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July 21, 2008

The Unbearable Lightness of Being Christopher Dodd

By Patrick Casey

With the practical collapse of mortgage giants Fannie Mae and Freddie Mac upon us, a good measure of the political bias of the media is who they're claiming is responsible. After all, those two government supported enterprises (GSEs) are the biggest mortgage holders in the country, by a huge margin. And the drive-by media has proclaimed that we're in a nationwide "mortgage meltdown".

An unbiased media would go after the political party who has used these GSEs as cash cows to support their political activities and to provide employment for their apparatchiks, in return for providing political cover and federal funding for their private business activities. That would, of course, mean close scrutiny of the Democratic Party and its relationship with the GSEs during the election year of the anointed one, Barack Obama, which should give you an idea why the media isn't covering this mess to the extent warranted, if at all. (A related aside - Did you know that the top four recipients of political donations from the GSEs, according to OpenSecrets.org, are

1. Christopher Dodd,
2. John Kerry,
3. Barack Obama, and
4. Hillary Clinton?)


Luckily for us, the editorial page of the Wall Street Journal isn't willing to give the Democrats a pass on this one. They come through again with an editorial (Fannie and Freddie's Enablers) which, while it won't have the political impact of a series of front page expose articles in the New York Times or the Washington Post, should end the vice-presidential aspirations of one Christopher Dodd, at the very least.

You'll love this one. In the strange accountability of Washington, the same folks who put taxpayers on the hook for Fannie Mae and Freddie Mac are now demanding ransom to let taxpayers bail them out. It's as if Andy Fastow insisted that Enron shareholders pay his fines after his fraud cost them their life savings.

"I don't know how in good conscience you come up here and ask me to give unlimited lines of credit" to Treasury for Fannie and Freddie without giving Democrats something in return, Senate Banking Chairman Christopher Dodd (D., Conn.) told the Journal last week. Come again? This is the same Chris Dodd who long resisted tougher regulation while more recently handing Fan and Fred even more room to expand their risk-taking.

At a February hearing, he derided critics who he said were "repeatedly raising alarm bells about the risks Fannie and Freddie pose to the financial system." You may also remember Mr. Dodd as the fellow who got a sweetheart mortgage from former Countrywide Financial CEO Angelo Mozilo, who was thick as thieves with Fannie Mae.

To be fair, the editorial goes on to point out that there have been plenty of Republican enablers for the GSEs as well - including several important Senators and, it appears, all of the House GOP (who routinely join with all of the House Democrats on this issue). Which proves the point that many of us have been making recently - that the Republicans haven't yet learned the lessons they should have from the election of 2006.

Putting aside the admirable fairness of the Wall Street Journal's editorial reporting this morning, Fannie Mae and Freddie Mac is primarily a Democratic Party mess. They created them, and the Dems have nurtured and expanded them for the past half century. And at a critical time when the GSEs should be investigated and more closely regulated for the future, the Democrats in Congress successfully pushed for the majority of the private-sector sub-prime loan portfolios currently in trouble to be taken over by the GSEs - the same GSEs who, by any reasonable business standard, are themselves failing. That's a recipe for future disaster.

Oh well. At least we won't have Chris Dodd to kick around as Vice-President.
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