Thursday, July 10, 2008

Time To Retire The Cutsie Diminutives

By which I don't mean "put all the dwarves in homes." Well, I do happen to believe that, it's just not the point of this post. Ba-dum-chah.

Carnage reigns on Wall Street. The trading equivalent of a pack of rabid mastodons hit the shares of Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and Lehman Brothers.

The New York Times can write something alarming and nonsensical like "Lehman Brothers, one of the biggest guarantors of Fannie and Freddie, fell 11 percent in early trading, to $17.46" and no-one cares, because they're already too frightened. That was drive-by snark on the Times' business reporting, by the way, because I've got bigger fish to fry: the entire edifice of naming conventions of government-sponsored enterprises.

Two of the institutions with faltering share prices are GSEs, and are better known as Fannie Mae and Freddie Mac. Wikipedia refers to the shorthands as "creative acronymns", though I think its better to refer to them as diminutives, much as my wife refers to my son Frederick as Fritz. And it gave me a chance to vent my prejudices against short people.

There's no doubt that saying the names of the GSEs in full would be a right pain in the ass, and its pretty difficult to spell out the initials, too. What with the fact that the two made up most of the mortgage bond market until fairly recently, it was quite understandable that some kind of diminutive would emerge.

What's more interesting is that the two GSEs eagerly embraced the diminutives, and therefore licensed any other two-bit financial services company to come up with a nauseating diminutive as a way of aping the (until very recently) reputation of the big GSEs (I should mention the Government National Mortgage Association, or Ginnie Mae, as well here) for stability and security.

Thus, we have to endure the likes of:

  • The College Construction Loan Insurance Corporation, or Connie Lee, a guarantor absorbed in 1997 by Ambac, and Ambac's proposed name for a new, clean, unsullied, less stupid, monoline spin-off (you knew I'd get onto monolines before now).
  • We have IndyMac, founded as a real estate investment trust in 1985 by the luxuriantly orange Angelo Mozilo, before he moved on to, um, greatness with Countrywide Financial, with the origins of its name unclear. What we do know is that after a slightly rash rock-slinging from Chuck Schumer is that its financial health is far from super.
  • Student Loan Marketing Association, or Sallie Mae, focus of a botched leveraged buyout from last year.
  • There's Ellie Mae, a software provider for mortgage servicers, the sole purpose of whose name is to suggest a closeness to Fannie Mae, as far as I can tell.
  • I've had dealings with Municipal Mortgage & Equity, or Muni Mae, a Pink Sheets-traded real estate and energy developer.
  • And bringing us to our proud conclusion is Private National Mortgage Acceptance Company, or Penny Mac, which was founded to buy distressed mortgage securities from desperate banks, and has heavy hedge fund backing.

Let's leave aside the delicious irony of a bottom-feeder taking on such a cutesy name, salute briefly the consultant who came up with it so quickly, and ask ourselves why infantilizing large and precarious financial institutions is such a good idea. With the two big GSEs teetering, now would be as good a time as any to abandon this foolish affectation.

Let's confine the GSEs to large, unwieldy and ominous initials. Whatever body the Feds cook up to fix the mortgage mess should be called the Bureau of Oversight over the Origination of Mortgages, or BOOM. The state level offices could be called the District Offices for the Oversight of Mortgages, or DOOMs. The problem is, if anyone's got a yen for stupid-sounding acronyms, it would be our dear leaders in congress. SAFETEA-LU, anyone?


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