Others have mentioned this July piece by Paul Gigot — which includes links to other WSJ pieces, as well as to response pieces from Raines, Rep Oxley, and Sen Conrad — so I figured I’d link it here for posterity’s sake.
The meat and potatoes:
Freddie’s accounting fiasco became public in 2003, while Fannie’s accounting blew up in 2004. Mr. Raines was forced to resign, and a report by regulator James Lockhart discovered that Fannie had rigged its earnings in a way that allowed it to pay huge bonuses to Mr. Raines and other executives.Such a debacle after so much denial would have sunk any normal financial company, but once again Fan and Fred could fall back on their political protection. In the wake of Freddie’s implosion, Republican Rep. Cliff Stearns of Florida held one hearing on its accounting practices and scheduled more in early 2004.
He was soon told that not only could he hold no more hearings, but House Speaker Dennis Hastert was stripping his subcommittee of jurisdiction over Fan and Fred’s accounting and giving it to Mike Oxley’s Financial Services Committee. “It was because of all their lobbying work,” explains Mr. Stearns today, in epic understatement. Mr. Oxley proceeded to let Barney Frank (D., Mass.), then in the minority, roll all over him and protect the companies from stronger regulatory oversight. Mr. Oxley, who has since retired, was the featured guest at no fewer than 19 Fannie-sponsored fund-raisers.
Or consider the experience of Wisconsin Rep. Paul Ryan, one of the GOP’s bright young lights who decided in the 1990s that Fan and Fred needed more supervision. As he held town hall meetings in his district, he soon noticed a man in a well-tailored suit hanging out amid the John Deere caps and street clothes. Mr. Ryan was being stalked by a Fannie lobbyist monitoring his every word.
On another occasion, he was invited to a meeting with the Democratic mayor of Racine, which is in his district, though he wasn’t sure why. When he arrived, Mr. Ryan discovered that both he and the mayor had been invited separately — not by each other, but by a Fannie lobbyist who proceeded to tell them about the great things Fannie did for home ownership in Racine.
When none of that deterred Mr. Ryan, Fannie played rougher. It called every mortgage holder in his district, claiming (falsely) that Mr. Ryan wanted to raise the cost of their mortgage and asking if Fannie could tell the congressman to stop on their behalf. He received some 6,000 telegrams. When Mr. Ryan finally left Financial Services for a seat on Ways and Means, which doesn’t oversee Fannie, he received a personal note from Mr. Raines congratulating him. “He meant good riddance,” says Mr. Ryan.
Fan and Fred also couldn’t prosper for as long as they have without the support of the political left, both in Congress and the intellectual class. This includes Mr. Frank and Sen. Chuck Schumer (D., N.Y.) on Capitol Hill, as well as Mr. Krugman and the Washington Post’s Steven Pearlstein in the press. Their claim is that the companies are essential for homeownership.
Yet as studies have shown, about half of the implicit taxpayer subsidy for Fan and Fred is pocketed by shareholders and management. According to the Federal Reserve, the half that goes to homeowners adds up to a mere seven basis points on mortgages. In return for this, Fannie was able to pay no fewer than 21 of its executives more than $1 million in 2002, and in 2003 Mr. Raines pocketed more than $20 million. Fannie’s left-wing defenders are underwriters of crony capitalism, not affordable housing.
[...] The abiding lesson here is what happens when you combine private profit with government power. You create political monsters that are protected both by journalists on the left and pseudo-capitalists on Wall Street, by liberal Democrats and country-club Republicans.
Comment as you must.
Comment by Warren Bonesteel on 9/19 @ 6:33 pm #
Let’s just say that life as you’ve always known it is over.
Now it’s time to play “Hero with a Thousand Faces.”
Don’t forget your Guy Fawkes mask and cape.
Comment by dre on 9/19 @ 6:39 pm #
Health care wasn’t big enough. Now they want the whole enchilada with guacamole and greasey union workers.
Comment by thor on 9/19 @ 6:43 pm #
A black liberal dude is to blame for all this? Of course! That’s it, of course! We’ve got us the perfect scapegoat, boys!
Comment by dre on 9/19 @ 6:50 pm #
“A black liberal dude is to blame for all this?”
No THE DEMOCRAT/SOCIALIST/MARXIST party is responsible. The skinny guy with big ears and a funny name is THEIR FALL GUY.
