The link below contains a purported list of the top 25 in Congress who got contributions from the folks at Fannie and Freddie. Obama is listed third, after Dodd and Kerry, even though Obama is just a junior Senator. Obama is followed next by Clinton. Barney Frank and Nancy Pelosi are on the list as well.
http://www.investors.com/editorial/IBDArticles.asp?artsec=16&artnum=1&issue=20080918
Then there is the Senate Banking Committee Chairman Christopher J. Dodd who allegedly got special mortgage deals from Countrywide, who gave preferential rates to 'friends' of company's chairman.
http://www.msnbc.msn.com/id/25140560/
For an interesting article purporting to detail the House Financial Services Committee Chairs long history with Fannie Mae, See http://www.businessandmedia.org/printer/2008/20080924145932.aspx
"House Financial Services Committee Chair promoted GSEs while former 'spouse' was Fannie Mae executive."
The link below describes how some in Congress tried to use the original version of the bailout bill to divert money eventually recovered to groups like ACORN, a group Obama has a long association with. See:
http://online.wsj.com/article/SB122247015469280723.html?mod=googlenews_wsj
And then there is House Speaker Nancy Pelosi, who allegedly has directed nearly $100,000 from her political action committee to her husband's real estate and investment firm.
http://www.washtimes.com/news/2008/oct/01/pelosis-pac-pays-bills-for-spouses-firm.
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3. Goodbye, Washington consensus. For decades, the United States has been preaching about the benefits of minimal government intervention in the marketplace. Deregulation, privatization, trade liberalization, the message was always the same: trust markets more and governments less.
One can debate the merits of this takeover, but it is hard to dispute that the political optics have changed. Governments across the developing world had already rebelled against many aspects of the Washington consensus, but this move will make it harder for U.S. officials to preach the virtue of markets to others. If Fannie Mae and Freddie Mac are "too big to fail" in the U.S. economy, how many national champions are there in the developing world that merit similar claims?
4. Individuals still matter. The credit crunch makes it easy to talk about the power of structural factors and the massive pressure that impersonal capital markets can impose on governments. Don't be fooled, however. As scary as the current situation might seem, it would be even scarier if Henry Paulson was not Secretary of the Treasury.
Paulson matters domestically and internationally. Consider that his predecessors in the Bush administration were John Snow and Paul O'Neill. Neither man earned the trust of George W. Bush, and it is likely that neither man could have gotten Bush to sign off on the takeover. As the New York Times reports, however, Paulson was able to secure Presidential approval with a minimum of fuss.
Bush is not the only powerful actor to trust Paulson. One China watcher told me recently that last year, the leadership in Beijing decided that Paulson was the person they could trust in Washington. Top Chinese officials have been more willing to be candid and direct with him. This does not mean that Paulson takes orders from Beijing. He simply has better information at his fingertips.
Had this crisis happened in 2005, the outcome could have been very different. Foreign purchases of Freddie Mac and Fannie Mae securities might have dried up, and the political leadership in Washington might have been found wanting as well. The credit crunch would have morphed into a Category Five meltdown.
That could still happen.The initial market reaction was positive, but initial reactions can prove illusory. Because so many central banks have a stake in the current plan working out, however, the situation looks more hopeful than it did last week.
© 2008
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