FM Watch director Mike House often likes to say that when a former Hill Rat (Capitol Hill, that is) leaves government service for Fannie Mae or Freddie Mac, "they're going to Valhalla." As some of you might recall from history class, Valhalla is where the Nordic warriors go when they die. It's sort of like heaven, but only better. Last week it was revealed that the ultimate Hill Rat, Sen. Phil Gramm, R-Texas, had landed himself one big Valhalla, the vice chairman job at UBS Warbug. The irony of Gramm getting the job can't be understated. The Texan has been a long-time critic of Fannie and Freddie and the FHLB System. UBS Warburg, thank you very much, is the No. 1 player in the MBS market. And where do MBS come from? Not from FM Watch, but from, you got it, Fannie and Freddie. We expect Sen. Gramm to soften his anti-GSE rhetoric, either that or maybe UBS will bolt the MBS market. (Not likely). When told of Sen. Gramm's new job, one former UBS official asked us, "What can he possibly do?" An FM Watch spokeswoman said Mr. House was shedding no tears over Sen. Gramm's new position. "If he cries, I'll give you a call," she said...
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FM Watch hasn't had a new member since, well actually, we can't remember the last time the anti-Fannie/Freddie group signed up a new member. Even so, it may want to consider dumping one of its charter members, Household Finance . Household, the alleged poster boy for predatory lending, last week inked a $484 million settlement with 20 states to settle allegations that it misled some of its mortgage customers. But that may be the least of Household's problems. On Friday, S&P cut its ratings on the company's debt. Moreover, one analyst told us Household's cost of funds on five-year paper is now 400 basis points over Treasuries. He also said that the company has $16 billion in debt coming due soon, which means its cost of funds will rise. "They're going to have to roll over the paper at a different rate," he said. "They may be forced to use the securitization market more aggressively." Household is set to release earnings on Oct. 16...
This past week if you visited Yahoo!'s finance website and clicked on the "profile" section for Household International's stock, you would've seen a consumer mortgage ad not for Household, but for one of its competitors, Providian...
On Thursday, J.P. Morgan initiated coverage on shares of Countrywide Credit, giving it a rating of "overweight," citing its strong near-term earnings. Countrywide, of course, competes head-to-head, especially in the correspondent channel with its own mortgage affiliate, Chase Manhattan Mortgage...
IN CASE YOU MISSED IT: Countrywide's servicing portfolio broke the $400 billion market recently. Company chairman Angelo Mozilo told NMN that the firm may crack the $200 billion mark in production this year.
AND FINALLY: Freddie Mac spokesman Douglas Robinson turned the big 4-0 recently. We mention this not because Doug works for Freddie Mac, but he's the former Wall Street editor for National Mortgage News.
