The current financial crisis is no surprise. A WSJ editorial in October 2004 said Fannie has been “cooking the books. Big time.” (at left: NYSE traders yesterday after the Dow plummetted 800 points).
Repeated warnings were sounded.
Our elected government do-nothings did nothing.
Here's what you need to know. Fannie and Freddie are the two biggest mortgage holders in the country. Fannie Mae and Freddie Mac are government-sponsored entities that were designed to help with the noble goal of allowing more Americans to own a home. Congress gave Fan and Fred special privileges long ago. They were allowed the benefits of completely private companies but not required to follow the same rules. They don't have to register their securities or file insider trading forms with the Securities and Exchange Commission. In other words, they don't have to disclose how they are running their business to investors.
Two WSJ editorials in 2002 and 2004 were entitled "Fannie Mae Enron" in an attempt to show the scary similarities between Enron and Fannie Mae. The losses in the current banking crisis dwarf those of Enron, and it took government investigators five years to make their complicated case against the Enron executives. One wonders if they'll ever figure this one out.
I believe this is the real "crime of the century," and like O. J. Simpson after his first trial, I predict Congress members will spend the next few years feigning disgust in congressional hearings and on beautiful golf courses while looking for the "real killers" of our economy.