Sunday, September 20, 2015

Pope Francis, Fannie, Freddie, and Hope;
Could he Condemn a Mongolian Mormon?
During his two day visit to Washington DC this week, Vatican sources—whose identities I cannot reveal because of my adherence to the International Blog Source Secrecy Guidelines (IBSSG) —implied Pope Francis expects to warn congressional and Administration policy makers, “Hands off the GSEs.”  It was hinted His Holiness may also suggest that banks not be given early access to the CSP.
My source says this GSE communication will occur when the President and the Pope play their round of golf at Andrews Air Force base, since the Pope hurt his wrist and can’t dribble a basketball, as he smoothly once did. BHO has offered the Pope three strokes because of the Pope’s long robes, which Francis took.
I wonder if those talks will get attention from this town’s jaded media and federally appointed and elected public officials.
Administration sources madly are racing to find someone who—by Thursday--can explain to President Obama what Fannie and Freddie do and why they are so important to low and moderate income families whom the Pope adores, especially minorities whose home ownership rates significantly trail whites.
Also scurrying around were clerks to Judge Margaret Sweeney, who snagged one of the gilt-edged invitations to see the Pope. Judge Sweeney’s assistants are hoping to secure the proper Latin pronunciation of “scumsucker,” “deposition,“ “Ugoletti,” and “redaction,” should Pope Francis raise those matters with “somebody.” (Apparently out-of-town Popes are not covered by the Judge’Sweeneys gag order. After all, how/why would you gag the Holy See’s #1 guy?)
In a related matter, it also was reported Mario Ugoletti,  former Treasury and FHFA employee, has moved to Ulaanbator, Mongolia, shortly he joined the Church of Jesus Christ of the Latter Day Saints last week, muttering something about, “Francis wouldn’t come after a Mongolian Mormon would he?”
We’ll know by week’s end, if the papal GSE intervention is a success!

Bethany McLean’s Book Tour 

Bethany McLean started her book tour last week for her latest GSE book, 

“On Shaky Ground: The Strange Saga of the U.S. Mortgage Giants.”

I managed to see one of her four Washington DC events. Unfortunately there was no video of that one at the Politics and Prose book store, but I did get a chance to speak with her before and after getting two books autographed (one for the very helpful Mr. Fidlsticks) and one for myself. Mine replaced my original galley proof copy, that the author provided to me weeks ago, which disappeared after I lent to a well-known GSE personality, an author in his own right, whose name I won’t mention.(Psst.  OK, I confess, it was (the real) Tim Howard, who joined us at P&P with his lovely wife Debbie. They also bought books.)
Bethany’s efficient synopsis and P&P presentation were excellent, with the history and current limbo perils to Fannie and Freddie floating in conservatorship surrounded by a WH and Congress uncertain of how to proceed enamored with their love of F&F’s revenue generating capacity but knowing the present design leaves the GSEs each year with less and less capital to protect against losses.
That’s even before you mix in the GOP hate and disdain of anything tied to the Roosevelt Administration or federal support for conventionally financed home ownership. But, as Bethany said at P&P, loosely applying Winston Churchill’s logic and words, “Fannie and Freddie may be bad, but they are better than whatever is next.”
McLean recounted a revealing vignette, unfortunately one shared by too many people “inside the Beltway,” and which then got incarnated by a fellow book buyer in the back of P&P.
Bethany described twice of seeing old pals months ago, on a visit to New England and, separately, when she was in a friend’s wedding. Two acquaintances, after asking what the four time author was working on and being told “researching a Fannie and Freddie issue,” both responded with a variation of the line. “Well, I can tell you all you need to know about them. Their pursuit of bad low income loans caused the 2008 financial meltdown.”
After her friendly Politics and Prose audience laughed at that distorted and most inaccurate explanation, a man in the back of the room loudly exclaimed, “That is me, I’ve been telling that to people for years.”
I later found the man and as he was checking out his McLean book purchase, and asked him why he believed that and he said, “Well weren’t all of those bank securities (meaning PLS) backed by Fannie and Freddie?”
When I explained why the opposite was true and “$2.7 Trillion in PLS” sold internationally by banks meant  Private Label Securities, issued outside of the GSE systems and not backed by F&F, he was embarrassed and perplexed, saying, “I have to read this book right way.”
I hope he’s microcosm for the nation and will learn the truth after reading “On Shaky Ground…” and engage others with his new knowledge.
By all means, buy and read Bethany McLean’s book, consume those interviews and watch the videos, and remember, she is a very firm believer in Fannie and Freddie needing to stay operational in the mortgage market to insure long term fixed rate financing, standardization and efficiency for consumers, and as a counterweight to the market and political influence of the nation’s big banks.

(Related/unrelated. I bumped into two Fannie employees at the P&P event and both laughed and threw cold water on any talk of an "employee walkout", noting that the name associated with such talk works for neither Fannie or Freddie.)





Here is a list of the events, with videos in which Ms. McLean engaged. In addition, I also linked some articles and reviews about her and her book, as well as a link to up coming events.
___________________________________________________________

Columbia Global Reports: 'Shaky Ground' Launch Event Video
Tuesday, September 15, 2015

___________________________________________________________

Charlie Rose : A discussion about Fannie Mae and Freddie Mac with Bethany McLean, author of “Shaky Ground: The Strange Saga of the U.S. Mortgage Giants,” and Bill Ackman of Pershing Square Capital.

