Thursday, September 25, 2008

Wall Street, Congress and Main Street

I have said for the past year on BreakPoint that much of the financial crisis we are facing stems from moral failure—moral failure on the part of greedy Wall Street speculators, and moral failure on the part of ordinary Americans who bit off more mortgage than they could chew. And all of that is true.

But there is another cause of this crisis that we cannot ignore: the near-incestuous relationship between politicians and big-time government-supported financial institutions.

The near collapse and buyout of Fannie Mae and Freddie Mac are prime examples of Washington corruption. For at least a decade, a few brave politicians have sought to reform these quasi-governmental behemoths, only to be beaten back by political powerbrokers. Why? Because, as they say, money talks.

Few politicians are unsullied. According to, Fannie and Freddie spent more than $200 million lobbying Congress over the past decade. Among politicians, Barack Obama ranked number three in terms of campaign contributions received from the two agencies—more than $100,000. His chief advisor in the vice-presidential vetting process is a former CEO of Fannie Mae.

As for John McCain, to his credit, he has called for reform of both corporations. But according to the New York Times, his campaign manager “was paid more than $30,000 a month for five years as president of an advocacy group set up” by Fannie and Freddie “to defend them against stricter regulations.”

. . . keep reading here.

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