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By Anonymous Mike, pseudonymously.

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Tuesday, September 9, 2008
Big Mac Attack

Some tempting to comment, so tempting, must resist temptation...

Nope, not gonna do it.

Instead let's look at Fannie Mae and Freddie Mac. When the Feds took the two mortgage giants into conservatorship. it was only yet the latest chapter in the ongoing saga of the two quasi-government corporations. The problem with the two is that they had one foot in the private sector, companies working to make a buck by providing liquidity to the mortgage market and thereby having things stockholders and income statements, and another foot in the public sector operating with implicit federal guarantees.

This split personality ends up being a glass half-full, glass half-empty argument. Some argue that the companies were forced to answer to 2 masters and ended up flopping because of the cognitive dissonance. I'll argue that by having 2 masters, the companies ended up having none and was able to use its public standing and resultant political support to dominate the secondary market and in the case of Fannie Mae commit accounting fraud on an Enron-level scale that resulted in massive bonuses paid to executives. The Wall Street Journal has been all over this here and here.

I am not going to pick out individual members of management and their political affiliation or the members of Congress that provided covering fire for them; there seems to be enough bipartisan
blame to go around. I am going to state that with all the corruption and mismanagement, that there was a symbiotic relationship between the 2 companies and the political Washington that gave us the mess we had today. It's type of mess, that type of culture that needs to be cleaned up.

So who are you going to hire to do it? One ticket has at the top a man who went along in one of the most political machines in the country, had ties to fundraisers who were later convicted on political corruption charges, and cannot pick a single incident in his legislative career where he bucked his party. To top it, he selected as a running mate a senator who is almost the living embodiment of establishment Washington.

At the other, you have at the top a man who bucked his party to the point of being an outcast, who battled the tobacco companies, and maid his reputation as a maverick. To top it, he selected as his running mate a governor who made her bones bucking her state's political party and battling the political influence of the energy companies.

So does Fannie Mae and Freddie Mac become issues in this election? It doesn't seem to be getting traction and that's a shame because I cannot think of a better embodiment of how Washington doesn't work then those 2.