___________________________________________________________

MarketPlace: U.S. mortgage giants under the microscope
___________________________________________________________

WNYC: The battleground that's Fannie and Freddie 

___________________________________________________________

Museum of American Finance: Bethany McLean on "Why Does the US Government Want Fannie and Freddie Dead?"

___________________________________________________________

Yahoo : Video interview: The biggest remaining risk in today's financial system, hiding in plain sight

___________________________________________________________

CNBC : Mortgage giants on 'Shaky Ground'? 

___________________________________________________________

New America:   Shaky Ground , The Strange Saga of the U.S. Mortgage Giants
___________________________________________________________

The Street: Fates of Fannie and Freddie Need to Be Settled ASAP Says Bethany McLean
___________________________________________________________

Columbia Global Reports Upcoming Events Link
 ___________________________________________________________


What’s New With David Fiderer’s Book
David Fiderer is one person who has written extensively about the bank/investment bank PLS madness documenting their sloppiness, blunders and lying and, most importantly, all of the losses, far larger than those of F&F securities.
In a surprise to me a week ago, David Fiderer published his e-book  on Amazon, “The Plot to Destroy Fannie Mae, Anatomy of a Power Grab, which excoriates in great detail a bunch of senior government and regulatory officials, starting with former Treasury Secretary Henry “Hank” Paulson,  for their haphazard, reckless,  and demagogic treatment of Fannie Mae and Freddie Mac.
In his zeal as an artist, David later admitted that the book was not totally ready for prime time and needing some reorganization, cleansing of typos, and made easier to read.
While I didn’t disagree, I also told anyone who asked me, “Fiderer’s research and fact finding are so solid and his finding so disturbing, that the flaws do not undercut what he produced. Read it and see for yourself.”
The good news is DF’s is working with an editor and hopes shortly to reissue his work, possibly in print form. But, I’ll remind all that, the original is on Amazon, you don’t need a Kindle to read it, any sort of e-reader can access it.

SBC members reintroduce F&F 'Jump start'
This Jon Prior article in Politico last week caused some angst in the GSE community because Sen. Elizabeth Warren first supported this bill, then opposed it taking off her name, and finally jumped on a new version but with the same poisonous impact. Its fate still is up in the air because the SDC ranking member, Sen. Sherrod Brown (D-Ohio) opposes it and reportedly has a “hold” on the legislation?
  
By Jon Prior
09/16/2015 11:13 AM EDT
Members of the Senate Banking Committee, led by Bob Corker, Mark Warner, and Elizabeth Warren, reintroduced a bill today that would prevent the government from selling its stake in Fannie Mae and Freddie Mac without instructions from Congress.
After failing to be fast-tracked through the Senate this week, the bill is being pushed for a vote after language was added that would prevent lawmakers from raising fees charged by the two companies to be spent on other government programs. The committee's top Democrat, Sherrod Brown, had put a hold on that process. He told POLITICO earlier today he was against a piecemeal approach to housing reform and wanted the proposal to go through regular process. Warren had thrown up a roadblock, too, after language centering on the fees was taken out. Another provision was separated out that would suspend pay hikes for the chief executives of Fannie and Freddie, but that was pushed through the Senate last night.
"While comprehensive reform is my preference, we must not allow a small minority to prevent us from making any progress at all," Corker said in a statement today.
The bill stands long odds of becoming law, as it's unknown whether Senate and House leaders will want to take up the controversial proposal. The bill would hurt shareholders who are suing the Obama administration seeking a court to allow Fannie and Freddie to pay down the government's stake in the firms after they returned more in profits to the Treasury than the $187.5 billion they received in bailouts.




What Others Are Saying?

Presidential Corner
Latest GOP Candidates Rankings

Trump and Carly Fiorina at the top
http://www.aol.com/article/2015/09/20/trump-down-but-still-no-1-in-republican-race-fiorina-at-no-2-c/21238451/
___________________________________________________________ 
Support me so I can sell your info (Carly)


Common Question: Hillary’s Achievements??


Trump on Obama is a Muslim
http://www.washingtonpost.com/news/the-fix/wp/2015/09/19/donald-trump-is-now-reaping-what-he-has-sown/
___________________________________________________________

Fannie and Freddie Corner

http://dealbreaker.com/2015/09/bill-ackman-is-thisclose-to-reading-the-u-s-government-its-miranda-rights/
__________________________________________

“Big Banks Can’t Be Trusted to Replace GSEs”
http://www.talkmarkets.com/content/us-markets/we-cannot-trust-big-market-rigging-banks-to-replace-the-gses?post=73668
____________________________________________________________

Paul Muolo in IMF

Short Takes: Almost All GSE-Related Legislation is DoA / Don’t Kill the Golden Goose / Those Crazy Common Investors / The GSEs Are Worth $35.2 Billion? / Brian Webster’s Resume


