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Fannie And Freddie Are Here To Stay According To Proposed Legislation

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(Via ZeroHedge)

Since the US government nationalized the two GSEs in 2008 in a $187 billion bailout of the mortgage giants, there have been consistent calls for them to be wound down and for the private sector to fill the void. As we discussed, this view is, or was, shared by new Fed Chairman, Jay Powell.

Mr. Powell has called on Congress to overhaul the housing finance system, saying he’d like to see the country’s two large mortgage-finance firms, Fannie Mae and Freddie Mac, move out from under government conservatorship. More private capital in those firms would reduce the risk of a taxpayer-funded bailout in the event of a downturn, he said in a speech in July. Although the Fed isn’t responsible for housing finance, it supervises some of the country’s largest lenders who frequently sell their loan to the two agencies. “No single housing finance institution should be too big to fail,” he said.

In August this year, Fannie and Freddie’s regulator, the Federal Housing Finance Agency (FHFA), published the results of its latest annual stress tests on the two GSE’s. The FHFA outlined a “severely adverse” scenario in which US real GDP decline 6.5%, the unemployment rate rises to 10.0%, equity prices decline almost 50%, home prices decline 25% and commercial real estate prices by 35%. Under these conditions, it estimates Fannie and Freddie would need a bailout of up to $100 billion in the form of a draw on the Treasury (depending on how they treat assets to offset tax). Mortgages guaranteed by Fannie and Freddie amount to about $4 trillion and account for about 40% of the total US market.

Sadly, after almost a decade of federal ownership, the hope that Fannie and Freddie could be wound down has evaporated. Senators on both sides of the political divide have concluded that they are too big and too risky to replace. Proposed legislation in 2018 will see them retained at the centre of the US mortgage industry, rather than replacing them as a previous senate proposal tried and failed four years ago. According to the Wall Street Journal.

Lawmakers in both parties and the Trump administration are negotiating overhauls of the two companies—critical to home mortgages but in government conservatorship since the financial crisis—that could keep them at the center of the U.S. mortgage market for years to come, abandoning long-stalled proposals to wind them down, people familiar with the matter said.

Bipartisan Senate legislation set to be introduced in early 2018 marks the clearest sign of this reversal and shows how the companies, entering their 10th year under federal control, have proven too risky to attempt replacing. The housing market has seen strong demand in recent years, driven in part by steady access for many Americans to 4% or lower 30-year fixed-rate mortgages, thanks in part to a government backstop of the companies. Advancing legislation to refashion the nation’s $10 trillion mortgage market is a heavy political lift and may yet sputter during the coming midterm-election year, as a prior Senate effort did four years ago. One big difference this time around: a more incremental approach largely reliant on the existing housing-finance framework.

The new plan, proposed by Senators. Bob Corker (R., Tenn.) and Mark Warner (D., Va.) could be introduced as early as next month. Instead of a new mortgage-finance system, Fannie and Freddie will be retained under government control and permitted to issue mortgage securities guaranteed by the Treasury until private sector competitors emerge. The GSE’s investment portfolios, which have fallen to less than $250 billion each from over $900 billion each at their peak, could be liquidated under the Senate plan.

“We’re looking for a more simplified approach that protects the taxpayer, preserves the 30-year fixed mortgage and includes stronger access and affordability provisions,” Mr. Warner said in a statement Friday.

However, Bloomberg’s sources acknowledge that a private sector alternative to Fannie and Freddie will not only take years to emerge, but it’s not clear which companies will enter the market. Besides having the advantage of bi-partisanship, the proposals have the advantage that politicians who wish to reform mortgage finance are reaching retirement age as Bloomberg notes.

Another factor bolstering chances for a deal is the retirement of Washington officials interested in reducing government control of housing, including Mr. Corker. The Tennessee senator has been working with Mr. Warner and Senate Banking Committee Chairman Mike Crapo (R., Idaho) all year on the issue, according to people familiar with the deliberations, and Mr. Crapo has made the overhaul a top goal for his panel.

