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Which Political Party Is Better For Homeownership?

Homeowners living in Democrat-controlled congressional districts have gained more than twice as much in housing wealth as homeowners living in Republican-controlled districts over the past eight years, according to an analysis by ATTOM Data Solutions.

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Among 2.4 million single family homes purchased eight years ago, those in Democrat-controlled districts have gained an average $59,467 in value since purchase — a 21 percent return — compared to a $22,086 return representing a 10 percent ROI for homes in Republican-controlled districts.

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But homeowners in Republican-controlled districts are paying lower property taxes — $2,514 on average representing a 1.02 effective tax rate compared to $3,659 representing a 1.07 percent tax rate for homeowners in Democrat-controlled districts.

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Counter to the national trend, seven of the 11 battleground states in the 2016 presidential election have produced better ROI for homeowners in Republican-controlled districts.

To come to these conclusions ATTOM Data Solutions looked at home values, appreciation, property taxes and equity for 2.4 million single family homes purchased eight years ago, broken down by congressional district. Those metrics were measured for all homes in congressional districts with a Democrat representative and for all homes in congressional districts with a Republican representative.

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Let’s Learn From The Presidential Candidates

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Despite having the two highest unfavorable ratings of any major presidential candidates in history, Donald Trump and Hillary Clinton have outlasted their competitors—and one of them is going to become the leader of the free world.
What does success in the face of such highly unfavorable ratings teach us about personal branding? And what can working professionals at every level learn from it?

Below, internationally-regarded brand strategist and revered media expert source Karen Leland, author of the newly released title, “The Brand Mapping Strategy: Design, Build, and Accelerate Your Brand,” examines both candidates’ personal branding successes, challenges and resulting lessons for us all in six specific areas. According to Leland’s predictive Brand Mapping Matrix, the success of any brand—in business, politics or otherwise—boils down to how the brand performs across these six key dimensions.

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Leland details each dimension below, including exactly how each candidate fared therein as well as the correlated Personal Brand Takeaways, to help other enterprising professionals achieve in kind.

  1. Develop Your Brand by Design, Not Default. Know precisely where you are so you can discern where you need to go.

Trump: The Donald has clearly defined himself as the billionaire Maverick, owing no one anything. Trump has carefully crafted his image as the anti-establishment candidate proudly going against the grain. As a general strategy, it has allowed him to get away with more than the typical business leader or politician normally would.

Clinton: Despite her best efforts to promote herself as “the qualified candidate,” many Americans have by default stamped Clinton with the brand of Matron—part of the old guard of Washington politics. Recently she has begun to pivot and is trying to find her way to a brand by design based on straight-talking thoughtfulness.

*** Personal Brand Takeaway: Every business person, from secretary to CEO, needs to start by assessing the personal brand they currently have and be truthful about the degree to which it exists by design—or default. Then they need to take stock of the impact that current brand is having. Is your brand producing the reputation you desire? Is it creating the environment and responses you are looking for? If not, a pivot to a more powerful personal brand may be needed.

  1. Anchor Statement. What is the go-to description of who you are and what you do? This is sometimes referred to as an elevator pitch.

Clinton: To date, Mrs. Clinton has made her marketing bottom line “I’m the woman candidate,” but that has not played well with Sanders supporters and younger voters in general. While Clinton’s status as the first woman Presidential nominee is certainly history-making and a proud moment, as an elevator pitch, it’s flawed. She would be better served by focusing on another message (consider Obama’s focus on messages of hope and change, as opposed to his race) that resonates with a wider slice of democrats and the population at large.

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Trump: Four words—“Make America Great Again.” This single sentence has become Trump’s signature call to arms, his reason why voters should check the box next to his name come November. The issue Trump will face as the election gets closer is how he will translate this general idea into specific policies.

*** Personal Brand Takeaway: All business people need to be able to present their brand in less than a minute. For example: When at a cocktail party you are asked the standard, “What do you do?” can you answer in a few short sentences that pique the listener’s interest? If not, your anchor statement needs some work. In addition, it’s important to pay attention to how your anchor statement is resonating and landing with your desired audience.

  1. Unique Branding Proposition. What is it about what you do, or how you do it, that makes you unique, distinct and special? What sets you apart?

Trump: The presumed Republican nominee, Trump has taken a two-pronged approach to differentiating himself. First off, he is keen to point out (at every possible opportunity) that he is a businessman, as opposed to a career politician. Secondly, his message of “I’m willing to go it alone,” whether it relates to raising money to fund his campaign or being supported by the Republican party, is at the heart of his “why I’m unique” message.

Clinton: Hillary’s strongest point of differentiation to date has been “I’m the woman candidate.” The problem is that too much of her messaging has focused on this, and the voters don’t really seem to care.

*** Personal Brand Takeaway: Positioning yourself by specifically articulating how your brand speaks to the needs of your audience, and the unique way you address those needs, is critical to creating an effective personal brand. And the more specific you can be, the better.

  1. Brand Tone and Temperament. What is the consistent mood, tenor, quality, character and manner you bring to all your interactions?