By Paul Muolo
What will happen if Congress gets the authority to block (or approve) the Treasury Department from selling its senior preferred stock in Fannie Mae and Freddie Mac? First off, it’s unlikely that such a bill will ever pass. Industry lobbyists suggest that the only GSE bill that might have a chance in the current Congress is one that guts the recent pay raises implemented by the Federal Housing Finance Agency for the CEOs of the GSEs…
Keep in mind that few think Treasury would be willing to unload its senior preferred shares because that means the $20 billion to $30 billion the two contribute to the Treasury each year (at least) would go away. Then again, if Treasury received a bid of $100 billion (for example) for their holdings maybe…
GSE FACT CHECK #1: Meanwhile, the common shares of Fannie and Freddie have a current market capitalization rate of $19.60 billion, based on trading prices Tuesday afternoon. Many consider the common shares worthless, but no one has told the dreamers and speculators who continue to buy the stocks.  
GSE FACT CHECK #2: So, what are Fannie and Freddie really worth? At three-times annual earnings (based on 2Q15 results) that would be $35.2 billion. The calculation excludes franchise value and goodwill.



Bank Screw Up Corner

http://www.bloomberg.com/news/articles/2015-09-17/primary-dealers-rigged-treasury-auctions-investor-lawsuit-says
Posted by at 1 comment:

Test to show Shaky Ground event / video link list



Columbia Global Reports and 'Shaky Ground' Launch Event Video
Tuesday, September 15, 2015

https://www.youtube.com/watch?v=ZqbixJARBpY

 ...............................................................................................................

 Yahoo : Video interview: The biggest remaining risk in today's financial system, hiding in plain sight

http://yhoo.it/1iq1cd9

 ...............................................................................................................

 WNYC: The battleground that's Fannie and Freddie 

http://bit.ly/1Nt4QPq

 ...............................................................................................................

 Museum of American Finance: Bethany McLean on "Why Does the US Government Want Fannie and Freddie Dead?"

http://www.moaf.org/events/general/evt_20150915

 ...............................................................................................................

 NPR:  MarketPlace: U.S. mortgage giants under the microscope

http://www.marketplace.org/topics/economy/big-book/us-mortgage-giants-under-microscope

 ...............................................................................................................

 CNBC : Mortgage giants on 'Shaky Ground'? 

http://video.cnbc.com/gallery/?video=3000420067

 ...............................................................................................................

 New America:   Shaky Ground , The Strange Saga of the U.S. Mortgage Giants

https://www.newamerica.org/new-america/shaky-ground/

 ...............................................................................................................

 The Street: Fates of Fannie and Freddie Need to Be Settled ASAP Says Bethany McLean

http://www.thestreet.com/video/13291283/fates-of-fannie-and-freddie-need-to-be-settled-asap-says-bethany-mclean.html

...............................................................................................................

For a list of  upcoming events ....
Columbia Global Reports upcoming Events Link

...............................................................................................................

Posted by at No comments:

Monday, September 14, 2015

Monday, September 14, 2015
Fiderer and lots of other stuff

“The Plot To Destroy Fannie Mae: Anatomy Of A Power Grab,”
by David Fiderer


 Fiderer’s E-Book Available now on  Amazon; He Doesn’t Disappoint
You can find Davids book here

Damning the Big Lie with Overwhelming Data

 David Fiderer’s long awaited book—minus about 45,000 words he excised but held onto for future work--finally is out on Amazon and available for review. The lengthy editing process was worth the wait as the book slams former Treasury Secretary Hank Paulson and a gaggle of former OFHEO/FHFA executives.

Together they engineered “The Big Lie,” and shoved Fannie Mae and Freddie Mac into an unnecessary “conservatorship,” where they still exist seven years after the fact, still doing their housing missions and still spewing money into the government’s pockets, but not their shareholders’.

All of Fiderer’s research comes from publicly available documents, which is pleasing and easily verifiable. (Reportedly, he wore out two library cards at the NYC public library branch in Greenwich Village.)

Fiderer describes why F&F were not derelict when
Paulson led his insidious and politically motivated actions, nor was their low-income lending anywhere near as red-ink-filled as their so called “private sector competitors.” In fact, the banks had three and four times the losses on
their in-house mortgage-backed securities as Fannie and Freddie accrued, a fact their detractors and most of Washington chooses to ignore, as the Congress and
the Obama Administration bend over backwards to accommodate the Too Big to Fail” (TBTF) Banks.

(I encouraged DF to conclude his long editing process and publish it, now, “warts and all,” so you can partly blame me for any typos, etc. I just thought he should get his labor of love out there ASAP because it is so rich in what people are talking about today in the GSE world. His facts aren’t flawed, just a word here and there, and a few of his sentences.)

Because of their roles in setting up a hurricane of GSE lies and specious allegations, Treasury Secretary Hank Paulson and some of his Administration colleagues, OFHEO regulatory officials Armando Falcon, Steven Blumenthal, Alfred Pollard, FHFA Director James Lockhart, media types, and other public officials inhabit Fiderer’s special GSE rogues gallery.

They all put their DNA and fingerprints on the choreographed downfall of the nation’s premium mortgage finance companies, for reasons which most readers will understand don’t pass muster but which still seem politically appealing to many.

But while Fiderer’s many perpetrators attempted to hasten the GSEs demise, none of them anticipated Fannie’s and Freddie’s dramatic rebirth/recovery to operational life, national productivity, and multi-billion profit, which both compounded initial government errors in 2008 and ushered in a new round of Treasury’s twisted GSE policies in 2012.

