Excerpted from Slate: “Fannie Mae and the Vast Bipartisan Conspiracy”, Jack Shafer, Sept. 16, 2008
* * * * *
My POV:
Slate leans left, so I find its revelations particularly note worthy. Repubs are dirtied by drinking from the lobbying trough. Dems own the CEOs and folks who raked off the uber-dollars. A pretty disgusting picture … Read the full article (link below) for names of “bit” players and more context.
* * * *
Article Highlights
The blowup and bailout of Fannie Mae and Freddie Mac by taxpayers was foretold so many times in the last three decades by critics of the two federally chartered and subsidized mortgage giants that not even the data-searching powers of Nexis, Factiva, and Google combined can total them.
The Wall Street Journal editorial page deserves a special commendation for hammering these two outposts of corporate socialism, not that the page’s many warnings over the years helped avert disaster.
Mae and Mac—especially Mae—were just too nurtured by the Washington establishment — an “influential network that extends from the highest reaches of the Clinton Administration to the ranks of conservative Republicans on Capitol Hill.”
The bipartisan network provided the essential cover Fannie Mae needed to run its scam.
* * * * *
The key to Fannie Mae’s survival was the patronage operation it ran. “For years, high-level jobs at Fannie Mae were lucrative prizes for lawyers, bankers and political operatives waiting for their next U.S. government post.”
Now that the jig is up, let’s meet some of the bipartisan warriors who fought for Fannie Mae’s right to plunder.
At the top of the list we must place Franklin D. Raines, chairman and chief executive officer of Fannie Mae from 1998 to 2004. Raines, who served as director of the Office of Management and Budget under President Clinton. He was forced to leave Fannie Mae in 2004, when regulators discovered it had broken accounting rules “in an effort to conceal fluctuations in profit and hadn’t maintained adequate risk controls.” The New York Times reported two year ago that regulators “have said that of the $90 million paid to Mr. Raines from 1998 to 2003 at least $52 million—more than half—was tied to bonus targets that were reached by manipulating accounting.” Raines agreed to a $24.7 million settlement with a federal regulator in exchange for charges being dropped, but he admitted no wrongdoing.
Next up is Jamie S. Gorelick, Deputy Attorney General during the Clinton administration. Although Gorelick had no background in finance, she joined Fannie Mae in 1997 as vice chair and departed in 2003. For her trouble, Gorelick collected a staggering $26.4 million in total compensation, including bonuses.
Republicans also proved willing to serve Fannie Mae. Robert B. Zoellick, current head of the World Bank, has served President Reagan, President Bush 1, and President Bush 2 as a trade representative, deputy secretary of state, deputy secretary of the treasury, deputy chief of staff, and so on. Zoellick’s title at Fannie was executive vice president in charge of lobbying, public affairs, and affordable housing. According to a July 23, 1997, report in the American Banker, Zoellick “has used his close ties to Republicans in Congress, such as Speaker of the House Newt Gingrich, to defend Fannie Mae from new taxes.”
Moving back across the aisle, let’s say hello to Mr. Democrat James A. Johnson, who ran Fannie Mae from 1991 to 1998, served as vice chairman from 1990 to 1991, and earlier worked as a managing director at Lehman Bros. and for Vice President Walter F. Mondale. He made news earlier this summer when he had to resign as vice-presidential-candidate vetter for Barack Obama “as new details emerged about loans Mr. Johnson received from mortgage lender Countrywide Financial” Mr. Johnson has made Fannie Mae both a launching pad and a landing strip for officials moving in and out of politics and Government in Washington.” Johnson earned nearly $21 million from Fannie Mae in 1998.
But Fannie Mae is nothing if not ecumenical. According to the Associated Press, Fannie Mae and Freddie Mac have spent $170 million on lobbying in the past decade. “Fannie Mae’s 51-member lobbying stable” includes “former Reps. Tom Downey, D-N.Y., and Ray McGrath, R-N.Y.; Steve Elmendorf, a Democratic political strategist and former congressional aide; and Donald Fierce, a longtime GOP operative. Freddie Mac’s list of 91 lobbyists includes former Reps. Vin Weber, R-Minn., and Susan Molinari, R-N.Y.” The AP notes the Fannie Mae ties enjoyed by McCain campaign manager Rick Davis and Arthur B. Culvahouse Jr., who helped in McCain’s veep search. According to Politico, McCain economic adviser Aquiles Suarez worked as Fannie Mae’s director of government and industry relations, and McCain finance co-chairman Frederic V. Malek spent time on the Freddie Mac board.
* * * * *
The bipartisan Fannie Mae gang appears to have broken few, if any, laws. Their crime was to have practiced—without any thought of the consequences—”access capitalism,” which Michael Lewis defined in the New Republic as “a neat solution for people who don’t have a whole lot to sell besides their access, but who don’t want to appear to be selling their access.”
“The scandal in Washington isn’t what’s illegal. It’s what’s legal.”
“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.”
* * * * *
Full article:
http://www.slate.com/id/2200160/
* * * * *
Want more from the Homa Files?
Click link => The Homa Files Blog
SHARE THIS POST WITH FRIENDS & FAMILY
![[Chart]](https://i0.wp.com/s.wsj.net/public/resources/images/NA-AS653_RETIRE_NS_20080921192028.gif)
The Homa Files 