Clinton: Clinton’s tone has consistently been one of a serious Implementer. The tonal subtexts to her speeches ring with “I’m experienced, I know what I’m doing and I can get the job done.” Her demeanor, while dignified, is missing an accessibility (and even friendliness) that voters need to see in order to wholeheartedly embrace her as their Presidential candidate. However, given the alternative, it may be enough to win her the highest office in the land.

Trump: Trump is always Trump. To some, his brash pronouncements play with a tone of rugged individualism. For others, (even some members of his own party) his demeanor shows up as angry, and even childish in cases. So much so that the question of his temperamental suitability to be President has become a Democratic rallying cry. Likewise, Trump’s tone has some Republicans begrudgingly supporting him for the sole “anyone but Hillary” reason. Not exactly the inspiring message you would want your personal brand to create.

*** Personal Brand Takeaway: What you say has power, but the way you say it—your tone—has just as much impact. Every businessperson needs to be aware of how their brand tone is coming across (online and off) and adjust where necessary. In addition, taking any tone to an extreme will always backfire: Too serious or too snarky both harm a brand in the long run.

  1. Signature Story. Why do you do what you do? What’s the essential story that brought you to this place?

Trump: Rather than focus on a narrative based on how his past has informed his bid for the Presidency, Trump is pointing to the present problems America faces as his reason for seeking office. But by doing so, he is missing the opportunity to tie his brand to a bigger, more historical reason for running.

Clinton: After her win in California on Super Tuesday, Hillary Clinton spoke about her mother, the influence she had on her life and how the way she grew up set her on a path to public service. Clinton has skillfully integrated her history into her narrative and connected the dots from how what she learned there has brought her to here.

*** Personal Brand Takeaway: Never underestimate the power of a good story. A strong (and truthful) narrative about where you came from and what has influenced you to do the work you now do can connect you with your customers, employees and colleagues at a deeper level. Your brand needs to be more than a single sound bite or pithy elevator pitch. Otherwise, you run the risk of damaging your brand when things don’t go exactly as you planned. The best brands feature multiple, complementary messages that weave together to form an accessibly complex and in-depth communication.

  1. Signature Services. What are your core competencies?

Clinton: At the heart of Hillary Clinton’s brand is her varied and deep experience in government—and her proven ability to get things done in a political system that makes this challenging at best. Her particular expertise in foreign relations—especially at this time in American’s history—gives her a powerful place to stand as the candidate of choice. She is able and willing to talk about the “how” of the why.

Trump: In almost direct opposition to Clinton, Donald Trump’s brand is rooted in being “not” a government insider—but a business one. Continually providing tough talk about his corporate success, negotiation expertise and business acumen, Trump is presenting voters with the idea of a president who would function more like the CEO of a company than the head of state. While this “non-establishment” message is resonating with many people, the downside is Trump’s lack of specifics and seemingly naïve understanding of how things actually work in Washington and the protocols that keep the wheels turning—thus causing a questioning of his suitability for the job.

*** Personal Brand Takeaway: Know exactly what your brand brings to the table and how it stacks up against your competitors, and craft a powerful way to talk about it that inspires confidence in others. The fulcrum of your brand needs to rest on the material ingredients of your values and commitments.

A standout style (be it a brash Trump or competent Clinton) is a plus, but it will only take you so far. At some point going beyond taking a stand for what you believe in and specifically letting people know how you plan to get there will become a central issue. Think about one area where your personal brand is being expressed more in talk than displayed in action and focus on aligning the two.

About The Author

Why Tear Down That Wall?

Ronald Reagan knew that tearing down walls Trumped building them. Presidents Ronald Reagan and Bill Clinton were both widely known as master communicators. Their extraordinary communication skills were a key element that made them wildly popular and successful as presidents. During this highly partisan, crazy political season, much can be learned about how to improve the way we do business in the mortgage industry by studying either of these former presidents.

Regan was dubbed The Great Communicator. “What made him the Great Communicator was Ronald Reagan’s determination and ability to educate his audience, to bring his ideas to life by using illustrations and word pictures to make his arguments vivid to the mind’s eye,” opined Ken Khachigian, former Reagan speechwriter.

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Clinton was known as the Explainer in Chief. Media analyst and syndicated columnist Steve Adubato, Ph.D., makes the case that Clinton used two key techniques that contributed to his success as Explainer in Chief. Clinton used the terms “we” and “us” more than “I” when explaining even the most complex geopolitical or economic issues to the electorate. And he employed liberal use of the Q&A approach. Adubato points out, “The former president consistently asked ‘why?’ something was the case and then quickly and confidently answered that question. For example, Clinton asked; ‘Now why is this true? Why does cooperation work better than constant conflict? Because nobody’s right all the time, and a broken clock is right twice a day.’”

What Builds Walls

It’s not a question, and it’s not “who” builds walls, but “what” builds walls. In the mortgage industry, we tend to undertrain and under-explain. We tend to state the “whats” without the “whys” and inadvertently build walls. Let’s use a simple loan origination example to understand this point. When an underwriter provides an approval condition on a loan, he or she typically states what is needed. The processor and the loan originator scurry about to meet the underwriter’s demand and often become extraordinarily frustrated when the underwriter then asks for more information or rejects what is provided as inadequate. The reason often lies in an underlying lack of understanding of why the item was needed by the underwriter. This lack of full communication and understanding the why behind the request leads to additional cycle time for the loan file, additional labor expense for unnecessary back and forth and general inefficiencies. Perhaps more important, simply stating “what” without “why” is an insidious separator that builds walls between colleagues and erodes the culture of companies and our industry overall.

