It’s rare when a major media outlet actually supports my position, that many of the things that are wrong with this country are the product of both parties’ and ideologies’ actions or inactions. But finally, at least one has done so. This past Sunday the Washington Post published an exposé of the failure of FNMA and FHLMC (better-known by the nicknames Fannie Mae and Freddie Mac) and the causes of the sub-prime mortgage lending practices that — after the article was published — led to the collapse of Lehman Brothers and the bailout of AIG:
As policymakers now set out to decide what role government, and the two companies, should play in the mortgage business, the failures of the past two decades offer a cautionary tale.
Blessed with the advantages of a government agency and a private company at the same time, Fannie Mae and Freddie Mac used their windfall profits to co-opt the politicians who were supposed to control them. The companies fought successfully against increased regulation by cultivating their friends and hounding their enemies.
The agencies that regulated the companies were outmatched: They lacked the money, the staff, the sophistication and the political support to serve as an effective check.
A parade of partisan minions from both parties moved through the halls of Freddie and Fannie (the latter more frequently). People on both sides of the ideological divide were able to “cash in,” landing lucrative do-nothing jobs, while the legions of pseudo-bankers who infested these agencies led the country into a morass of poor lending practices. Meanwhile, other folks — some also in government, but many in the private sector — profited handsomely as the US real-estate market was artificially propped up.
That’s right … the whole impetus behind “sub-prime lending” was to bring even more money into real estate once the market had become saturated and it appeared real-estate prices might deflate (sometime in 2003 or 2004 depending on the locale). Public figures and private magnates managed to keep the values of their real-estate holdings high, and made a good deal of money at it.
Don’t be fooled by anyone who says they didn’t see this coming, or that one party or the other was most to blame: It’s a lie. Everything that happened was foreseeable (even if perhaps no one wished to see it), and both parties and ideologies profited from it.
The Post’s sister site, Slate, published a story on Tuesday which cataloged many of the folks — from both parties — who were part of the parade of political minions who participated in the “Fannie/Freddie payoff” — and yes, they come from both parties. The Slate story’s headline is telling … “Fannie Mae and the Vast Bipartisan Conspiracy: A list of villains in boldface.”
I had not thought any media outlet capable of actually admitting to any “bipartisan conspiracy,” but there it is, from the respected Post/Newsweek company.