Comment by Swen Swenson on 9/19 @ 6:50 pm #
Barney Frank, Chuck Shumer and Paul Krugman are black? Who knew?
Comment by JimK on 9/19 @ 6:55 pm #
McCain and company really need to stick the Dems with this mess. It is their baby.
Comment by sears poncho on 9/19 @ 6:55 pm #
Hastert and Oxley are specifically named in the article Jeff excerpted, also. It seems they are implicated in this mess. Are they liberal black dudes?
Comment by Jeff G. on 9/19 @ 7:01 pm #
thor’s not even trying anymore. Peaked too soon. Like Obama.
Comment by happyfeet on 9/19 @ 7:03 pm #
We can’t just help wall street we has to help main street. It has to rhyme goddammit.
Comment by Republican on Acid on 9/19 @ 7:07 pm #
USSA!
Comment by C Smith on 9/19 @ 7:10 pm #
We need to either get off the socialist crack pipe, or
rename the country the United State Socialist Republic.
The half measures are what’s killing us.
Comment by Jeff G. on 9/19 @ 7:10 pm #
Was bound to happen, RoA. We gave up teaching economics for more important things — like how the Pilgrims killed off the Indians with pox blankets, and how George Washington himself kept a harem of Nubian royalty who were finally released when “Roots” appeared on network TV.
Those Jay Leno on-the-street bits? Scary true.
Comment by Republican on Acid on 9/19 @ 7:16 pm #
Yeah, I guess Amerikkkan’s are really as stupid as they say on that there weird tube with peoples and varmints in it.
Comment by Republican on Acid on 9/19 @ 7:18 pm #
Did I spell stupid correctly? I meant to type STOOPED!!!…
Comment by Republican on Acid on 9/19 @ 7:19 pm #
Actually I am thinking we just ought to get rid of Columbus day immediately and replace it with BLACK POWER! day. I bet that would be a real party over at the Thor homestead.
What with all the fingering and dry humping going on over there.
Comment by MC on 9/19 @ 7:22 pm #
This is ghastly beyond all description. Maybe time for we silent Americans to become activists. Our backs are already nearly broken with a crushing tax system. Time to reform everything. Time to find out what consent of the governed means.
Comment by Republican on Acid on 9/19 @ 7:24 pm #
What I can’t wait for is when they nationalize Hollywood. Just think, they could finally force EVERYONE to watch movies about how EVIL we _were_.
Maybe the cool people in Europe would finally love us and then world peace would just sort of happen.
Comment by N. O'Brain on 9/19 @ 7:26 pm #
Ford’s Iron Law of Government Intervention:
“Every time any government interferes with a market, it fucks it up.”
Comment by Warren Bonesteel on 9/19 @ 7:27 pm #
“Stoopid” is spelled with an “i.” Ya gotta do the whole Freudian ego thing with it.
Comment by Republican on Acid on 9/19 @ 7:27 pm #
I just saw a liner on CNN or FAUX when I was strolling the halls here at EVIL BASTARDS CORPORATIONS, and I saw that Hugo Chavez stated that what we have just done makes his nationalization efforts look petty. And I hate to say this, but he is right.
And the weird thing is that the market rallies for nationalization? WHA?
Comment by Republican on Acid on 9/19 @ 7:30 pm #
“Stoopid†is spelled with an “i.†Ya gotta do the whole Freudian ego thing with it.
Not really related, but several years ago I had a boss that was all into using office cliche when spoke. He said to me, “there is no I in team.” I responded, “and there are 2 U’s in fuck you.”
Comment by Pablo on 9/19 @ 9:11 pm #
No, he isn’t. He didn’t take over businesses on the brink of collapse. He nationalized profitable companies, many of them built on foreign investment.
Not to say that this is a good thing, but it ain’t what Chavez has done by a long shot. Chavez is stealing.
Comment by happyfeet on 9/19 @ 9:21 pm #
Looking ahead though you think the government will end up with a bunch of nice Herman Miller chairs they’ll need to unload for cheap? Maybe I should RSS a search on craigslist and keep an eye out.
Comment by Obstreperous Infidel on 9/19 @ 9:50 pm #
“A black liberal dude is to blame for all this? Of course! That’s it, of course! We’ve got us the perfect scapegoat, boys!”
