Good Q & A w/ TH & ROLG:
Thanks to patwhall for presenting these questions, interesting answers...someone else thinks MC should shut up and get to work LOL
patwhall
APRIL 22, 2019 AT 4:24 PM
Tim, thank you so much for your insight. Can you elaborate on some of the additional points such as:
1. Working with Congress to end conservatorship, is this the usual party line or does he really think that this Congress or the next will be able to pass something to end a divided and controversial issue such as F&F conservatorship?
2. In the article, he basically says he will not end the sweep. First of all, isn’t Calabria the one who stated the current sweep is unlawful? How does this statement not contradict himself and put him the same category as Watt? Secondly, how does this statement inject confidence to the potential investors? Can you share with us your opinion on this particular statement? Is Mnuchin behind this?
My opinion is that the Administration won’t go alone on this. Out of the 3 branches of the government, if they are the only branch that acted, this will simply put too much pressure on these guys and will alienate themselves from some of the current allies. Since Congress is hopeless, we desperately need the court to give us a favorable ruling. Or else my fear is this conservatorship will never end.
jtimothyhoward
APRIL 22, 2019 AT 5:54 PM
On (1), I think Calabria is just expressing the same view he’s held for years, without connecting it to the political realities that have impeded replacing Fannie and Freddie over the last ten-plus years. He needs to realize that doing that as Director of FHFA has broader implications than doing it as Pence’s chief economist or as an advisor at the Cato Institute. On (2), he didn’t say he wouldn’t end the sweep, only that he wouldn’t do so unilaterally. The WSJ article reported Calabria as saying, “the change [ending the sweep] could be considered as part of a separate package of changes negotiated with Treasury…” I think that’s the right way to do it.
On your opinion of Treasury and FHFA “not going it alone,” the White House memo was pretty clear on that being what they intend. Whether they can do it successfully is another matter. Self-contradictory comments by Calabria (or others in a position to influence the outcome) don’t help.
ruleoflawguy
APRIL 22, 2019 AT 6:54 PM
Tim
Calabria has no clue what it is like to raise big time (or for that matter, small time) money on Wall Street. Housing policy “experts” like Parrott, Demarco, Pinto etc are even more clueless.
On the other hand, Mnuchin does get it. this is a melodrama that usually gets played out in private, where the cherished hopes and dreams of private company ceos are dashed on the shores of investment banking reality. with the GSEs the ugly truth will be more visible…that truth is that you cant raise money shooting yourself in the foot, let alone a more life-threatening appendage.
talk is cheap, and talk about raising >$100 billion of money while seriously tinkering with the GSEs business model is stupid. Calabria will learn his lesson publicly and the more he talks the more he will be embarrassed.
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