[Contrary to the BS of Paul Krugman] Fannie Mae and Mr. Mozilo [at Counrywide] weren't competitors; they were partners. Fannie helped to make Countrywide as profitable as it once was by buying its mortgages in bulk. Mr. Raines -- following predecessor Jim Johnson -- and Mr. Mozilo made each other rich. Which explains why Mr. Johnson could feel so comfortable asking Sen. Kent Conrad (D., N.D.) to discuss a sweetheart mortgage with Mr. Mozilo, and also explains the Mozilo-Raines tag team [attacking Gigot] in 2003. I recount all this now because it illustrates the perverse nature of Fannie and Freddie that has made them such a relentless and untouchable political force. Their unique clout derives from a combination of liberal ideology and private profit. Fannie has been able to purchase political immunity for decades by disguising its vast profit-making machine in the cloak of "affordable housing." To be more precise, Fan and Fred have been protected by an alliance of Capitol Hill and Wall Street, of Barney Frank and Angelo Mozilo.
I know this because for more than six years I've been one of their antagonists. Any editor worth his expense account makes enemies, and complaints from CEOs, politicians and World Bank presidents are common. But Fannie Mae and Freddie Mac are unique in their thuggery, and their response to critics may help readers appreciate why taxpayers are now explicitly on the hook to rescue companies that some of us have spent years warning about ..
Also this:
Fan and Fred also couldn't prosper for as long as they have without the support of the political left, both in Congress and the intellectual class. This includes Mr. Frank and Sen. Chuck Schumer (D., N.Y.) on Capitol Hill, as well as Mr. Krugman and the Washington Post's Steven Pearlstein in the press. Their claim is that the companies are essential for homeownership. Yet as studies have shown, about half of the implicit taxpayer subsidy for Fan and Fred is pocketed by shareholders and management ..
And that's about all you need to know about the left today. It's a twisted, corrupt cover for a massive plundering of wealth and grasping of power, and academics like Krugman are simply the most intellectually dishonest of the bunch.
UPDATE: Thomas Sowell on the Democrats and the banks.And this from Jim Lindgren:
Some people thought that I was too hard on the former managers of Fannie Mae, whose greed and misconduct in their Enron-style accounting scandal of 2003-4 helped to destroy the soundness of a huge quasi-government agency.
Now comes Paul Gigot recounting just how thuggish their behavior was. The Fannie Mae officials at the time made millions in unearned profits from phony accounting to maximize their bonuses while trying to intimidate -- and when that didn't work, to destroy -- any politician who dared to stand up to their corruption.