You also research well by digging through the surface skin of an issue and getting to the bone.
Here is puzzle to ponder.
The pieces of the GSE financial puzzle are now given and so how will they fit together to make possible futures since the present is somewhat confused.
As anticipated, net zero and now net positive has changed the conversational tone of the media, pundits, and some politicians. They can no longer rag and exaggerate GSEs as receiving a "200 billion bailout." The words now used about the GSEs are immensely profitable, making the housing recovery happen, they should be reformed not eliminated and so on, they will have paid back all invested in them and so on.
Politicians are loathe to admit the positives about the GSE and are finding it difficult to speak negatives. This is because to spout the old negatives about the GSEs, most of them false, betrays their their embroilment in the past views, shows an inability to accept reality, sets them up to be questioned with "but the GSEs are net positive", and in all ways silences their negative public rhetoric.
Lawmaker tongue biting and mouth shutting is further enhanced by the mounting legal evidence supported by billion dollars in settlements by the continued legal wins against large banks who fraudulently sold poorly underwritten mortgages with false indicators. This is another piece in the puzzle. This piece rectifies the mistaken perception that Fannie and Freddie were the vortex of the 2008 housing collapse. The finger now points away from Fannie and Freddie and towards the originators and sellers of "bad" mortgages to Fannie and Freddie.
Now that the cat has their tongue, the negative lawmakers instead turn on investors like Berkowitz, the very type of person they have been looking for to provide private capital. This betrays their desire for political power and control and not GSE reform for America. As many noted on this forum their bluff has been called. They are in a semantic vise and a political quandry with these pieces coming together in the housing finance frame.
With the 2014 elections looming the entire Congress and 33 senators will turn away to perform the ritual saving of their skins by paying attention to their re-election campaigns. Unfortunately, Corker does not have to save his skin this time. Warner does. This sets reform legislation back a bit. The Democrats and Republicans will be busy battling it out, red vs. blue.
This puts the legislative reform piece in a semi-limbo state and all eyes turn to Johnson and Crapo in the Senate and Waters in the House. What will they come up before year's end?
Add to these pieces, the two private capital bids in the common and preferred shares of the GSEs that represent a billions of private capital investment in the GSEs (Berkowitz, Paulson, Perry, Claren, and Ackman). This is an unexpected turn of events for lawmakers who have seen the shares as worthless. If these shares are so worthless why are they being invested in by savvy investors with billion dollar portfolios? The terribleness of the GSEs can no longer be claimed to cause a burden to the taxpayer or be claimed as worthless winding down companies. The GSEs have been pouring tens of billions into the Treasury and supporting the housing the recovery in the main.
These pieces do not yet have the interlocking edges to fit properly since the pending law suits have not yet revealed the legal moves the US Treasury and FHFA will make in response to the lawsuits that alleged violations of HERA and APA law and the takings clause of the 5th amendment of the US Constitution. US Treasury and FHFA will make their responses on December 2, 2013. We will then have a storm of debate about who will win and who will lose.
It is then that we may see how these pieces will provide clearly defined interlocking edges and the puzzles will begin to form a picture of the future that is clear for most to see.
It has already been said that the greater part of the political rhetoric and legislative efforts have been based on appeals to political agendas and emotional negativity. Now the US Treasury and FHFA will have to present legal arguments and not fluff and puff.
So what do you think of the legal arguments made by Perry, Fairholme and the others?
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