Fiderer describes why the two mortgage giants were not bankrupt (a theme Adam Schiffler and Dave Ciklin documented this year), lacked capital or market access, when Paulson led his insidious and politically motivated campaign; nor was the F&F low income lending anywhere near as red ink filled as their critics claimed, suggesting a much less calamitous resolution could have bene forged—if politics and chicanery weren’t the order of Paulson’s day.

From roughly 2005 through 2007, the big banks and investment banks—supposedly F&F “private sector competitors”--produced and sold throughout the world $2.8 Trillion in poorly underwritten and falsely rated private label securities (PLS).

Those bank issuers had three and four times the losses on their in house mortgage backed securities as Fannie and Freddie encountered, a fact GSE detractors and most of Washington chooses to ignore, as the Congress and the Obama Administration bend over backwards to accommodate the Too Big to Fail Banks.

Read Fiderer’s work, bitch at it, glory in it, disagree or love it, but—when you finish--you’ll understand better how and why almost two dozen lawsuits were leveled against the Treasury/OFHEO/FHFA for their GSE treatment. (Not even going to talk about those court cases now, except to wonder what Judge Lamberth saw when he dismissed the Perry Capital case, which currently is being appealed.)

One final request. Let me paraphrase something my mother used to say, “I hope all of the bad guys in Fiderer’s book spend the rest of their lives needing Pepto Bismol.”
Congress: The Return of Grumble, Groan and Reality Disassociation

Yes, the Congress has returned, briefly. They’ll be out for the Jewish holidays and then return to continue fighting over GOP follies of whether to close the government over funding for “Planned Parenthood” and teeth gnashing over the Iran deal.

The Republicans have, initially, until the end of this month to produce a budget which the Democrats and the WH can support. Eventually they will because—despite their rightwing crazies—stopping Uncle Sam, again, just will make them look sorry and once again confirm the GOP’;s inability to govern but still squabble over ideological matters not germane to everyday life in our country.

There maybe one or two short  term extension, but the R’s will run up the white flag and just bite the bullet on whatever internecine hot button matter drove them to threatened another shutdown.


What’s happening in GSE Land (Besides Fiderer’s Book)?

The GSE world appears tame by these standards. There is a demand from the big banks to rush the Shelby “regulatory relief reform” bill, which has a an anti-GSE nugget in it, opening the  new GSE platform project Common Securitization Platform (CSP) to the big banks and prohibiting the government from engaging in any deals with F&F investors.

One prominent GSE observer chided me for worrying about those things, but I repeat, never underestimate SBC Chairman Dick Shelby (R-Ala.), who controls those items in his legislation.


Senator Warren and GES Legislation

Some folks made a big deal of Sen. Elizabeth Warren (D-Mass.) removing her name form the Corker GSE legislation, which would have, again give banks access to the CSP and prohibited the federal government form using F&F revenue for deficit reduction.

Before anointing her as a new GSE friend, the truth may be closer to what her office claimed which is she opposed the prohibition of the government not be able to utilize GSE cash for other programs.


Forensic Analysis of the GSE Forensic Analysis

The forensic accounting paper produced earlier this year by Adam Spittler and Mike Ciklin got a pump last week in an independent analysis produced by Louisiana State University’s Dr. Larry Crumby.

As a reminder the Spittler-Ciklin paper argued that neither Fannie nor Freddie lacked sufficient capital to handle their secondary market responsibilities and mission, but that they were forced into “conservatorship” owing to a different Bush Administration agenda, powered by Treasury Secretary Hank Paulson (see Fiderer’s book) implementation, which likely saw him break the law, lie to Congress, and feed super valuable insider information to Wall Street types looking to score financially on F&F’s ill treatment by Treasury..

One caveat to Crumby’s work—which doesn’t undercut his final Spittler-Ciklin conclusions, but suggests some sloppiness—is his buy in to the idea Fannie and Freddie were forced to purchase, each month, $20 Billion of poor quality PLS/MBS  as part of the government’s deal.

That never happened, as a review of the F&F’s quarterly reports will/would have shown and researcher. But that BS creeped into the GSE world in an allegation first reported by reporter Dawn Kopecki (again, see Fiderer’s book)—who recently was separated from her work at Bloomberg--and then re-reported by others as if it was fact not fiction.
It wasn’t then and still is not factual.

Bethany Mclean’s Book

Ms. McLean starting her books tour this week.

Bethany Mclean’s new book, “On Shaky Ground, It’s Too Soon to Stop Worrying About the Nation’s Housing Market.”



Bethany in NYC, Tuesday, September 15, 12:30 PM.
Museum of American Finance
At the Museum of American Finance's Lunch and Learn Series on Tuesday, September 15, at 12:30. 48 Wall Street, NY, NY.
http://globalreports.columbia.edu/events/museum-american-finance/

*************************************
Columbia University, Tuesday, September 15, 2015
6:30pm — 8:00pm, Low Memorial Library
Columbia University, 535 West 116th Street
New York, NY 10027
http://www.universityprograms.columbia.edu/#!/big-problem-financial-crisis-still-isn%E2%80%99t-fixed

Bethany in DC, Thursday, September 17, at 7 PM
At Politics and Prose Book Store, 5015 Connecticut Avenue, NW, Wash. DC 2008
http://www.politics-prose.com/

Catch the author and buy her book, if you are in or near these two cities.






