A Bad Day for Travel

The only thing more disspiriting than imagining Hank Paulson with a blank check is observing the sheer gracelessness with which members of Congress are pursuing their “oversight powers.”  Yes, there probably should be some oversight; yes, various proposals for government equity ownership may make some sense; yes,  there probably should be some compensation guidelines for the new entities).

But honestly.  To think that Chris Dodd and Barney Frank, who were freaking *owned* by Fannie and Freddie, suddenly know what they are doing after years of ineptitude–doesn’t that strain credulity?  To hear Steny Hoyer talking about who should be paid what?  How on God’s earth would he (i.e., his staff) know?

The whole scene reminds me of a recent comment by one of my more mordant and reclusive friends, appropos of another situation in which elected officials were trying to tackle a complex issue.  “You know what this is like?” said my friend.  “It’s like going down the the bus station, rounding up all the bums, and saying ‘fellas, we need you to run air traffic control today.'”

One thing McCain has right:  there actually should be some sort of very serious commission that will recommend new regulatory structures to the new Congress.  Maybe, just maybe, having the draft of a framework come from outside the House would actually insulate it from the corrosive influence of the various financial services lobbies.  This should happen in the first hundred days or so of the administration. 

In the mean time, I say let Treasury have carte blanche.  Nibbling at Paulson with rushed, arbitrary, or–far worse–lobby-driven additions and deletions will almost certainly run afoul of the Law of Unintended Consequences.  Perhaps I’m belaboring the obvious, but a body of 535 politically ambitious human beings–every one of whom is playing to the folks back home–is not exactly optimized for crisis management.

Oh, and one further note to Congressional Democrats:  Damn-the-torpedoes affordable housing was *your* baby.  Fannie and Freddie were largely *your* whorehouse.  It might not be the worst idea to keep your heads down.


4 Responses to A Bad Day for Travel

  1. CDavis - Houston, Texas says:

    This reminds me of another expression: “It’s amazing what can get done if it doesn’t matter who gets the credit.” In other words these now more conspicuous congressional guardians of all that is good in decent want to visibly “save us”…A mild version of McCarthy at the microphone.

    In a not-so-mild form…isn’t the oversight request a suggestion that the repair process itself is likely to be corrupt and that the checkers need to be checked. Who is on what team? This feels like the secret police inside the secret police.

    On the issue of equity ownership…I loved this morning’s question from Paulson…”Why do we encourage sovereign funds to take equity positions in our financial institutions but suggest that our taxpayers should not?”

    On another front, many could not possibly begin to appreciate the magnitude of the impact of Naked Shorting has enabled gaming the system. No idea.


  2. Eugene says:

    Completely disagree about Freddie and Fannie being D’s responsibility. The subprime market was about greed and lack of oversight, it wasn’t motivated by wanting to get lower and moderate income folks into housing. It was about selling houses, about making fees off mortgages, about securitizing and selling these mortgages about then making fees off credit default swaps.

  3. johndthornton says:

    Gene, you gotta give me a break here. Fannie and Freddie have been run *exclusively* by the ultimate Washington insider D’s who were “between jobs” in government. During their tenure, they were sanctioned for crooked accounting and crooked campaign finance. Campaign contributions from the GSEs have been almost 2:1 to D’s in the past two cycles. The GSE lobby very actively supported Dodd’s nomination bid, although almost nobody else did. Check that, I forgot about the Firefighters. They liked Dodd.

    Of course, some of these cats were worse than others–my impression is that Jim Johnson is a really standup guy, even if he was a little too friendly with Angelo Mozillo. Raines, not so much. And this current crop: convincing their boards that they should be compensated based largely on “market share.” Mmmmm, mmmm.

    I agree with the part about greed and lack of oversight, but that’s been true since at least the Reagan administration, at least as it relates to Fannie Mae. I just can’t believe that Frank and Dodd can say they were “shocked, shocked to find gambling in the casino” with anything like a straight face.

    True, plenty of blame to go around. But still, the GSEs were largely a D trough. That is, an ex-aide told me, why the administration never appointed their 5 directors.

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