Even House Financial Services Committee Chairman Jeb Hensarling (R., Texas) signaled this month in a speech to Realtors that he would like to see a Fannie and Freddie deal in what is to be his final year in Congress. Mr. Hensarling said he is still committed to replacing the companies, but has backed off a position that any future setup provide no federal backstop.

Reforming mortgage finance has not been a focus for the Trump administration and nor has it endorsed any proposed legislation thus far. However, Treasury officials are reported to have been in close contact with the Senate officials as the plan has emerged. Furthermore, Treasury Secretary Steven Mnuchin, who also headed up Goldman’s mortgage securities department in the late 1990s, disagreed with calls for abolishing Fannie and Freddie last month.

“No, I wouldn’t,” he said in an interview at November’s Wall Street Journal CEO Council meeting. “We have got to make sure that the housing system is built to last.”

Bloomberg reports that supporters of Corker and Warner’s proposal see a “narrow window” in early 2018 when the legislation could be added on to another bill to reduce post-crisis regulations in the financial sector.

The question about what to do with Fannie and Freddie has now come full circle since the financial crisis. In its aftermath, the consensus view became so negative that even long-time supporters, like Democrat Barney Frank, capitulated, saying they should be abolished. In 2013, Obama called on Congress to wind them down and “end Fannie and Freddie as we know them”. However, the tide started to turn shortly after due to the lack of confidence in mortgage bonds that didn’t have a government guarantee. The latest Senate proposal is the first having bipartisan backing which keeps Fannie and Freddie instead of replacing them.

So, a bit like the “Too Big To Fail” banks, the encroachment of government into parts of the financial system which it should never have entered, makes winding back that intervention difficult, if not impossible. We could have seen it coming as Bloomberg laments.

Washington’s about-face will come as little surprise to market participants who for years predicted that efforts to replace Fannie and Freddie, which together back around half of all outstanding mortgages, would prove too difficult. But the shift on Capitol Hill nevertheless illustrates one way in which policy ideologues appear to have lost ground to market realities.

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Politics

Conservative Inc. Coordinates Attack on Nick Fuentes and Michelle Malkin for being America First Patriots

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Since the ‘Groyper War’ Phase 1 was a decisive victory following the November 14th ‘Change my Mind’ rip-off Charlie Kirk attempted to pull off, this late weekend we’ve seen a new onslaught of attacks from many mainstream Republican pundits, attacking Nick Fuentes and Michelle Malkin for their American First allegiance. Conservative Inc. is scared of the true conservatives exposing them and their big donor’s motives & hypocrisy. Even YAF (Young Americans Foundation) who even recently hosted Michelle Malkin, disavowed “holocaust deniers, white nationalists, street brawlers, or racists”. A slew of other clips and comments were made by Guy Benson, Michael Knowles, Stephen Miller, Bradon Tatum,Jordan Schachtel, & Matt Walsh.

Twitter threads about Fuentes and Malkin

Tweets Supporting Fuentes and Malkin

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Politics

No Nation Is An Idea

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The concept that “America is a timeless placeholder of ideas” is a common talking point that has been in circulation from both Conservative Inc., and the broader American Left for many years now. This saying is typically used as a divergence from addressing important policies as they pertain to mass immigration. Often, it is also used to stifle the growth of an American National Populist movement. Clearly, the unelected elites calling shots around the Western world seek to undermine valid and critical debate of the role of National Populism. Rather than emphasizing the importance of health, stable families, community, housing, and wages, our leaders have an obsession with growing GDP, doing the bidding of predatory crony capitalists who are constantly pushing to import cheap labor, and retaining power for generations to come. 

The fact of the matter is, Americans (and humans in general) seek more than cheap, 4k television sets, quirky tupper-ware for last night’s leftovers, and salad shooters that break after a few uses. We are innately spiritual beings who long for community, order, and social cohesion. The United States of America is not an idea… actually, no nation is an idea. As further disorder ensues among the population, the elites have made sure to use their corporate-funded foot soldiers as a means to promote a very new, Neo-Liberal agenda. This agenda is the concept that the beautiful mountains, forests, and lakes of our Nation would mean absolutely nothing without this arbitrary term of “ideas.” The blood, sweat, and tears American workers shed producing automobiles in Michigan, the early mornings for the farmers of Iowa, and the dedicated fishermen of California, all mean nothing if this is but a plot of land where the British came to talk about the importance of small government. 