What???

Another example of the federal government saying one thing, when the opposite is true.

Ask most mortgage observers and investors, if the federal governments stands behind GSE debt and MBS?

They’ll say “Yes,” pointing to the 2008 conservatorship.

But, wait a second, Treasury and the WH will say “no” and point to the fact that F&F debt and MBS are not listed in/on the federal budget, ergo they are not federal responsibilities!

Small point, literally correct, but figuratively not correct, but very reflective when it comes to the bizarre world of F&F treatment by the feds (not “The Fed!).



What Others Are Saying

It’s all Trump.

There will be plenty of time to analyze Donald Trump -before the GOP anoints him with their presidential nomination, but certain qualities I see—and I assume others see—are worth noting/fearing, now.

He’s no doubt smart (just ask him), but his arrogance and frontal lobe behavior, where he says whatever comes into his mind, with minimal filters, may not serve him well when the nation watches him get the GOP nod and then ponders, “Braggadocio and bravado are good, but is this the kind of candidate/person we want for President and to lead the nation?

Hillary’s faltering and Trump soaring is forcing more attention on him, allowing some to see faults they haven’t noticed before (not unlike what’s happened to HRC).

But, that’s what our electoral process is all about.
I understand how many people have OD’d on President Obama and his” do no evil light” handed approach to projecting America’s military strength and our national character, but governing a powerful, hungry, and diverse nation like ours takes more than “The Donald’s” New York chutzpah to be a successful international national leader (or Andrew Cuomo already would have gotten the Dem nomination).


Round 2: Remember the CNN GOP Presidential “Debate” is Wednesday, Sept, 18, at 8PM. Please Watch it. (Same 10 guys with Carly Fiorina added.)
Presidential Corner

Rand Paul on “The Donald.”

“You have a long-term governor from a large conservative state leaving the field, and meanwhile, the media continues to reinforce a celebrity that really doesn’t have qualifications for office and in fact would alarm me if he were in charge of our nuclear weapons,” Paul said. “So, really, I think it’s a serious versus the unserious. And there is a danger that if we continue to laud so much attention on basically someone whose level of discourse is that of junior high, I think there’s a problem, there’s a great risk for the country.”

Read more: http://www.politico.com/story/2015/09/rand-paul-donald-trump-easy-debate-2016-213577#ixzz3lbF0js4R

_______________________________________________________

Donald Trump on Carly Fiorina in Politico.


Read more: http://www.politico.com/story/2015/09/donald-trump-rolling-stone-carly-fiorina-213477#ixzz3lTUjxYdF
___________________________________________________________

Trump Grows Lead in Iowa

http://www.aol.com/article/2015/09/12/trump-embraces-role-as-bully-bids-perry-a-thorny-farewell/21235091/
_________________________________________________________

New Yorker Magazine on Trump’s deceit

http://www.newyorker.com/news/john-cassidy/donald-trumps-nose-is-growing-longer-and-longer
__________________________________________________________

 Bush tax plan—carried interest

http://www.politico.com/story/2015/09/jeb-bush-tax-plan-hits-wall-street-213422

________________________________________________________

 Fannie Mae/Freddie Mac Corner

Fannie Says Homeownership Demand Falls

http://finance.yahoo.com/news/americans-losing-confidence-in-the-economy--fannie-mae-143018376.html
_______________________________________________________
ValueWalk cites GSE accounting fraud but not by the GSEs (Dr. Crumby’s work)
http://www.valuewalk.com/2015/09/fannie-mae-fhfa-accounting-fraud-chorus-deepens/99999/

UI’s Laurie Goodman confirms no private sector residential mortgage security activity, yet every proposal to get rid of Fannie and Freddie relies on the existence of one.

http://themreport.com/news/secondary-market/09-11-2015/private-label-rmbs-market-remains-unrecovered-since-crisis
____________________________________________________________

Audit underscores accuracy of GSE Forensic accounting report? (Crumby, again.)
http://www.housingwire.com/blogs/1-rewired/post/35030-trending-thursday-forensic-accounting-in-fanniegate-gets-audited

New York Post, quoting plaintiff’s lawyers, says Treasury official Ugoletti lied in his deposition.
http://nypost.com/2015/09/10/obama-official-hid-fannie-and-freddies-profit-mojo-suit/


Bank Screw-Up Corner

“Did we miss anyone big? Nope, looks like we got them all, again!”
http://finance.yahoo.com/news/big-banks-1-208-billion-154803009.html

_________________________________________________________

Obama/DoJ to go After Wall Street?? I’ll believe it when I see it.

http://www.cnn.com/2015/09/09/politics/justice-department-white-collar-crime/index.html





Maloni, 9-14-2015
Posted by at No comments:

Monday, September 7, 2015


2015 Labor Day--U.S. Workers made our nation great; don't forget them or their controbutions




The GSE Week, Last Week


Hurry, before Congress returns and the place goes to Hell; again, can we all just talk?
If not scintillating, it was interesting watching the back and forth speculation of: 1) whether Ron Kirk who vacation golfed with the President may have mentioned to BHO anything about the case before Judge Margaret Sweeney and whether that—or something else, entirely, including something wholly inconsequential—caused the White House Counsel’s office to request access for three of its associates to the Fairholme documents.