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Why Educates and Motivates

It has been my long-held belief that we should train everyone to have (and everyone should have a keen interest in having) a working knowledge of performing the role at least two steps beyond theirs in order to fully understand and be effective in their own role. To extend the example, if the processor and loan originator have a full understanding of not only the underwriting guidelines that prompted the underwriter’s condition, but also of the secondary market’s risk factor experiences that prompted the guideline to begin with, the condition likely would have been fully resolved far more easily and efficiently. Ultimately, the borrower would have been hassled less, the processor and loan originator would have been more productive and the underwriter’s relationship with the production staff would have been stronger. The wall never would have been built had the why been adequately understood with what.

In Regan’s famous 1987 Berlin speech he did not simply say, “Mr. Gorbachev, tear down this wall!” In a mere 2,600 words, he made his demand, provided historical context of the building of the Berlin wall and then explained not only how, but why it had failed to achieve its purpose. Then he invited his foes to join him to work together. Toward the end of the speech, he focused on the unity that could be achieved in tearing down the wall by saying, “and I invite Mr. Gorbachev: Let us work to bring the Eastern and Western parts of the city closer together, so that all the inhabitants of all Berlin can enjoy the benefits that come with life in one of the great cities of the world.”

We all know that the Berlin Wall fell, the cold war thawed and the European Union was eventually formed where the wall formerly stood. It did not happen simply because of the demand to tear down the wall. It happened because of the persuasive context of why. What can you do in your organization to improve efficiencies and cohesiveness using the techniques of the Great Communicator and Explainer in Chief? Consider requiring everyone to explain why each time they state what. Imagine the power and benefits why can offer your organization if consistently used.

About The Author

They Always Have Something To Say

The Presidential race of 2016 is off and running and while home financing does not have the same impact that it had in the two previous campaigns, there is still some focus on the underlying cause of the crisis and what government should be doing to prevent another one. And while there is not much overtly said about creating more opportunities for homeownership, there are directives and actions taking place that indicate that government policy is still thinking in that direction.

Of course we know that any politician worth their salt will have something to say on everything and while the focus has been on foreign policy and immigration, the candidates have been fairly vocal when it comes to monetary policy, government oversight and assigning blame for the financial crises. Yet in their effort to win votes and influence people they sometimes say the most outlandish and inaccurate things. Here are just some examples from both the Republican and Democratic candidates.

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Marco Rubio: On January 10th Mr. Rubio declared that “…banks and other firms crave being declared too big to fail.” He went on to say that “We have created a category of systemically important institutions and these banks go around bragging about it.”   The reality is that no one is bragging and in fact regional and mid-size banks are pressing Congress to actually raise the threshold currently considered as the entryway for a “too big to fail” classification.

Jeb Bush: In the same debate Mr. Bush claimed that the Dodd-Frank Act had lowered capital requirements on the big banks. He stated that “What we ought to do is raise the capital requirements so banks aren’t too big to fail. Dodd-Frank has actually done the opposite, where banks now have higher concentrations of risk in assets and the capital requirements aren’t high enough.”   Unfortunately for Mr. Bush he was just plain wrong. As every banker knows the Basel III Accord requires all banks to have higher capital requirements and the Federal Reserve Board added a capital surcharge between 1% and 2.5% to the most complex banks.

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Ted Cruz: The senator from Texas went further when he claimed that the Feds monetary policies and actions in the 2000s directly caused the crisis. According to the FCIC report the causes of the crisis were determined to be a breakdown in corporate governance, firms willingly taking on too much risk and a mix of excessive borrowing by households and investors.   Unfortunately, Mr. Cruz obviously failed to read the report himself.

Bernie Sanders: In numerous statements made by Mr. Sanders the weakening of the Glass-Stegall Act was the true cause of the crisis. According to him the diluting of this act allowed shadow banks (such as Lehman and AIG) to gamble recklessly with the money that came from the federally insured commercial banks. However, two Yale professors quoted in American Banker stated. “…Bear Sterns…and Lehman…and Merrill Lynch and…Morgan Stanley all managed to get enough funding to be systemically dangerous without the deposit bases, in ways that would have been consistent with Glass-Stegall.”

Hillary Clinton: Of course Mrs. Clinton cannot be left out of this listing of misstatements. In October of 2015 when she announced her plan to “rein in Wall Street” she accused President Bush’s administration of basically ignoring the accumulation of risk and pointed a finger at regulators in Washington who “would not or could not” keep up. Her point of reference was a picture taken of regulators taking a chainsaw to banking regulations. Unfortunately, she failed to acknowledge that this picture was actually part of an initiative by regulators to ease outdated regulations for Community Banks.

