I Think It's Called Focusing on What's Important!

I just returned from a long weekend in the Normandy in France amongst a cacophony of my sister's in-laws where very interesting political views on France, Sarkozy and Europe were discussed. Just to throw the cat in amongst the pigeons I asked how the "French"-the representation went from Le Pen to the Far Left-viewed Frau Merkel. That will be the subject of another post but suffice to say there are still some rivalries to be overcome in the creation of a United States of Europe!

No, my subject today, after catching up on my reading is back to the USA. The great news of the passage of the Financial Reform Package-even thought the devil will be in the detail. The discussion surrounding the fate of Fannie Mae and Freddie Mac- Privatize or Nationalize!-and the red herrings that are thrown up around it. The criminal behaviour around payoffs to second-mortgage holders, and my favourite, the "friends" in the Senate and/or Senate Employees who received loans under a controversial (i.e. immoral)lending program by which Former Countrywide Chairman Angelo Mozilo made over 30 loans.

Starting from the latter, I will be interested to see how the distinguished Senator Bob Bennett from Utah,(R), Ranking Member of the Senate Rules Committee, Member of the Senate Energy and Natural Resources committee, and wait for it, Member of the Banking Committee deals with the fact that over a dozen of the loans received went to people in his office!

I then moved to the discussion on the under-the-table payments the holders of second mortgages are demanding in order to allow the "short" sales of negative equity homes. So here we have the holders junior liens trying to jump the line and take money away from the first mortgage lenders. You have to be amazed at the illegal actions these guys come up with. At the same time they are now complaining about the "logistical nightmare" that Fannie Mae is creating by suggesting that lenders "refresh" credit reports before they make the loans.

Sure it's a statistical nightmare-especially when you take into account that many mortgage lenders are only concerned about taking there fees and selling the mortgage to Fannie! What a pain to have to really care about the credit quality of the borrower.

Moving on to the restructuring of Fannie and Freddie. My favourite quote comes from Mr Jay Diamond, a Managing Director at Annaly Capital Management Inc., a New York Real Estate Investment Trust (REIT) who says: "What you call them is actually a very critical component"!

Now granted, many investment companies name Freddie and Frannie specifically in their investment guidelines, and a name change would require a change to their guidelines, but this is not the first, nor the last time that guidelines have to be changed.

What I don't understand, and Mr Diamond is not alone, is where they stand on the subject. Discussing the "massive re-engineering" required to implement a name change seems very much beside the point to me.

Perhaps the most impressive action while I was away was the passage of the Financial Reform Bill. Of course this is just the first hurdle and certainly there will be many attempts to circumvent it-but every journey starts with the first step.

First Health care, now Financial Reform-sounds like Obama believes in the 3 'R's': Ruthless, Remorseless, and Relentless!