GSE Cats and Dogs

Who is the nation’s most beloved woman and why?

Ruth Bader Ginsburg, Michelle Obama, Laura Bush, Barbra Streisand, Betsy DeVos, Oprah, Hillary Clinton???

Any one of them could lead many such lists, but now with the full disclosure about his unnecessarily complex, heavily ideological proposed risk-based capital, the FHFA’s Mark Calabria has catapulted 65-year-old federal claims court--Judge Margaret Sweeney--to the top spot because she seems to be the only federal judge whose decisions say anything positive about Fannie and Freddie, the US rule of law, and the prospects of GSE plaintiffs securing some relief from the government’s heavy-handed pillage of GSE profits and market operations via the 2013 “sweep.”

GSE fans have been sending her all sorts of gifts to insure she enjoys a long, vigorous, and happy life: vitamins, personalized COVID-19 masks, pelotons, health foods, chickens, sleep adjusted mattresses, names of age-appropriate trainers, meal suggestions, strength techniques, etc. It’s rumored that RBG’s trainer even chatted up Sweeney on correct barbell usage.

You get the picture. Judge Sweeney represents an element necessary to all heavy underdogs….hope! 

RBC

Speaking of Mark Calabria and his latest risk-based-capital proposal—for those still struggling to grasp it--what’s not to understand?

It’s a highly ideological capital construct designed to make the GSEs less effective while, simultaneously, leveraging the ability of the nation’s largest banks to compete in the mortgage world.

No matter how much MC and his staff dodge and run, they can’t escape its inherent higher costs which will impact mortgagors and knock some of them—likely the lower-income segment—from being able to afford a mortgage.

No matter their history, the FHFA posse doesn’t consider Fannie and Freddie real businesses which in the past returned dividends and growth to rapturous investors

There is Calabria’s other hidden problem with hamstringing Fannie and Freddie. He needs them in the future “as real businesses” so they can attract billions of dollars from new investors who would like to see their GSE stock purchases earn money, which is what most investors seek.

FHFA’s and Calabria’s actions to date seem more destructive than constructive which is why GSE fans are rooting for Judge Sweeney’s health and willingness to continue her exposure of government lying and perfidy against Fannie and Freddie in hopes, some court gets that message.

The SCOTUS ended its current session without acting on the “Selia” case, which could have decided the constitutionality of the FHFA, mooting some of its actions.

So, more delay.

And now Mark Calabria gets to oversee another deferral tactic a “GSE-driven Wall Street MMA battle,” with today’s announcement that Fannie (Morgan Stanley) and Freddie (J.P. Morgan-Chase) have chosen their own Wall Street investment banking warriors to rumble in an eight-sided octagon office FHFA has built for the negotiations.

All of this pisses away more GSE money on “outside consultants” and chews up more of the clock to help decide the ground rules for any GSE departure from Conservatorship.

Why does FHFA have 600 or so employees, but every time they do anything important, the agency requires outside consulting help or is that just a Calabria MO?

In his “2019 Report to Congress,” sent this week to the Hill, Calabria seeks even more power to destabilize the secondary mortgage market by seeking statutory authority to create competitive guarantors. (Maybe he’ll use his 600 do-nothings to work on that task??)

Maybe it’s the slowly drying up optimist in me, but I believe when all the dust settles, much of the Calabria plan will fall by the wayside because of its negative financial impact on the families Congress wants/expects to benefit the most from GE operations.

Now we all get to watch just how?

Maloni, 6-16-2020