The Corner

This Was All Predictable

That is an astounding tape of the past 2004 House hearings on Fannie Mae and Freddie Mac, in which Reps. Walters, Meeks, Davis, Clay, and Frank (who really should recuse himself from the present discussions given his culpability for the original mess) essentially bully and all but call the honest worried bank regulators liars and quasi-racists after hearing their prescient warnings that these institutions were suspect, violating accounting laws in Enron-like fashion, verging on insolvency, and being used as cash cows for their dishonest administrators.

The shouting, accusations, grandstanding, praise of 100% financing, and kudos to Franklin Raines (whose creative accounting allowed himself and his cronies multimillion dollar bonuses) are surreal. And to watch these exchanges is chilling since it is a scary example of demagoguery in which statistics and audits, in postmodern fashion, are attacked as biased.

PS. As I recall Raines was the one who, following the Enron scandals, gave public lectures about corporate responsiblity and CEO honesty. And as one begins to read about Raines, James Johnson, Jamie Gorelick, and Leland Brendsel at Freddie Mac, one begins to understand their modus operandi. Freddie and Fannie were landing pads for former Democratic insiders, who milked the agencies for millions in bonuses as they covered their tracks by donations to Congressional candiates and pseudo-racial-populism of helping minorities buy homes with little down. Their careers are every bit as nauseating as anything at Enron — and yet the press strangely does not go after them in the manner we learned of Ken Lay’s deceit. God help us all.

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