There are of course other housing policy issues that do not make the regular debate circles but are still active in government circles. One of these of course is Fair Housing and expanding homeownership. Despite the failure to be part of an active candidate dialogue these issues are still a focus within the government housing community. For example, the FHFA recently announced that they have directed Fannie Mae and Freddie Mac to evaluate why some consumers are unable to obtain a mortgage and to make changes where required to ensure the availability of mortgage financing. The CFPB, while currently focusing on LO compensation is still working or changes to the HMDA data to be collected and how the resulting information will be used to address Fair Lending problems. From my perspective it would be beneficial if these same issues and related regulation would be something that the candidates discussed before November rolls around.

About The Author

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Executive Spotlight: Michael Kinlaw, Mortgage Broker Turned Presidential Candidate

Michael-KinlawWith all of the attention from the 2016 presidential campaign shining on Hillary Clinton, Jeb Bush and other high-profile politicians, it is easy to overlook another candidate who wants to become the next president: Michael Kinlaw, a real estate professional who began in house-flipping before creating and running the Houston-based company Manhattan Mortgage from 2002 until its closure in 2008. Kinlaw is now running for president – seriously! – and we spoke with him about his campaign.

Q: For the benefit of those who are not familiar with you – who are you? And why are you running for president?

Michael Kinlaw: The second question is easier to answer than the first one. I am running for president for one simple reason. I am tired of watching millionaire politicians run our country the way they seem fit without regards to the working class of America. There are so many things that I’m sick and tired of hearing, so I decided to give it a shot and run myself. I’m not even concerned right now about Democrat candidates and the media trying to push me down and away. I’m smart enough to know that the Republican Party is going to be the one trying to get rid of me, not the Democratic Party.

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For your other question, I am just a normal guy. Just an American citizen that believes our country will never truly change until “We the People” make a significant change at the voting box. It’s hard for me to understand how people claim to want change and then vote for someone that has been in politics for 20 years. I am a previous small business owner myself and I know what it takes to generate jobs and get the economy back on track.

Q: The election has a lot of notable names lined up as candidates – Clinton and Warren are mentioned endlessly on one side, while the other side has Bush, Christie, Paul, Rubio, Cruz, Carson, to name a few. How are you standing out from this crowd?

Michael Kinlaw: Hillary Clinton will be the Democrat nominee, but I believe she is the worst candidate the Democrats could put up. Elizabeth Warren is not running, but she is a much better candidate than Hillary.

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Jeb Bush will be a viable candidate simply based on his name and the money he can raise. However, he will begin to fall apart when the other more conservative candidates start to criticize and critique him during debates and campaign speeches. He cannot reverse course on some issues that. Rand Paul – I actually really like many things that Rand has to say. I agree with him on some issues. The problem I see with Rand is that right after he says something you can agree with, he says something that is so far out there, that you are just stunned.

Marco Rubio is a good candidate, but I just don’t think he will be able to get past the immigration bill he created. Red State hard conservatives won’t let him get past it. Ted Cruz is the senator from my home state of Texas. I like him very much as a senator and I want him to stay in the Senate and continue to push hard for the people of Texas. He will never win a general election because he is too far right. Ben Carson gave an interview will Glenn Beck where he said that he only supports the Second Amendment depending on your address. Most of America hasn’t seen this interview, but they will and he will be doomed.

Basically with all the candidates that are running, I stand out for one big reason. I’m not a politician. I’ve never been in politics and I’m also not a multi-millionaire. I’m a hard working, middle class man that truly cares about the middle class and the poor class. It’s not just lip service with me, it’s a reality.

One difference between me and the others is that I support legalizing medical marijuana on the federal level. Medical marijuana is considered in most states to be medicine and I don’t think that traveling across state lines with medicine should be grounds for arrest. I also want marijuana in general to be decriminalized to the point that if someone is found in possession of two ounces or less, they aren’t arrested and taken to jail. Instead they should be given a warning or a ticket with small fine. Locking up teens and young adults for small amounts of marijuana is killing the chances for them to be successful in their future. It is also a major reason the black communities across America are suffering.

The biggest difference is that I support gay rights and gay marriage. The Republican Party and its candidates are always the first people to stand up and declare that Abraham Lincoln was a Republican and that they support the 13th amendment by eliminating slavery. They are the first people to say the Republican Party supported the Voting Rights act of 1965. They are the first people to say they supported women’s rights and their right to vote. They declare these things every single election. They always say they want the government to become smaller, they want the government to get out of businesses and they want the government out of people’s personal lives. I agree. They don’t think the government should be involved in our households, in our cars, in our investments, in our paychecks, in our healthcare, in our dinner menu, in our cell phones, in our internet data and more.

They keep saying that government is too big and must be downsized and get out of our personal lives. But then one minute, later they say that they want the government to regulate gay rights. So they want the government out of next to in the privacy of your own home. To keep this short and to the point I don’t think they government should be in the business of marriage.

Marriage is a religious symbol made between two people that wish to declare their love for each other in front of their friends, family and their god. We do have the separation of Church and State.

Q: Many of our readers are small business owners and entrepreneurs. What policy positions would you offer to this voting bloc?

