Fannie Mae and Freddie Mac expose the corruption culture in Washington, DC

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From: Judicial Watch

Fannie and Freddie Expose the Corruption Culture in Washington

The federal government announced earlier this week that it has seized control of mortgage giants Fannie Mae and Freddie Mac in a $200 billion corporate bailout, the largest in the nation's history. The shock waves are being felt not only in the financial markets, but also inside the Beltway as the two companies face allegations of corruption and cronyism. The whole bailout (and other federal actions) seems very socialist and dirigiste to me. But I'll leave the free market to critique our economic conservative friends. The one thing that is certain is that the collapse was avoidable, but oversight was lax because of the casual culture of corruption that pervades this city.

Overall, Fannie and Freddie have spent more than $180 million over the last 10 years to lobby their friends in Congress, making sure that nothing happened in Washington they didn't want to happen. According to Politico.com, "The two government-chartered companies run a highly sophisticated lobbying operation, with deep-pocketed lobbyists in Washington and scores of local Fannie- and Freddie-sponsored homeowner groups ready to pressure lawmakers back home." (Fannie Mae was also nabbed in an all-too-familiar accounting scheme where the company's profits were overstated so that top executives could reap huge cash bonuses.)

Of course, with the bailout, that has all changed -- for now anyway.

The tentacles of the Fannie and Freddie debacle reach deep into Washington and both political parties. Again, from Politico.com:

Franklin D. Raines, a former budget director in the Clinton White House, was paid $90 million in the five years he served as Fannie's CEO. He resigned amid an accounting scandal in 2004 with a $19 million severance package, though it was later whittled down after court challenges.

Former Clinton FBI Director Louis Freeh sits on Fannie's board today. Bush White House veteran Stephen Friedman was once a board member, and former Bush trade representative and State Department official Robert Zoellick did a tour as a Fannie executive vice president.

Freddie's foundation has its own list of heavy hitters. Among its former board members are Rep. Rahm Emanuel (D-Ill.), a confidant of Democratic nominee Barack Obama, and Harold Ickes, a senior adviser to both President Clinton and Sen. Hillary Rodham Clinton (D-N.Y.). From the Republican side, David Gribbin, an aide to Vice President Cheney, once sat on the board, and Robert Glauber, a former Treasury undersecretary, is on the board.

Another so-called "confidant" of Barack Obama, by the way, was none other than James Johnson, the former Fannie Mae CEO who was forced to resign from Obama's Vice Presidential vetting committee after the press reported Johnson had received preferable mortgage interest terms. (Johnson was also linked to shady fundraising practices when he was the head of the company.)

(And don't worry, the mortgage expert Charlie Rangel will continue to help oversee the mortgage companies in Congress.)

The fact is big government leads to more corruption. And it doesn't get much bigger than Fannie Mae and Freddie Mac, which dominated the $12 trillion home loan market, especially now that the federal government is running the whole show. The companies took care of both political parties, took more risks with the urging of their allies in Congress, and taxpayers are left holding the bag.

Arguably, this is the biggest government corruption scandal in our nation's history. But because "everyone" in Washington is involved, you won't hear a peep about it from our nation's Establishment.

Judicial Watch, on the other hand, has more than a few leads to investigate and I'll keep you informed as to what we find.

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