Trump Admin: Look out, here come the Judge(s)

First they came for the Socialists, and I did not speak out—
because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out—
because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—
because I was not a Jew.

Then they came for me—and there was no one left to speak for me.

Martin Niemöller (1892–1984) was a prominent Protestant pastor who emerged as an outspoken public foe of Adolf Hitler and spent the last seven years of Nazi rule in concentration camps.

Benjamin Franklin: “We must, indeed, all hang together or, most assuredly, we shall all hang separately.”

Some GSE Cats and Dogs, a Little DJT

--As predicted, more anti-GSE types are finding themselves in second tier policy positions and--at some point—that negatively could impact Trump GSE decisions. Unless, Steve Mnuchin—up for Senate approval this week (today?) as Treasury Secretary—puts his strong stamp on the Fannie/Freddie issue, with the President’s backing, and suggests all of the wannabes stay far away from his turf.

That won’t stop all GSE policy envy, but will force the amateurs and marginal players to the sidelines.

Most pro-GSE folks feel positive, if not euphoric, over recent events. But, as I’ve noted, don’t discount the bad guys, because there remains lots of them inside the Beltway, plus the majority of media.

When past troublemakers gather—now with new Admin titles and portfolios--it’s inevitable that they will try to galvanize and push some mischief, unless promptly spanked.

Some of these mini-chefs will want to add ingredients to Mnuchin’s GSE soup.

CATO’s Mark Calabria—who was a committee staffer for former Senator Phil Gramm (R-Texas) and current Senator Dick Shelby (R-Ala.), neither of whom were GSE friends when they were Senate Banking Committee chairmen--now will be VP Mike Pence’s chief economist.

Yes, Calabria has some GSE views but if they are contrary to Mnuchin’s, I expect the Treasury Secretary will prevail—but one never should say never, especially with the current Admin changing priorities, i.e. one China, two Chinas;  Japan the enemy, Abe the golf partner; Mexico will pay, US taxpayers now will pay for the “Wall.”

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--It’s all good news that attorney Chuck Cooper’s chose not to join the new Administration as Solicitor General but remain in his law firm, where he has been a major tour de force, supreme intellect, and comprehensive voice representing GSE plaintiffs.

Had he taken that post, he would have had to recuse himself from any future cases involving the GSEs, but more significantly, the GSEs would have lost his experience, style and brains.

Also on the plus side, Cooper has some major Admin friends and his opinions will matter in some quarters.

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--GSE earnings this week (Fannie on Friday, but Freddie will follow quickly, if they don’t precede by a day) will produce more green stuff for the taxpayers and the Treasury’s General Fund.

Those positive numbers shouldn’t but might give a kick to the current upward trending stock prices, but Fannie’s and Freddie’s revenue capacity never has been an issue (except for some Obama Admin distortions). 

But investors and would-be investors should understand only WH/Treasury actions ending the “sweep” and freeing the GSEs from strict government control will signal a return the equitable, efficient mortgage finance machines all Americans need and deserve.

I won’t/can’t make earnings estimates, Tim Howard is better than me on that stuff, but it will be enough, unfortunately, to make some DJT people realize that they still will need money because their current plans—at least until they succeed in putting together a real set of trade policies and the crucial tax reform plan—will mean the dreaded deficit spending.

That same principle, albeit in reverse but not in effect, will apply to any financial settlement reached with GSE lawsuit plaintiffs. Previous dividends sent to Treasury/taxpayers will need to be sent from the General Fund to plaintiffs. Unless negotiators get super creative.

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You’ll know it when you see it and I won’t plug it, except to say, there soon will be a new GSE book out, written by a former Freddie Mac official—who I never met or heard about in her reported Freddie 20 years, and never heard her name in connection with shaping and Freddie policies, when I worked closely with so many Freddie execs from Leland Brendsel on down—but it already has attracted Right Wing praise.

It’s not surprising since, apparently, the author buys into the Pinto-Wallison view of GSE mortgage purchase, which claims Fannie’s 1990 books of business were 10 years’ worth of “subprime purchases,” but—unfortunately for them and blowing large holes in their tall tale—those excellent and non-subprime loans had credit loss rates of less than 4 basis points.

As David Fiderer would observe, “The Big Lie” continues.

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With all of the banker driven Dodd-Frank drivel, my observation is the only two features that have clicked are the Consumer Finance Protection Bureau (CFPB) and higher bank capital levels.  Effectiveness of the Volcker Rule, prohibiting inside dealing, has been spotty. Notice—despite all their bitching--banks still have made huge earnings over the past 10 years (while still paying massive fines for aberrant financial behavior, i.e. somewhere north of $150 Billion).

IMO, Everything else D-F has been nada, which is the result of bank lobbying the original legislation, later the regs, and quiescent federal financial regulators, who husband their regulated institutions. (Ironically, the only one that doesn’t foster the financial institutions it oversees is the FHFA.)

Some DJT Thoughts

Get over it. He’s our President for at least the next four years.

---The good news bad news about his constant tweets is, at least, we all know with his demeaning shout outs what he thinks that day (and who he is targeting).

Part of me doesn’t want him to stop because—absent normal filters—Donald Trump’s tweets are a transparent, an open window to his mindset.

Also, if he continues shotgun targeting so many individuals, groups, political interests, and institutions, he just might undercut his own support (think congressional allies) and not be able to carrying out some of his more bizarre agenda elements.

The POTUS may be energizing more Americans to get civically active and communicate with their Senators and Congressmen, as well as the media.

However, if I was advising him--on the theory that he won’t stop tweeting--I would urge him to record his “tweets” and then have Reince Priebus, Ivanka Trump, or Eric Kushner, rewrite the POTUS’s ideas and let DJT tweet them a day or two later.

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---I can understand why some Americans might get their fill of Massachusetts Senator Elizabeth Warren (D-Mass.), but I would urge DJT to stop demeaning her with the derogatory “Pocahontas” label, no matter what the history of it and his angle.

If you want respect you should give respect.

It‘s beneath a President to engage in that silly slander and it’s unlikely to earn him or his GOP colleagues--virtually all of whom will run, again, in two or four years--support from hostile female voters.

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--I want Secretary of Education, Betsy DeVos to visit as many public schools as she can. They all are not wastelands filled with slow or no-learning kids.

The more of those she sees and understands, hopefully, the better her judgment.

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---It’s tough to discern, but I hope President Trump gets smarter, faster about Russian motives, intent, and leadership. (He might also see Mike Flynn is over his head, likely panicked and lied to VP Pence and Steve Bannon—for now--is channeling Machiavelli, Catherine de Medici, Rasputin, and Joey Goebbels.)

Maloni, 2-13-2017