PAUL GIGOT DEFENDS THE WSJ
Posted by PrestoPundit on 07/23/2008
against the lies of Paul Krugman, who’s been spreading all sorts nonsense about Democrat run Fannie Mae. Quotable:
[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 ..
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
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.