Michael Kinlaw: For most of my life I was a small business owner and entrepreneur. I know how hard it is to start a business from nothing and not have a silver spoon in your mouth. The entire section of my campaign involving the economy and jobs will default to the small business community. I believe that small businesses are the backbone of the American economy. Every small business owner dreams of growing their business larger and our economic policies should benefit and assist that dream.

The simplest way I can put it is that I would have much rather the SBA open up their regulations and loan out $50,000 to thousands of entrepreneurs instead of lending Solyndra LLC $500,000,000 just so they could go bankrupt. Our government keeps this policy of loaning money to large corporations and banking institutions instead of making that money available to real people that want to open real businesses and hire real workers. I would immediately open up the SBA regulations.

I would open up all banking regulations for loaning to small businesses through the Federal Reserve. I would be the most pro active small business owner President in history. I know that almost all good jobs are created by small business, and no one seems to understand that.

Q: How have people responded to your presidential goals?

Michael Kinlaw: So far the general public has been extremely supportive. I have received thousands of letters, emails and notes of support. I have received no negative attention, except for the fact that the RNC won’t even sit down and give me a meeting. The RNC has told me that I am on my own and they won’t support anyone not in the political arena. So basically the RNC and DNC don’t care about regular people, just millionaire career politicians.

Michael Kinlaw’s campaign is online at http://kinlawforpresident.com/. An earlier version of this interview appeared on Business-Superstar.com.

Mr. Watt And Mr. Castro

When President Obama announced that he was naming Melvin L. Watt to run the Federal Housing Finance Agency (FHFA) and Julian Castro to become Secretary of Housing and Urban Development (HUD), I felt that both appointments were major mistakes. At this point in time, however, I think I may have been half wrong in my assessment of their abilities to handle these jobs.

At first, both Watt and Castro appeared severely out of their leagues. Watt was an undistinguished Congressman with a penchant for tilting to the left. There was genuine reason to believe that he would tow the Obama line when it came to government intervention in housing. And Castro was the mayor of San Antonio and one of the fastest rising Hispanic figures in the Democratic Party – indeed, some pundits are eyeballing him as a potential vice presidential candidate in 2016. Neither gentleman had any great experience in formulating housing policy, and it was easy to assume their appointments were strictly engineered for partisan purposes.

For his part, Watt appears to be something of a happy wild card. In an October 1 news article that ran on the Bloomberg wire, reporter Clea Benson noted that Watt has confounded those who were expecting quasi-socialist machinations from his FHFA office.

“Watt’s circumspect style and scant policy changes in his first nine months as director of the Federal Housing Finance Agency have drawn criticism from some of the same housing advocates who pushed President Barack Obama to appoint him,” Benson wrote. “The National Low Income Housing Coalition and other groups said they expected Watt, the most powerful housing official in America, to move quickly to help troubled borrowers and lower-income families shut out of the two-year housing recovery. Instead, he is maneuvering cautiously, asking for public feedback on many issues — and earning accolades from the mortgage industry.”

Benson also quoted Peter Dreier, a public policy professor at Occidental College in Los Angeles and a highly vocal advocating of enabling debt reductions for borrowers with Fannie Mae and Freddie Mac mortgages. “Mel Watt has been a huge disappointment,” Dreier complained. “No one I know in the housing community understands why he’s sitting on his hands.”

To his credit, Watt appears to making a serious effort to understand the complexity of his duties before he attempts to make any significant changes to federal housing policy. In view of my earlier assertions that he was the wrong man for the job, I humbly acknowledge that my consideration of him was incorrect.

On the other hand, Castro’s leadership at HUD appears to be placing much more focus on the “urban development” element of HUD rather than on the “housing” side of the equation. His first major speech on housing took place on September 16 before the Bipartisan Policy Center’s annual housing summit, but Castro used his time on the podium to place a surplus amount of attention on Internet-related considerations. For example, consider this upcoming quasi-clueless happening that his office is producing.

“HUD is planning an event with the White House we call a ‘codeathon,’” he stated. “We’re bringing together data experts and programmers to take our information about communities and develop new digital tools that empower others. One of our hopes is that lenders will use these tools to see the whole picture when working with potential homebuyers. Let’s say they can easily determine a family wants to buy in an area where transportation costs are low. Lenders may consider these savings as they make their decisions about the quality of the loan – and that can help get credit moving.”

Oh, that’s all it takes to “help get credit moving”? Uh huh. Later in the speech, Castro enthusiastically called for a federal crusade to improve Internet usage.

“Over the next two-and-a-half years, I’m going to place a special focus on expanding broadband access,” he said. “Access to knowledge and information is as vital to a thriving community as access to jobs, good schools and safe streets … President Obama has challenged the nation to connect 99% of American’s students to broadband and wireless in their schools and libraries by 2018.  As HUD Secretary, I’d like to ensure that this access follows them home.”

While Castro’s speech offered vague acknowledgement of issues relating to affordable housing (or the lack thereof), his Internet mania clearly drove his address. Perhaps Castro should spend some time at FHFA headquarters, where Watt can offer him some guidance on the importance of not rushing into a new job in a silly-willy manner. Until I start hearing some serious talk from Castro about how HUD can add muscle to the housing market, I remain unconvinced that his HUD ascension was a good idea.