Although we can appreciate the writings of philosophers like John Stuart Mill, John Locke, and Adam Smith, the “marketplace of ideas” means absolutely nothing to people who see the world completely different than you. It is apparent that the philosophy of our ancestors and founding fathers have changed the world. In an American context, the very concepts of things like liberty, freedom of speech, and the right to bear arms should be held in the highest regard. Among Conservatives and the American Right, these values are not even up for debate. Unfortunately, much of Conservative Inc. (who are just liberals who want to keep more of their money) do not recognize (or are blatantly ignorant to) the sacrifices made by the ones who came before them.

To put this into perspective, Turning Point USA founder Charlie Kirk previously stated, “I have loyalty to ideas.” Kirk says, “Of course I love the Grand Canyon. I love the Rocky Mountains. And I love Boston. And I love Chicago. But if all that disappeared, if all I had was ideas, and we were on an island, that’s America. That’s Israel. And that’s what people have to realize, America’s just a placeholder for timeless ideas. And if you fall too in love with, oh, the specific place, and all this…that’s not what it is.” What Kirk fails to recognize is that the physical reality of a Nation is what manifests those very ideas he holds so dear. 

Nations are unique, with celebrations and folktales that those who inhabit the land feel relation to. Nations are made up of a people. Nations are traditions. Nations are land, resources, and landmarks. Nations are history – the good, the bad, and the ugly. No Nation is an idea.

 

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Culture

The ‘Alt-Lite’ Has No Answers For Real Conservatives, Ask More Questions

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As was with the answer to my Demographics question by Charlie Kirk on October 23rd (the third “Groyper” question of them all), insufficient, so is the entire ‘grifter right’ and gateway keepers answers on the right to legitimate concerns of Americans across the spectrum, left or right. Global, corporate, and government sponsored legal immigration, mass migration, demographic changes in Western Countries, the destruction of the Christian Religion, the Family, and the decrease in the value of labor.

Charlie Kirk embodies the 21st century establishment Libertarian side of the Republican party, being an ex-libertarian I can see how it’s appealing. However, as much as it is appealing it is even more destructive to our culture and politics than perhaps progressives. Giving up on key issues such as abortion, morals, religion, demographics, free trade, and open borders.

This is a fairly new hive-mind of new and old Republican talking points, however this ‘Corporate’ or ‘Conservative Inc.’ style control over the conversation on the right is leading us back into the same problems with middle of the ground “Conservative” leaders like John McCain and Mitt Romney, you can see the Alt-Lite gearing up to endorse Nikki Haley or Dan Crenshaw to be President in 2024. Attempting to usurp and hop on the Populist Wave Trump rode in on.

The same host of Never-Trumpers who now play ball as Trump supporters only to not be completely tarnished by Trump’s Populist base, are seething at the idea that the actual Conservative Right, who wishes to actually conserve Western Culture & Christian Values in America, instead of making this a “place holder” for Wood Stock and Wall-Street Culture, to continue to sacrifice the American Middle Class. This is also the same class of people who endlessly call for Wars in the Middle East at the behest of Israel, Saudi Arabia, etc, and criticize Trump on a regular basis of his “liberal” handling on the Middle East, aka withdrawing our Troops, and as Trump declares, “without a drop of blood.” Something that must really get the blood boiling of the Neo-Con Establishment.

It is ever imperative we make sure this establishment force within the Republican Party is shut out and completely shunned into the corner of Politics, along with failed trade deals, endless overseas wars, bail outs of the elites, and a slew of other misguided policies. The only way to keep these sell outs on their toes is to always ask them questions that can ultimately either continually expose their hypocrisy, or open their eyes to the truth, otherwise they will attempt to continue to use the “leftist” tactics of smear campaigns, silencing you, get you fired, etc. It is not so different from the Antifa tactics that are used of the far left.

We’ve posted the graphic below of the continued “Groyper Wars” events and will be continuing the coverage of this:

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