Fannie was pressuring banks to write mortgages with no money down and no proof of income. What could go wrong?
In 2004, Bush's White House Chief Economist Gregory Mankiw warned that Fannie was creating "systemic risk for our financial system." In response, Barney Frank went to a champagne brunch with his partner "just because."
Democrats saw nothing of concern in the Fannie debacle. Bad mortgages don't contain sodium, do they? They don't engage in "hate speech." And they don't emit carbon dioxide. There was nothing to catch a Democrat's eye.
In 2005, when the housing bubble burst, Sen. Chuck Schumer, D-N.Y., introduced a bill allowing Fannie Mae to buy up even more schlock mortgages, apparently reasoning that if owning some toxic mortgages is bad, owning lots of them must be better!
He accused Republican opponents of his suicidal bill of being against affordable housing. (And that is a specific example of how liberals love the poor so much, they promoted policies to create millions more of them.)
As late as 2008, Sen. Chris Dodd, D-Conn., who had received more than $133,000 in political contributions from Fannie Mae, called Fannie "fundamentally strong" and "in good shape" -- which is the kind of thing the Politburo used to say about Yuri Andropov right after he died.
(Amazingly, Dodd was only the second most embarrassing Democrat to run for president in 2008, but only because John Edwards was also running that year.)
As the titanic losses were racking up, Fannie Mae's operators, Franklin Raines and Jamie Gorelick, disguised the catastrophe by orchestrating a $5 billion accounting fraud -- all the while continuing to pressure banks to make absurd, politically correct loans and denouncing Republicans as enemies of the poor.
In Gorelick's defense, at least when she was wrecking the economy, she wasn't able to wreck national security by building any more walls between the FBI and the CIA.
Have you ever noticed that whenever there's a major calamity in this country, the name "Jamie Gorelick" always pops up? I think I'll pull some articles about the Great Chicago Fire from Nexis to see if there was a "Gorelick" living on Catherine O'Leary's block.
As Peter Schweizer points out in his magnificent book "Architects of Ruin," which everyone should read, Enron's accounting fraud was a paltry $567 million -- and it didn't bring down the entire financial system. Those involved in the Enron manipulations went to prison. Raines and Gorelick not only didn't go to jail, they walked away with multimillion-dollar payouts, courtesy of the taxpayer.
(Here's more fascinating Jamie Gorelick trivia: That giant wall she built between the FBI and the CIA, making 9/11 possible? It was financed with a risky loan from Fannie Mae.)
Under the Democrats' 2010 "Financial Reform" bill (written by Chris Dodd, Barney Frank and Goldman Sachs), Raines keeps his $90 million, Jamie Gorelick keeps her $26.4 million, and Goldman keeps its $12 billion from the AIG bailout.
Let's get it back. Twelve billion, one hundred and sixteen point four million dollars might not sound like a lot to you, but it starts to add up.