About The Author

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Elizabeth Warren’s Media Phobia

Earlier this summer, Washington Post columnist Dana Milbank offered a somewhat unusual portrait of Massachusetts Senator Elizabeth Warren. Milbank, who is among the most respected journalists covering Washington, was tracking the growing chatter in liberal political circles about the possibility of having Warren run for the 2016 Democratic presidential nomination.

“I wanted to write about the Warren presidential hoopla, so I mentioned to her spokeswoman, Lacey Rose, that I’d buttonhole the senator after the subcommittee meeting,” Milbank wrote. “‘We don’t do hallway interviews,’ Rose replied. She said she would ‘see about’ a phone interview but six hours later reported that she ‘couldn’t make this work … This, I learned, is typical. Congressional reporters say that Warren is unusual among senators in her refusal to take questions. She is invariably guarded by staff as she walks about the Capitol, and the few interviews she has done have generally been on defined topics (such as her book), where the risk of unanticipated questions is low.”

Oddly, Milbank saw nothing peculiar in Warren’s irritation with questions from the press.

“Such reticence is certainly not a fault,” he continued. “But it is the behavior of a lawmaker who plans to keep her head down and to do her job as a legislator – not somebody who is contemplating the glare of the national spotlight. She has plunged into policy and is doing whatever she can to shield herself from unscripted moments.”

Uh, hello? Warren has been in the “glare of the national spotlight” for the past few years – mostly at the expense of the mortgage banking industry. Through an endless series of speeches, blog posts and a now-infamous viral video that suggested business owners are selfish boors that don’t contribute to the maintenance of the infrastructure, Warren has made herself a darling of the left-of-center crowd and elevated herself from the Harvard campus to the U.S. Senate – all with the help of the media, both the mainstream and trade editions.

Strangely, the mainstream media has kept a curious hands-off approach to Warren, rarely probing the basic inanities of her anti-business tirades. Even the sons of fun at the Wall Street Journal and the other Rupert Murdoch media outlets don’t seem to have their right-wing feathers ruffled whenever Warren is at the microphone.

Why is this? Well, I don’t see this as a case of being afraid to appear sexist – after all, Hillary Clinton and Nancy Pelosi have suffered plenty of slings and arrows in the media. More likely, the mainstream media finds financial issues dull and they would prefer not to be bored by Warren’s pedantic lecturing. And, besides, how many people outside of banking have a passionate respect for banks?

But the trade media is another story. Warren’s rise to power in advocating the creation of the Consumer Financial Protection Bureau (CFPB) and her leap to power in the Senate was reported in a straightforward manner. But the context of her speeches and blog postings was rarely challenged – when Warren squarely blamed the mortgage industry for the 2008 crash, very few trade media writers and editors called her to task for her reckless rewriting of recent history.

As for Milbank’s assertion that Warren is “doing whatever she can to shield herself from unscripted moments” – well, that has less to do with her diligence to her senatorial duties and more to do with the fact that she is awful when forced to speak extemporaneously. In an ABC interview in April, Warren was asked about whether Hillary Clinton would be too cozy with the banking world if she was elected president. Warren responded by saying, “I’m worried a lot about power in the financial services industry and I’m worried about the fact that basically, starting in the ’80s, you know, the cops were taken off the beat in financial services. These guys were allowed to just paint a bull’s-eye on the backside of American families. They loaded up on risk. They crushed the economy. They got bailed out. What bothers me now, they still strut around Washington, they block regulations that they don’t want, they roll over agencies whenever they can.”

Of course, Warren didn’t answer the question that was put before her regarding Clinton; the fact that she rewrote history to blame the 2008 crash on Ronald Reagan is another matter. And this is why the Massachusetts senator is, as Milbank observed, “doing whatever she can to shield herself from unscripted moments.” When she deviates from her tried-and-true routine of bashing the financial world, it becomes painfully obvious that she has no idea what she is talking about.

Maybe it is time for journalists to start demanding “unscripted moments” from Warren. And there is no shortage of questions to ask her: Would she campaign for a presidential candidate that pockets a $400,000 speaking fee from a Wall Street company? Is she unconcerned over charges of racism in the personnel procedures at the CFPB? Will she openly question why the White House refuses to support the expansion of the Fair Housing Act to accommodate gays and lesbians? And can she explain why the vast majority of mortgage-related complaints filed with the CFPB have been dismissed as being without merit?

I think that journalists should be pressing Warren for some answers. After all, she is an elected official representing the American people. And those people are financing her $174,000 a year salary as a senator – and that Senate platform helped her to pocket $525,000 in the advance for her memoir “A Fighting Chance.” Yes, the self-proclaimed champion of the working class soaked up more than a half-million for a self-congratulatory book. Hmmm, perhaps there is some value to Warren’s most famous quote: “There is nobody in this country who got rich on their own!”