 We all are assuming that request—which has been documented and therefore not a figment on someone’s imagination--is for the original docs since a gaggle of them were declared too sensitive for the plaintiffs lawyers to see absent those ugly black redaction lines marked through otherwise spoken or written words?

 Beginning of the GSE week

 Last Monday started out fairly simple, when WSJ ‘s Joe Light reported that he asked Ron Kirk about the golf course rumor and Kirk said he had not spoken to BHO and didn’t even realize that his firm had a client involved in this issue.

 Light described that “no” and then got hit with “tweets” pointing out that Kirk could have chosen to not tell Light the whole story and the former Dallas Mayor added the part about not knowing his firm’s client concerns just to build some additional cover.

 I asked Light about that and he disagreed, saying he believed public officials just would refuse to answer the question, not answer it in a way that forced them to fudge the truth.

 Again, as of this writing (Sunday, September 6), there has been no proof that anybody spoke to the President nor that the WH Counsel’s interest is anything but standard operating procedure (SOP), when the White House is involved in legal matters!

 But that didn’t stop the denizens of the “Tweetosphere” from going back and forth, occasionally, with Light in the middle, offering possibilities of what they all hoped had happened and what could explain the WH Counsel’s movement.

 Let me repeat, this all is speculation and should be viewed as such, but with one caveat I’ll hit later.


Middle of the GSE week

Todd Sullivan penned a lengthy article in ValuePlays, which took a different approach to the White House development.



Sullivan postulated a possible —in addition to the several others offered before—why the WH Counsel’s office sought document access. (BTW. Wouldn’t you think if the President of the United States wanted to see some %$&#@ paper, DoJ or Treasury just would bring it to him?? (“President Trump” has vowed to fix that, when he gets done with throttling—and possibly walling off, literally and figuratively--Mexico, China, Russia, and possibly Canada!!)

The point I will underscore is IF there is something substantive behind the Counsel Office’s request--and the “settlement talks” Holy Grail is in sight--the “whispering class” in DC will get hold of it and we’ll all soon know about it. Too many law firms, too many interested parties, too many vested interests—both pro and anti-GSE--for this type of development to stay under wraps.

Sullivan’s thought provoking article is part of that process, just as Joe Light honest reporting is of what Ron Kirk told him when Light asked if Kirk spoke to the President when they golfed.


End of the GSE week


A late contender for GSE story of the week—pregnant with possibility--is the Delaware filing of a separate GSE case, by Judge Myron Steele, former Delaware Supreme Court Justice, who outlined similar opinions in his amicus brief filed in the US Court of Appeals in conjunction with the Perry case and Judge Royce Lamberth’s original dismissal of same.

Steele cuts to the chase in the amicus and points out how Delaware law—where Fannie was chartered--forbids the use of preferred stock in the manner Treasury employed it in the 2012 “sweep.”

If Delaware courts concur. There goes the foundation for the government’s position on the Sweep and its preferred stock ownership.

The invalidity of the Net Worth Sweep under Delaware law informs the federal questions posed by Plaintiffs-Appellants in this appeal: 
1. Whether the Federal Housing Finance Agency (“FHFA”) exceeded its statutory authority as conservator for Fannie Mae and the Federal Home Loan Mortgage Corporation (“Freddie Mac,” and, together with Fannie Mae, the “Companies”) under the Housing and Economic Recovery Act of 2008 (“HERA”) by assenting to the Net Worth Sweep under which the Companies must transfer all of their net assets to the United States Department of the Treasury (“Treasury”) and are prohibited from retaining capital, in service of the goal of eliminating the Companies; and 
2. Whether Treasury exceeded its authority under HERA and violated the Administrative Procedure Act (“APA”) by entering into the Net Worth Sweep in 2012, when HERA USCA Case #14-5243 Document #1561097 Filed: 07/06/2015 Page 8 of 38 2 expressly permitted Treasury after December 31, 2009, only “to hold [or] exercise any rights received in connection with, or sell, any obligations or securities [it had already] purchased,” or by imposing the Net Worth Sweep based on outdated data without adequately examining reasonable alternatives.
If the Net Worth Sweep was illegal under the charter of the Companies, it exceeds FHFA’s statutory authority as conservator by definition. Standing in the shoes of the board and the stockholders, FHFA cannot exercise a corporate power that the board and the stockholders could not themselves have exercised. See 12 U.S.C. § 4617(b)(2)(B) (granting the conservator the power to “operate the regulated entity with all the powers of the shareholders, the directors, and the officers of the regulated entity and conduct all business of the regulated entity”). 
Similarly, if the Net Worth Sweep is an illegal term for preferred stock, the amendment cannot possibly be regarded under Delaware law as Treasury’s exercise of a “right received in connection with” preferred stock purchased by Treasury before December 31, 2009. Preferred stockholders cannot have a perpetual claim on all the residual earnings of the Companies to the exclusion of common stockholders under Delaware law.


Status: Judge Sweeney Punts, in the spirit of football season

Sweeney’s order, issued after Friday’s 9-4 status hearing, appears below and it’s not startling or very satisfying.
She extends discovery to the end of this year; delays implementation of actions which clash with unfinished discovery (think NYT request), approves some minor others; calls for a new status meeting before 1-21-2016, yada, yada, yada.

