Tag Archives: Fannie Mae
We won’t have Barney Frank to kick around any more and vice versa – here’s Dana Milbank on Barney the Bully.
This was inspired by one of my favorite Don Wright cartoons. Unfortunately I can’t seem to find a link to it. The cartoon featured a Vietnamese family standing in a landscape of bomb craters waving thanks to American jets as they flew away at the end of the war.
I’ve always considered Barney Frank just as much a friend to the poor as we were to the Vietnamese.
Continuing to lead from behind, Obama followed the examples of Dick Durbin and the Occupy Wall Street Teatotalitarians (your totalitarian alternative to the Tea Party) by taking a whack at the banks. True, banks are greedy. I think it’s in their mission statements. They maximize bail-out dollars for pension fund shareholders.
Still, there was no mention of the gal who made it all possible – Fannie Mae.
Wall Street wasn’t an innocent bystander but Gretchen Morgenson and Joshua Rosner pin the blame for the financial meltdown on Fannie Mae in their book Reckless Endangerment. They say Fannie head, James Johnson figured out how to monetize the outfit’s government backing.
Under Johnson, an important Democratic operative, Fannie Mae became, Morgenson and Rosner say, “the largest and most powerful financial institution in the world.” Its power derived from the unstated certainty that the government would be ultimately liable for Fannie’s obligations. This assumption and other perquisites were subsidies to Fannie Mae and Freddie Mac worth an estimated $7 billion a year. They retained about a third of this.
Morgenson and Rosner report that in 1998, when Fannie Mae’s lending hit $1 trillion, its top officials began manipulating the company’s results to generate bonuses for themselves. That year Johnson’s $1.9 million bonus brought his compensation to $21 million. In nine years, Johnson received $100 million.
Fannie Mae’s political machine dispensed campaign contributions, gave jobs to friends and relatives of legislators, hired armies of lobbyists (even paying lobbyists not to lobby against it), paid academics who wrote papers validating the homeownership mania, and spread “charitable” contributions to housing advocates across the congressional map.