Well, except for the incredibly immaterial “black” part of your incoherence, yes the liberal is a big part of the problem. You are too concerned with color. MLK would kick your ass. I broke my own pledge. Sorry.
Comment by dicentra on 9/19 @ 10:16 pm #
“there is no I in team.â€Â
“But there is a ME, if you look at it right.” — Gregory House M.D.
Comment by Republican on Acid on 9/19 @ 10:47 pm #
Man I love that character. It’s everything I couldn’t be, except addicted to opoids. I could probably do that pretty easily. But be witty off the cuff like that on a constant basis….Where are my writers god damnit?
Comment by Carin on 9/20 @ 6:58 am #
CNN tells me that this is all just distraction. So does Mitch Albom.
And thor really was weak up there. Perhaps today will be better?
Comment by Carin on 9/20 @ 7:01 am #
. Maybe time for we silent Americans to become activists
I thought that was what we were trying to do here? Unfortunately, we’re swimming against CNN, and NBS and ABC … and Hollywood, etc. I don’t mean to whine again about liberal bias, but when I hear the stupid shit swallowed by so many I just wanna cry.
Comment by Carin on 9/20 @ 7:03 am #
Honestly, I was so mad yesterday watching CNN, I had to get off the machine and do laps. Those fucking fuckers would rather take the whole country down than lose an election.
And, if that makes me sound like a moonbat …. well, that’s were the extra laps around the track come in handy.
Comment by Slartibartfast on 9/20 @ 7:22 am #
Try and keep it G-rated, Carin.
Comment by Carin on 9/20 @ 7:35 am #
Slart – I thought I’d made it clear that CNN is a GYM thing ;)
I’ve blocked the channel at my home.
I just have issues with changing the channel there. I’d rather turn it off and listen to music (Tool, of course) anyway. But people look at me funny when I just turn the tv off.
Comment by Slartibartfast on 9/20 @ 7:36 am #
Ah. My bad.
:p
Laps of…what? Running? Swimming?
Comment by Carin on 9/20 @ 7:41 am #
I don’t run – a few months of running will make my hip hurt. So, I keep my aerobic workouts to eliptical (sp?) training. When I get bored of that (after about 40 min) I’ll walk.
Comment by Merovign on 9/20 @ 1:35 pm #
Yeah, but there are two of them in “idiot.”
One of the first “political insights” that I remember is that “public-private partnerships” tended to wind up in bad places.
Comment by The Sanity Inspector on 9/20 @ 6:54 pm #
And the weird thing is that the market rallies for nationalization? WHA?
The markets will settle down and maybe even rally once they know what to expect. Federal oversight *koff*bungling*koff* is nothing to make them stand up and cheer, but with that scenario at least they’ll know what to expect.
Comment by The Sanity Inspector on 9/20 @ 6:57 pm #
And I’m mightily upset that my sound investments are getting bounced around in the wake of this meltdown; and also that thrifty, debt-free little me is being handed this gift-wrapped stinker to pay off via taxes. It burns me up, that I’m (happily) driving a ten year old near-jalopy and living in a 50 year old brick ranch, all paid for, and now I’ve got to bail out people who couldn’t face life after 30 without a McMansion and new Volvo that they couldn’t afford to their names.
Comment by mojo on 9/22 @ 9:10 am #
“there is no I in team.â€Â
No, but there’s an M and an E…
Comment by Swen Swenson on 9/22 @ 8:41 pm #
Unfortunately, they’re sore losers too..
Pingback by Kayak2U Blog » Blog Archive » The thugs of government on 9/22 @ 11:08 pm #
[...] much, and thought it seemed more real than stories about who voted for what when. Via Protein Wisdom, which has a slightly larger excerpt (and the WSJ link) and additional [...]
Comment by Alan bol on 9/25 @ 10:34 am #
So let me get this straight, republicans controlled the House, Senate, and Presidency, yet a samll all-powerful cabal of liberals was able to roll the republicans and get their way. Riiiiggghhht. Just like they did on everything else that was passed (or not) 2000-2006.
Comment by retirement plan on 7/26 @ 12:12 am #
retirement plan
Comment by Boy26 on 10/22 @ 11:57 am #
Sprinkle the baking soda and salt over the mixture and mix in. ,