ORDER The court conducted a status conference in the above-captioned case on September 4, 2015 concerning several matters, including various motions filed by the parties. As discussed during the status conference, the court resolves the following motions as follows: 1. Plaintiffs’ oral motion during the status conference to extend jurisdictional discovery is GRANTED. Jurisdictional discovery shall be completed by Thursday, December 31, 2015. The parties shall file a joint status report suggesting future proceedings by no later than Thursday, January 21, 2016.

As one of my favorite DC people said, when I expressed my exasperation with a slow legal process:

“Hey it's only the world's second largest securities market after U.S. treasuries.  What's the rush? (Additional proof that more college degrees don't equal greater wisdom.) “


Other GSE Items

Some dreams do come true.

On Sept. 3, former Fannie Chairman and CEO David O. Maxwell and his tennis partner, Herb Bascome of Devon, PA., won the United States 85-and-over grass court tennis championship at Longwood Cricket Club in Chestnut Hill, MA. Along the way, the winning pair beat the first and second seeded teams. It was a dream come true for Maxwell, a lifelong tennis player, who has undergone two knee and a hip joint replacement surgeries so he can continue his tennis passion.




House Draft Bill Would Recap GSEs

It’s nice that House members can cross party lines on GSE reforms. But with no real details, yet, of what Rep. Mick Mulvaney (R-S.C.),  is touting in his new F/F recap proposal, it’s hard to make any guesstimates about its popularity, other than to note they aren’t too many GSE friends on Mulvaney’s House Banking Committee.

Added interest always is good, but the reality is no GSE legislation of any substance will move through the Congress until 2017 at the earliest, when there is a new President.

So, welcome aboard Congressman Mulvaney, just remember to don your big boy pads!



Iran Deal Now Protected for Obama

With retiring Senator Barbara Mikulski (D-Md.) announcing she’ll support President Obama and vote to sustain his veto of any GOP effort to derail the Iran proposal, the President appears to have won final passage.

The WH needed at least 34 committed votes (one third plus one) votes. They got that with Mikulski. Four others since have signed on, giving Obama 38. Approval looks like a foregone conclusion. (Although, we all will hear more threats and partisan allegations.)

Look for other uncommitted D’s to support or oppose the President—depending on their narrow back home political needs--now they know their vote won’t matter one way or the other, but the WH still will welcome those following Mikulski’s lead.

The Senate’s political “Bravehearts” are only those who went out early—before Mikulski’s clinching declaration--- and vowed their support for/opposition to the Obama plan. (See Sen. Chuck Schumer (D-NY).)

Everybody coming later like Virginia’s Mark Warner (D-Va.), who hid his vote until the Iran decision appeared home free, because of Mikulski--was game-playing and very relieved their departing Maryland colleague rode political shotgun for them.
  

What Others Are Saying

Presidential campaign corner
  
Pledge: I think Trump just clinched!

Trump signing the GOP loyalty test, IMO, likely gives him the Republican nomination and—if that looks to become a finality--it might draw other D’s to challenge Hillary, seeing her continued popularity challenges and believing the national electorate won’t choose Trump, who never has held public office. (Hey, the less experience the better, right?)


But look at the other GOP presidential candidates and see which one you think might qualify as “The Donald’s” best VP choice? I am sure the GOP establishment will seek one of those for Trump’s eventual running mate.

Trump’s decision was a wise one for him and should lower a lot of R primary election barriers, but he’s still thoroughly unpredictable and maybe anathema to blocs of minority voters and others who care about integrity and realize you can’t return to “Fortress America” in the internet age.

______________________________________________

Will Trump go after Carson?
__________________________________________
Schmidt: Trump emasculates Bush
____________________________________________________________
Bush: “Moo-shi pork or combination fried rice with that contribution?”
________________________________________________

Cheney Says He’s Not Endorsing Trump “Today”


________________________________________________


Foes to vote Trump in GOP Primary; “We’ll show you.”

________________________________________________

Whither thou goest, Scott Walker?
Cutting Losses, Kochs to Sell Scott Walker

WICHITA (The Borowitz Report)—Saying that “things just didn’t work out,” the billionaire Koch brothers have decided to put Wisconsin Governor Scott Walker up for sale.

Read more at newyorker.com.

________________________________________________

Trump Stomps on GOP Economy Message

“OK, I’ll sign the pledge, but I won’t…..”


________________________________________________
Hillary's campaign  needs a comb over
________________________________________________


Ted Cruz’s Father, Rafael Cruz
This former Fidel Castro supporter, self-confessed alcoholic who abandoned his family, found Christ, and now lectures Christian clergy, lashes out regularly against son Ted Cruz’s opponents.

Is there a “pot and kettle” analogy with Rafael Cruz? How about the Republicans’ “11th Commandment”—don’t speak ill of another R--a surely a religious GOP presidential parent would know and abide by it???



Save me, please, from Pastor Cruz!!


https://thefamilyleadershipsummit.org/extended-bio-pastor-rafael-cruz/

(C’mon, move along folks, no hypocrisy here!)
__________________________________________

Anyone have a Rick Perry sighting lately? He’s a short guy, glasses, very thin campaign wallet, often seen in key states with nobody around him???
______________________________________

Palin and Trump, a heavenly match!


