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.”
But even more so, in this post, I just want to be sure I understand you, because I think you may have inadvertently got this statement backwards, and I bring it up because it is a key one (heck, the longest part of the title of the book)
You said in your post:
"Anyone who blames Ambition, Greed and Corruption” on the failure of a system..." is incorrect, in my opinion. Your statement should say:
"Anyone who blames the failure of a system on Ambition, Greed and Corruption..." I think it is wrong because your first statement says that the faults of Ambition, Greed and Corruption HAPPENED because the failure of a system occurred. And that is CLEARLY not the case presented by the authors.
In the second case (My rewording, to correctly reflect the authors of the book) is undeniably and unequivocally true. It is CLEAR that Ambitition, Greed and Corruption can and have destroyed many, MANY entities. More than you and I can count, and as far back as these characteristics have been attributable to men.
Fannie Mae was buying up mortgages before 1995, and this was indeed one of the prime functions of Fannie Mae, to allow mortgages be obtained by people who couldn't get them through "traditional" means (originally intended for farmers and other people whose lack of steady income made it difficult to get them loans.) Fannie Mae would BUY these loans with the full support of the US government behind them.
Then,beginning in the early to mid-nineties (and Fannie Mae WAS delivering sub-prime mortgages to "non-traditional" (read "minority or other who could not repay) at that time as part of the "Trillion Dollar Targeted Mortgage Financing" trumpeted by Fannie Mae in 1994
The REAL explosive part here was that FANNIE MAE was a FULLY BACKED GOVERNMENT ENTITY that was seen by ALL investment houses as COMPLETELY SAFE. They were FULLY BACKED by the FULL WEIGHT of the US Treasury. You lend money to a dead cat in the middle of the road, sell loan to Fannie Mae, who then, with the backing and support of places like Standard and Poors (who were in bed with them) Fannie Mae would bundle those dead cat loans into un-openable securities (to make it impossible for investors to look at the guts of the bundle) and sell them as investments to people who took them at their word, because after all, who is safer than someone backed 100% by the power of the US Treasury?
This is not the only book I have read on this, I have read five or six others, and they dovetail appropriately.
If you haven't read the book, you should refrain from condemning it so quickly. I would suggest you read it. It is not in any way a hit piece on Republicans, but neither does it exclude them because they are Republicans, which is as it should be. It is clear the issue is a liberal issue in both its genesis and largely execution.
In 1995, Fannie was essentially private, and was working the way it had been working for decades. Before the aforementioned legislation, Fannie and Freddie actually worked rather well, and without federal dollars.