I have just finished reading one of the best books on the subprime crisis: "Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon" by Gretchen Morgenson and Joshua Rosner.
In 1995, Jim Johnson (Fannie Mae CEO) the corrupt liberal SOB responsible for damaging our economy more than any other single person (in my opinion) was in the process of opening up Fannie Mae branches all over the country.
James Johnson saw the company as the cash cow it was for the bureaucrats who ran it, and implemented a strategy that was on the job 24x7 with eyes and ears everywhere. He created Fannie Mae branches in a huge number of cities across America (I think it was between 50 and 100) staffed by like-minded people who served as the canary in the coal mine for any push back. They had armies of powerful lobbyists with lots of important connections.
At the opening of one of these newly opened, metastatic evil Fannie Mae branches in Atlanta NEWT GINGRICH got on stage with that damned CRIMINAL, and this is what he said:
GINGRICH: "Fannie Mae is an excellent example of a former government institution fulfilling its mandate while functioning in the market economy...Fannie Mae has had a regional presence in Atlanta for over 40 years and the announcement of a partnership office demonstrates its continued commitment to affordable housing in the Atlanta metropolitan area."
(Note that as the authors state, it was COMPLETELY FALSE AND INACCURATE to characterize Fannie Mae as a "former government institution".)
More to the point...Newt shouldn't have been up on the stage with this guy because he was a crook and a damned evil liberal hack, he shouldn't have been up there because he was for small government (and Fannie Mae was the complete ANTITHESIS of that) and he shouldn't have praised Fannie Mae, which more than any other institution has damaged the economy immeasurably.
In my opinion, there is a lot to like about Newt and the way he changed the political scene when he entered it, but I have a hard time explaining his support for Fannie Mae, the epitome of the government food trough and wealth redistribution while enriching the pockets of those who run it and those who politically support it (Like Gingrich and President Bush). Gingrich wasn't in 1995 even and isn't in 2011 the same guy he was in 1994.
I’ll concede at the very least that in 1995, Newt liked Fannie Mae. Fannie Mae was not SUPPOSED to be federally funded, which is part of why Newt liked Fannie Mae. In 1995, Fannie Mae had not yet been used as a tool for tying the banks to the federal government. In my article, you’ll note that the Clinton Administration used novel reasoning to make Fannie Mae a tool of tying the banks to federal policies, and that still required the passage of Gramm’s banking bill, the grand compromise I referred to.
Anyone who blames “Ambition, Greed and Corruption” on the failure of a system is someone you should run screaming from. That title alone suggests that Morgenson and Rosner don’t have a freaking clue about how the American system works. Because ambition, greed and corruption are constants in the human condition, which cannot be removed from the human soul by government, and cannot be countered successfully by laws.
What a society CAN do is create laws which redirect the God-given motives which greed and corruption are the perversions of into legal acts which are mutually beneficial for the tempted individual and the larger society. People don’t corrupt governments; governments corrupt people. If someone asserts that a system was ruined by greed, the question is what God-damned idiot — and I mean that literally — designed a system that would rely on the nonexistent altruism of the marketplace or the logically impossible spiritual cleansing of government?
(Please read “Democracy in America.”)
Morgenson is the business and financial editor of the NEW YORK TIMES. Not someone you want to be taking lessons in capitalism from. She has been busted on dozens of times for plagiarizing from blogs, and has been called by Calculated Risk, as “a noxious mixture of fact and hype, information and innuendo.” Business Insider titled an article, “Gretchen Morgenson Officially Blows Her Credibility On Derivatives With Ridiculous Confusion About Swaps.”