Palin: “Speak American”

______________________________________

Fannie/Freddie Corner

--Judge Myron Steele’s amicus filed in the US Court of Appeals (Perry case)


--Media Discussion of Judge Steele’s Perry amicus brief


Negotiations to Solve GSE Issue Near?

September 2, 2015 Alexander Rosen Business

Richard X. Bove of Rafferty Capital Markets highlighted that Myron Steele, a retired Judge filed an amicus brief in the Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) lawsuits. The pressure continues to mounts for a negotiated deal as Judge Steele files case in Delaware. He was Chief Justice of the Supreme Court in Delaware before he took retirement.
The details
Retired Judge Steele had submitted amicus brief in Federal National cases making two major claims. The first one of that the third amendment on Fannie Mae’s senior preferred stock is not enforceable, and secondly the Amendment violates Delaware law which clearly mentions that preferred shareholders are not eligible to get all the profits of the mortgage company leaving no profits for common shareholders.
Now, the retired judge has taken one step further and filed a case under his own name. Since Federal National is a Delaware entity, if the courts in that case find for Judge Steele, the Treasury will lose the game. The other cases will be unresolved since Delaware has alleged that mortgage company has broken the law.
The highlights
Todd Sullivan reported that President Barack Obama, ex-President Clinton and lawyer Mr. Ron Kirk played golf a couple of weeks ago. He even released a picture of them on the golf course. Mr. Kirk Has served as Mayor Dallas in the past and was also a special trade executive appointed by the U.S. President.
He now works for a Perry Capital law firm, which is suing the Treasury and FHFA seeking the redress of the Federal National Third Amendment. This meeting may be a coincidence or an indication that the White House could probably lose control of the mortgage company.

Judge Steele as filing attorney in Delaware Class Action

Judge Steele’s law firm filed a class action suit in Delaware federal Court, on behalf of plaintiffs David Jacobs and Gary Hindes, based on the federal government’s use of preferred stock, which Steele claims in his amicus and his clients claim in their lawsuit violates Delaware law. Plaintiffs also demand a jury trial.



Legal sources with whom I’ve spoken this week believe that Steele’s class action suit, i.e. Jacobs and Hindes, as well as his amicus, present very strong arguments against the U.S. government’s actions.

Jacobs and Hindes might have far-reaching property rights implications. The case also could be a major test of federal limits, because Treasury’s GSE moves could violated state laws as well.

(In an email exchange, over the weekend, printed in IHub, Judge Steele says he expects the Delaware federal court to take at least 6 months before moving on the Jacobs and Hindes class action suit.)

________________________________________________

Joe Colangelo says public should be concerned about GSE plight.

________________________________________________

Kamal Kolacek letter to Bill Ackman, “Why Fannie and Freddie holders deserve little compensation.”



Latino and Black Leaders in NYC say reviving F&F key to increased home ownership among minorities.

Maybe someone should tell that to President Obama, Secretary Julian Castro, and FHFA Director Mel Watt, just to name a few whose ears should get that message.



The Atlantic on Fannie Mae’s “Home Ready” new mortgage product could address the problem mentioned in the article above.
________________________________________________

Barry Zigas, my friend and former Fannie colleague, is very optimistic about the same new Fannie low income mortgage product. (See his blog below.)

WSJ’s John Carney says WH interest not a big deal.


Compass Point says no behind the scenes F&F deal


IMF Looks Ahead Three Years 

In an article written by Paul Muolo for Guy Cecala’s Inside Mortgage Finance publication, Muolo sets up the reality of GSE reform legislation for the next three years?? 


What We’re Hearing: The Coming Ticking Time Bomb at Fannie and Freddie / Time for Mel Watt to Step Up to the Plate? /

By Paul Muolo
If you think Congress is going to pass a Fannie Mae/Freddie Mac reform bill in the next two years, you’re dreaming. No matter how you analyze the situation, the political climate in Washington is so toxic that there’s little politicians from the both sides of the aisle can agree on unless it’s a dire emergency like the U.S. defaulting on a debt payment. For now, the GSEs are “safe” as long as they keep earning money, which looks like a given, even though they keep giving away the upside via risk-sharing deals. But there is a wild card here and it comes in 2018 when the allowable capital cushion at the two falls to zero. Fannie/Freddie watchers we’ve spoken to fear that a large hedging loss caused by a sharp swing in rates could eventually result in a net loss, which means Treasury would need to plug the net worth hole with cash – money that comes from taxpayers…
And when that day comes, you can bet that members of both parties will take to the floor of the House and Senate, criticizing each other for not doing something sooner. Of course, there is a way to avoid the zero capital cushion dilemma. Congress can pass legislation to allow the GSEs to build capital or Federal Housing Finance Agency Director Mel Watt can do the same by teaming up with Treasury Secretary Jacob Lew to do it administratively. But will it happen?
___________________________________________________________

Nonsense Corner

Alexandra Petri lists parenting styles if those of you with kids want to know where you “fit” as Mom and Dad?

_____________________________________________________________


Maloni, 9-7-2015



Posted by at No comments:
Subscribe to: Comments (Atom)