as much as a 150 basis points (one and a half percent) more than families with higher credit scores.

Is that what congressional Democrats want??

Challenge this point Senate Banking Committee; don’t buy a pig in a poke because Calabria once was a glib GOP committee staffer and labored for VP Pence. 

If you bless his RBC proposal, you wear it.

Maybe the SBC Senators listening to Calabria on Tuesday will cut through the FHFA’s previous bull crap and ask the Director point blank questions about MC’s ideological  GSE/large bank risk and capital comparisons, as well as who in the mortgage chain will bear the real cost of a GSE capital increase? 

Remember Senators, we are talking about 40% to 50% of all future American mortgages? Do the math for your own states and the negative impact on your constituents in this election year. 
Then take another look in the streets.

Maloni, 6-7-2020