Tag Archives: dsk
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.
DSK OUT IMF
Bon vivant eurocrat, Dominique Strauss-Kahn (DSK), has stepped down from his post as managing director at the IMF. Abusing the economies of troubled countries from his current post at Rikers Island, where he stands accused of raping a hotel maid, must have proved too difficult.
DSK’s fall brings to mind the ousting of Paul Wolfowitz from leadership of the World Bank for his unprovoked attempt to bring accountability to that institution. Christopher Hitchens rehashes that one here in Slate.
