Déjà vu: Fannie Mae, Corporate Socialism and John McCain

The parallels are astounding. So astounding, that I can’t help but think that the current Fannie Mae/Freddie Mac crisis will cause people (even in major media?) to retell the story of the Savings and Loan crisis and the related Keating 5 story, where John McCain was caught in an influence-peddling scheme.

Did you hear the news that it is expected the government will have to bail out Fannie Mae and Freddi Mac? They are two government-guaranteed shareholder owned companies related to the mortgage industry.

Three Article Excerpts:

Story One: The current crisis with Fannie Mae and Freddie Mac

from Yahoo News:
Government may soon back troubled mortgage giants
By ALAN ZIBEL, AP Business Writer 1 hour, 41 minutes ago

WASHINGTON – The government is expected to take over Fannie Mae and Freddie Mac as soon as this weekend in a monumental move designed to protect the mortgage market from the failure of the two companies, which together hold or guarantee half of the nation’s mortgage debt, a person briefed on the matter said Friday night.

Some of the details of the intervention, which could cost taxpayers billions, were not yet available, but are expected to include the departure of Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron, according to the source, who asked not to be named because the plan was yet to be announced…

Fannie Mae was created by the government in 1938, and was turned into a shareholder-owned company 30 years later. Freddie Mac was established in 1970 to provide competition for Fannie.

A government takeover could cost taxpayers up to $25 billion, according to the Congressional Budget Office.

But the epic decision highlights the size of the threats facing the housing market and the economy. On Friday, Nevada regulators shut down Silver State Bank, the 11th failure this year of a federally insured bank. And earlier this year, the government orchestrated the takeover of investment bank Bear Stearns by JP Morgan Chase.

Story Two: History of the Savings and Loan Crisis and the Keating 5 (of which John McCain is one)

from Wikipedai entry “Savings and Loan Crisis”

The savings and loan crisis of the 1980s and 1990s (commonly referred to as the S&L crisis) was the failure of 747 savings and loan associations (S&Ls) in the United States. The ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government—that is, the U.S. taxpayer, either directly or through charges on their savings and loan accounts[1]—which contributed to the large budget deficits of the early 1990s. The resulting taxpayer bailout ended up being even larger than it would have been because moral hazard and adverse-selection incentives compounded the system’s losses. [2]

[Wikipedia entry continues]

Lincoln Savings and Loan

The Lincoln Savings led to the Keating Five political scandal, in which five U.S. senators were implicated in an influence-peddling scheme. It was named for Charles Keating, who headed Lincoln saving and made $300,000 as political contributions to them in the 1980s. Three of those senators – Alan Cranston, Don Riegle, and Dennis DeConcini – found their political careers cut short as a result. Two others – John Glenn and John McCain – were rebuked by the Senate Ethics Committee for exercising “poor judgment” for intervening with the federal regulators on behalf of Keating.[10]

Story Three: The way the mainstream press handles the John McCain story. Interview of author Paul Waldman by Amy Goodman of Democracy Now!

Comments of Paul Waldman, author of “Free Ride: John McCain and the Media”

These days, when Keating Five gets mentioned, it’s kind of a redemption story, sort of like George W. Bush’s drinking. The story the press tells us: well, you know, he had this sort of youthful indiscretion with Charles Keating, where he put pressure on federal regulators to ease off of their investigation of this crooked S&L operator, but then he was reborn as a reformer, and he would sin no more. Well, the truth is that what he did for Charles Keating, he has done in more recent cases, for instance, the Paxson Communications case, which was almost exactly the same thing as he did with Charles Keating, putting pressure on federal regulators on behalf of a big donor and flying around the country on that donor’s corporate jet.

One Response

  1. You say: “The parallels are astounding. So astounding, that I can’t help but think that the current Fannie Mae/Freddie Mac crisis will cause people (even in major media?) to retell the story of the Savings and Loan crisis and the related Keating 5 story, where John McCain was caught in an influence-peddling scheme.”

    Well, I noted that too:

    http://normdoering.blogspot.com/2008/09/can-mccain-be-redefined-as-crook.html

    I think Obama ought to make a TV ad about it, linking Bush and McCain on the deregulation policy.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: