Wednesday, April 1, 2020

FHFA anthem: "Go slow, go slow, it's back to work we go."




All around, clomp, drag, clomp, drag

When President Trump last year nominated Mark Calabria to head the Federal Housing Finance Agency and become the GSE’s new Conservator plus safety and soundness regulator, Calabria, knowing his inclinations and biases, wisely, invested in a pair of 30-pound, wraparound Velcro ankle weights. Wearing them all of the time was clumsy, but he knew it would facilitate his preferred slow-walking policy, clomp, drag.
Everything GSE which came to his desk, got a clomp, drag. 
Calabria thinking:
“Let’s hire some outside capital consultant,” clomp, drag; “let’s bring in some new (conservative) staff,” clomp, drag; “let’s push back the date to publish the GSE capital regs,” clomp, drag; “let’s hire new office painters and paint my walls purple while putting wallpaper in my executive bathroom,” clomp, drag.
Dutifully the Director wore his weights, his calf muscles grew wondrously, but, unfortunately, MC forgot to take off his new devices when swimming at the YMCA, last month, and nearly drowned.
And, while he wasn’t a great “clogger” beforehand when he wore the weights he stepped on his wife’s toes so often, she stopped taking him to the neighborhood clog dances.
“Recap and release,” clomp, drag. “Consent decrees,” clomp, drag. Free the GSE Two, clomp, drag!
In light of the COVID-19 crisis and to show POTUS-solidarity, all FHFA employees were directed by their boss to learn how to spell all of those useless/mystery  drugs the President claims just might be the answer to the novel coronavirus infecting all of us, clomp, drag.
To make it easier, MC put this 2-page drug list on cards, and—apparently--most FHFA execs got stuck after the word “aspirin.”
We know what things Calabria doesn’t want the GSEs to do because he finds ways to announce them on his regular trade association speaking circuit.
But last week he was given a stupendously positive  idea and it came from an unusual source, former MBA President, now private citizen, David Stevens, who suggested utilizing the GSEs to help mitigate more mortgage industry problems.
No doubt Stevens’ idea will get a clomp, drag from Calabria because Dave’s ideas make so much sense.
Ponder this, I don’t think I am the only one who has never heard Calabria utter one truly positive word about the GSEs their achievements or their capacity to do more. Not one accolade. It’s like he feels he has he has to apologize for them, rather than see success and utility as civic virtues and celebrate the two mortgage giants he oversees.
For those who haven’t read them, here are Steven’s suggestions as reported by Paul Muolo in Inside Mortgage Finance.
Meanwhile, former FHA commissioner Dave Stevens noted, “Mortgage markets have reached a perilous level of risk. Excess supply of MBS as investors offload/reposition and originator pipelines are large, combined with far fewer buyers than compared to previous corrections are threatening institutions across the country.”
He’s calling on the government to allow Fannie Mae and Freddie Mac to bolster their purchases of MBS.
“Today, the GSEs cannot grow their portfolios so they cannot buy, banks are constrained due to regulatory leverage rules enacted post Dodd-Frank, and the Fed [Federal Reserve] has only slightly increased purchase activity, far short of what is needed, Stevens said. “We saw no-bids last week on some agency MBS forward trades. The FHFA [Federal Housing Finance Agency] needs to step in and let the GSEs buy MBS for a temporary period…”
Meanwhile, some, such as Brian Benjamin of Two Rivers Mortgage in northern New Jersey, are asking the FHFA to hike the GSE loan limit to $1 million from $510,400 currently.

Clearly, this is too progressive a bite for FHFA and Calabria’s mob, although the GSEs years ago, at the direction of Congress on an emergency basis, once bought loans above their set single-family ceilings when the “jumbo” market (loans above the GSE single-family ceilings) froze. Obviously, when they were permitted to have portfolios, both Fannie and Freddie invested in MBS, often guaranteed by the other.

If the GSEs once again could –temporarily, say for the next six months or until the end of the year, buy MBS—that GSE purchase activity would keep mortgage securities rates down which then translate into lower prices individuals pay when they finance a home purchase.

One would think those actions would complement what the Fed and Treasury are doing. But, I suspect they would make the GSEs stronger, in terms of value to the national economy and generate greater income for Treasury, which is where they likely run afoul of Calabria's private policy thoughts.

What do you say Director Mark, has David Stevens titillated you or will you just clomp, drag his suggestion.

President Trump and his COVID-19 response

I won’t prattle about this matter, since it’s all over the front pages and the airways, except on Fox, and is too deadly.

But real leaders don’t spend weeks lying to their citizens about the health threat, downplaying obvious medical facts, and trying to blame everyone within pointing reach for his anti-science ignorance.

In wartimes—as he claims we—he’s waited too long and directed industry too inconsistently  to facilitate producing needed medical equipment, and geometric amounts of testing supplies, gowns and masks, and crucial ventilators and related materials.

A confident and capable President doesn’t criticize the Governors who have stepped up to prepare and protect their states, while he ruminates from afar.
Ten weeks ago, he dismissed evidence that the novel coronavirus had begun to infect the nation, because we had so few infected citizens and resulting deaths.

Yesterday, the Admin suggested the death toll could be somewhere between 100,000 or a million and conditions will last 18 months.

Get off your ass Mr. President, you have plenty of tricks remaining to influence November's election and no doubt are heating them up.
So, stop trying to assuage your red state political machine (most of these states which haven’t put in place or enforced staying in place using social distancing and other tools) and see their recalcitrance as the source for future health problems for the rest of us.

Donald John Trump you are the President of the United States, act like it.

Maloni, 4-1-2020