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Running Amok with Preet Bharara

Officially, Preet Bharara is the U.S. Attorney for the Southern District of New York. Unofficially, he is a stooge of Attorney General Eric Holder and part of the Obama Administration machinery that actively shakes down major financial institutions at the center of the 2008 crash for billions of dollars in so-called “settlements” without actually forcing any executive responsible for that mess to do a perp walk into the slammer.

Bharara is part of a wave of high-profile governmental attorneys/politicians – including Richard Cordray, Lisa Madigan, Kamala Harris, Benjamin Lawsky and Eric Schneiderman – that have worked overtime in actively publicizing their legal targeting the financial services world. What makes Bharara somewhat more interesting is his recent decision to publicly probe New York Governor Andrew Cuomo for his recent decision to disband a state-level anticorruption commission.

Cuomo, of course, came to national prominence as Bill Clinton’s second Secretary of the Department of Housing and Urban Development (HUD); Clinton’s first HUD chief, Henry Cisneros, was forced out of office amid an extramarital sex scandal. (And you thought the Man from Hope was the only person in the 1990s’ Executive Branch caught with his pants down!) Cuomo was much less colorful than Cisneros, at least in terms of his views on marital fidelity, but he was also more reckless in realigning federal housing policy in a matter that set into motion the domino chain that ultimately ended up with the 2008 crash.

I don’t know enough about the current Cuomo scandal to pass any judgment on the issue. But I know that it is highly unusual for a U.S. Attorney to happily publicize that he is investigating a major public figure without making any specific facts available to give their inquiry credibility. Indeed, Bharara has given interviews where he makes broad slams about governmental corruption that are clearly meant to sting Cuomo. This is without precedent among high-profile prosecutors, who are usually happy to merely trumpet their arrests and settlements.

Now, why is Bharara making a spectacle of himself at Cuomo’s expense without producing a stitch of evidence that would affirm any criminal aspect to the governor’s disbanding of his anticorruption commission? For starters, Cuomo is a political foe of Hillary Clinton, and we all know that she has career goals that go beyond putting her name on self-serving autobiographies while making guest appearances on comedy talk shows. Bharara is a Democrat, and Clinton could certainly use a new Attorney General or a new CFPB Director in the event she becomes the next president. What better way to charm a potential employer than to discredit that potential employer’s foe – especially one in the middle of a re-election campaign?

Even worse, Bharara’s investigation was allegedly launched without seeking Justice Department approval. By supposedly working independently of the Attorney General, Bharara carefully disconnects the Obama Administration from the investigation of a prominent Democrat. (I need to stress the words “allegedly” and “supposedly” because those claims are based on “people familiar with the matter” told the Wall Street Journal. WSJ readers may notice the newspaper’s liberal habit of reporting news via information provided by people that don’t have names – and as an aside, I always got a laugh out of Nick Timiraos’ housing-related news when he backed his work with unnamed people who were supposedly “familiar” with insider machinations.)

How is all of this going to play out? I would wager that Bharara’s tough talk is merely heated verbiage – if he had the goods on Cuomo, he would have gone for the jugular right away. By carefully smearing Cuomo with the public suggestion that the governor is playing sleazy political games, Bharara demeans the integrity of his office and dilutes the respect he has for the people he is sworn to serve.

And while Cuomo is hardly a figure deserving of surplus sympathy, he is getting a raw deal from this publicity-seeking shyster. Bharara needs to make his case in court with facts, not in the newspapers with innuendo.

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2014: The Year The CFPB Loses Power?

If I could make one bold prediction for the coming year, it would be that the Consumer Financial Protection Bureau (CFPB) will begin 2014 at the height of its powers and wind up 12 months later facing the end of its viability as a regulatory force.

Why would I say such a thing? Because market and political forces are not aligned in the agency’s favor. If these forces set off a specific socioeconomic chain reaction, they will result in the CFPB at the end of next year in a very different place.

For starters, next month will see the official launch of the CFPB’s new rules governing home loan origination, most notoriously the qualified mortgage (QM) aspect. Very few people believe that these rules will spur a new wave in originations. Indeed, the major lenders in this space spent a good chunk of this year cutting down on their origination operations – and no one is rushing in to fill the void they are leaving.

These rules will have one positive impact: it will spur many lenders to aggressively pursue the non-QM market. But this sector will be pursued by default rather than design, and there is only a finite number of deep-pocketed consumers eager to seek out jumbo mortgages.

Complicating matters will be the trends that promise (or threaten, depending on your outlook) to reshape the housing market: rising interest rates, the dramatic decline in affordable housing, a stagnant economy, an employment picture that favors low-wage/part-time job creation, and the financial disruptions being created in the Obamacare debacle. And I hate to imagine what will happen if the Fed tries to wean the economy off its QE-Forever policy.

Then, there is a real wild card: Mel Watt at the Federal Housing Finance Agency (FHFA). It is no secret that Watt – or, to be honest, the Obama White House that will tell Watt how to behave – wants to reverse the FHFA’s positions on principal reduction. Whatever flaws Edward DeMarco had as the FHFA leader, he was on target in ignoring the political pandering that fueled calls for aggressive principal reduction. If Watt changes course on this action, this could easily create new convulsions in a housing market that is attempting to stabilize.

