Malkin: The mother of all financial scandals

Townhall.com ^ | 6-11-03 | Michelle Malkin

[cgk]

Malkin ping.

[MEG33]

We are the ones at risk!It's our money.

[Orangedog]

That's because they are faceless, government-sponsored enterprises in a complex, loosely regulated, highly leveraged monopoly business that has engaged in questionable accounting practices and put billions of taxpayer dollars at risk

This is a massive under-statement. If Fannie Mae and Freddie Mac were to suffer the same fate as Enron due to not having enough reserves to cover defaults, it would make the collapse of the tech bubble look like a walk in the park. Right now, new and existing home sales are just about the only thing keeping us moving ahead.

[risk]

Malkin writes like an industrial laser.

[Ruth A.]

You are right. Her opening paragraph is well-crafted.

[ikka]

Clinton-appointed board members at Fannie Mae include Marc Rich lawyer Jack Quinn and Janet Reno's lieutenant at the Justice Department, Jamie Gorelick. At the helm of Fannie Mae is another Clinton appointee, Franklin Raines, who was paid more than $4 million and had almost $6 million in unexercised stock options in his first year at the helm.

Who says crime doesn't pay?

[ggekko]

Its worse than that. The smart money believes that these two agencies have been speculating interest-rate derivatives to enhance yields of the mortgage-backed securities that they issue.

If this is the case then that is adding insult injury: the executives of these two quasi-governmental agencies have been speculating using the public's dime and then hiding losses in byzantine financial statments.

It makes Martha Stewart's alleged pecadillos seem mild by comparison.

[ggekko]

Its worse than that. The smart money believes that these two agencies have been speculating interest-rate derivatives to enhance yields of the mortgage-backed securities that they issue.

If this is the case then that is adding insult injury: the executives of these two quasi-governmental agencies have been speculating using the public's dime and then hiding losses in byzantine financial statments.

It makes Martha Stewart's alleged pecadillos seem mild by comparison.

[MEG33]

And much more complicated to investigate.

[Fractal Trader]

Are GSE's the real source of our economic malaise? Which is worse, Freddie Mac irregularites or Martha Stewarts charges? Who should really be going to jail?

Free Republic Stock Market/Economy Discussion List. Freep Mail me if you want on or off this list.

[palmer]

Excellent article, thanks for the ping.

[Marysecretary]

Oh, there's probably room in jail for both...

[GailA]

btt

[coloradan]

FYI

[Soren]

Martha Stewart seems like a smoke screen to me- run it through the papers until the public gets sick of financial scandals and has no interest when it comes time to prosecute the big time criminals. I don't condone what she did, but $50,000 doesn't even qualify as chickenfeed. Meanwhile, the major Wall Street players are getting fined left and right and the story has no legs.

[Starwind]

Meanwhile, the major Wall Street players are getting fined left and right and the story has no legs.

Martha stewart's insider trading is readily understood by the media and readership. IPO laddering, derivative risk, and off-balance sheet special entities are rather arcane.

The media doesn't understand and can't explain them sufficiently. Franklin Raines and David Glenn don't do cooking shows and aren't terribly recognizable.

Then too the actual facts surrounding Martha Stewart were more readily obtainable whereas the investigations into investment banks and GSE's are buried under layers of auditors, lawyers and agencies.

[plusone]

I have to admit I really don't understand these two GSE's. But from what I read, I think this might be a bigger scandal than the S&L bailout (read: most massive taxpayer ripoff of the century) of the 1980's. Anything gov't backed is open to massive abuse.

[plusone]

Yes, and to think largely the same group of people are in charge of our pensions and the value of our life savings... It's no wonder gold bugs thrive in this type of climate.