Category Archives: Fannie Mae
Real Scandal
Politico had over 90 stories last week about the Herman Cain sexual harassment allegations. It’s still unclear just what is being alleged but it doesn’t appear to include pulling down his pants and ordering a subordinate to “kiss it”. That would be the charge against President Bill Clinton from about the same era.
Oddly, women’s groups swarmed to the defense of the “lovable rogue” and, after being impeached, he weathered the storm – minus his Arkansas law license.
None of us, however (at least not the 99%), weathered the storm caused by another scandal with racial overtones. Paul Sperry reported in IBD, how Clinton pressured financial institutions to make home loans to the un-creditworthy. Meanwhile, MSN Money quotes David Weidner, of Marketwatch, saying Clinton’s biggest mistake was the repeal of Glass-Steagall.
Business Week reported this week that, after stating a $4.4 billion loss for the third quarter, Freddie Mac will seek an additional 6 billion dollar bail-out from taxpayers.
President’s in Glass White Houses Shouldn’t Throw Bricks
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.
Bureaucratic Swarms
David Harsanyi gives a shout out to the “terrorists” for limited government.
Walk the Walk
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.