Furthermore, there is the question of Richard Cordray, the CFPB’s director and a former attorney general in Ohio. There has been plenty of buzz in Ohio that Cordray is considering a run for the governorship. Although most people in Ohio seem comfortable with the Republican incumbent, Gov. John Kasich, Cordray is reckless enough to try for this job. (Lest we forget, Cordray shamelessly ran the CFPB after being shoehorned into the job via a presidential recess appointment process that federal courts declared to be unconstitutional – it is a bit odd for a former attorney general to happily break the law in order to get a job.)

If Cordray stayed on at the CFPB, he could plan to run in 2016 against Ohio’s Republican Sen. Rob Portman. However, he would also be stuck on what could be a political sinking ship. And being associated with the Obama administration for any extended period is hardly a sure-fire vote generator.

And, finally, there is the question of the state of the nation in 2014. If there is a continuation of our current situation – or, if things get worse – it would be a no-brainer to see the Republicans maintain control of the House of Representatives and win the Senate come Election Day. (People will forget the government shutdown idiocy earlier this year and blame the president and his apologists for an endlessly crummy economy.) This, of course, hinges on the GOP’s ability to field candidates that don’t make utter fools of themselves on the campaign trail via stupid talk on social issues – I suspect the party finally learned the lesson there.

If Republicans control both chambers of commerce by strong majorities, one can easily expect to see significant changes to the Dodd-Frank Act and the position of the CFPB in the federal system in the next Congress While a full repeal of Dodd-Frank is unlikely, major tinkering can be expected in 2015, including the ouster of the CFPB director in favor of a commission to govern the agency, more direct CFPB accountability to Congress, and changes in how the CFPB is funded. These changes will weaken the CFPB considerably, to the point that the agency will limp through 2015 as a shadow of its current state.

Of course, these are only my predictions. And I have been known, on occasion, to be a little off-base in predicting the near-future. But if anything, 2014 won’t be a boring year!

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A Real GSE Reform Solution?

Huey Newton, the provocative co-founder of the Black Panther Party, once commented, “We have two evils to fight: capitalism and racism. We must destroy both racism and capitalism.” It seems that half of Newton’s wish has come true. Racism, while it is not officially tolerated, has not vanished completely and it is still a hardship faced by people of color. But Newton’s death wish for capitalism is another story.

In the past five years, Washington has sank hundreds of billions of dollars into propping up mega-corporations while burdening smaller institutions – the real backbone of the economy – with a crippling tax and regulatory regimen. As a result, the traditional definition of capitalism as the cornerstone of a healthy democracy has certainly been challenged to the fraying point.

Mercifully, there are those still among us that believe that capitalism is the solution and not the problem. A case in point: the Miami-based hedge fund Fairholme Capital, which audaciously offered to buy up the mortgage-backed securities insurance businesses of Fannie Mae and Freddie Mac in order to create the foundation of a secondary market consisting of two new state-regulated private insurance companies that will do the jobs of the government-sponsored enterprises (GSEs) without soaking the American taxpayers for operating expenses.

Of course, the Fairholme concept isn’t entirely altruistic – the company stands to earn a few bucks under this proposal. Fairholme, lest we forget, also has an axe to grind with Washington: in July, it sued the government to seek “just compensation” over changes to the bailout terms set for Fannie Mae and Freddie Mac, claiming that these changes lethally impacted shareholder value in the enterprises.

Fairholme’s managing member and chief investment officer, Bruce K. Berkowitz, made his pitch in an open letter to Edward DeMarco, who has been the “acting” director of the Federal Housing Finance Agency for more than four years. To date, DeMarco has not publicly responded to the Fairholme offer, but that is no surprise because this offer is radically different from his bureaucracy-driven strategy to realign the role of the GSEs – and, besides, the complexity of the plan is not something that you can absorb over a cup of coffee.

Berkowitz did not propose this idea to Congress or the White House. And why should he? After all, neither entity has done very much to speed to conclusion of the federal conservatorship of Fannie Mae and Freddie Mac. And, besides, DeMarco has already been reconfiguring the state of federal housing finance without bothering to consult with the Legislative or Executive Branches – score one for Berkowitz for speaking to the guy in charge.

I don’t pretend that this plan is flawless – I can’t believe the states will want to absorb a lot of the pressures borne by the federal government – but the Fairholme solution deserves praise if only because it offers evidence that some people in the private sector are tired of waiting around for government to do its job. Fannie Mae and Freddie Mac have been in federal conservatorship for more than five years, and at the current political pace it seems unlikely that their fate will be seriously discussed until after the 2014 elections.

Yes, there have been a number of GSE reform plans from trade groups and think-tanks, but they seem to be part of the Washington babble machine – a lot of talk and a lot of posing, but very little in the way of genuine results. By boldly forcing DeMarco to think outside of that proverbial box, Fairholme is providing a lesson that too many people in Washington have forgotten: it is the private sector that pumps the economy with ideas, initiatives and action.

With Thanksgiving coming up tomorrow, here is something we can all be thankful for: there are still passionate people in the private sector that are not willing to let Washington ruin the economy further. Cheers to Fairholme for reminding us about what really makes this country strong.

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