BLOG VIEW: ‘Good things happen to those who wait’ may be a suitable mantra for jam-band devotees, but one has to wonder if the same can be said for the Obama administration, which has delayed the release of its plans for those albatrosses-in-conservatorship, Fannie Mae and Freddie Mac.
Despite repeated assurances that the administration would lay out its plan by the end of the month, all indications are that the markets will have to wait at least another fortnight before finding out the details of the Treasury Department's proposals. Although few would suggest that overhauling the housing finance market's biggest players is an endeavor that should be rushed, the fact that the administration will apparently miss its originally self-imposed (and then legislatively mandated) deadline does not bode well.
That much would have been an understatement even before The New York Times broke news Monday about the millions of dollars in legal fees that taxpayers are footing in connection to the government-sponsored enterprises' (GSEs) accounting scandals from bygone years. The revelation of the fees, precipitated by a request from Rep. Randy Neugebauer, R-Texas, has only stoked calls for the administration to sever ties between taxpayers and Fannie and Freddie.
While GOP lawmakers have roundly attacked the administration for its handling of the GSEs, the Treasury and the GSEs' regulator, the Federal Housing Finance Agency, have also endured a drubbing from Democrats over the controversial settlements with Ally Financial and Bank of America over the banks' mortgage putback exposures. Those agreements left some high-profile Dems, including Rep. Maxine Waters, wondering aloud if putback settlements amount to anything more than backdoor bailouts.
Not to be left out of the blame game, the newly empowered GOP has also been attacked for moving too slowly on GSE reform – a notion that seemed inconceivable a year ago.
Rep. Barney Frank, D-Mass., a chief architect of the reform legislation that impacted nearly every aspect of the financial services world other than Fannie and Freddie, blasted Republicans this week.
‘Last year, the Republicans were very insistent that this was an emergency," Frank told reporters, according to a report in Tuesday's Wall Street Journal. "I'm waiting for their plan. I am surprised that they're not moving as quicklyâ�¦.They knew exactly what they wanted to do when they were in the minority, so I don't know why they aren't moving forward."
Neugebauer, for his part, told MortgageOrb.com last month that he was ‘anxious’ to see the administration's plan but that Republicans would ‘not necessarily wait on’ the proposals before taking action.
As far as the administration's delay tactics go, there have been at least two sets of reasons given. According to reports, the off-off-record reason is personnel turnover and internal disagreement over policy. The on-off-record reason was to make way for bigger considerations, such as the release of the federal budget and President Obama's State of the Union address Tuesday night.
If anyone went into Tuesday's address thinking Obama was going to touch the GSE lightning rods, they were sorely disappointed. The lone explicit mention of housing came when he discussed his goal of streamlining federal government and consolidating agencies that cover the same ground.
However, others, such as Mortgage Bankers Association President and CEO John Courson, saw Obama's address as being all about real estate finance�in an indirect sort of way.
‘He talked substantially about the economy, spending and jobs, and that is hand-in-glove with housing and the needs of housing to bring back a robust housing market,’ Courson told reporters during a press briefing Wednesday.
– John Clapp, editor, Servicing Management
(Please address all comments regarding this opinion column to clappj@sm-online.com)
