Paulson’s Delusions, Fannie Mae, and 9/11
Treasury Secretary Hank Paulson is now pushing a multibillion dollar bailout of the government-sponsored mortgage giants, Fannie Mae and Freddie Mac. But as the Wall Street Journal points out, just a few weeks ago, he was claiming that Fannie and Freddie were financially in good health, and signaling that he might support a mortgage bailout similar to that proposed by liberal lawmakers like Charles Schumer, Barney Frank, and Chris Dodd, whose mortgage bailout legislation relies on letting Fannie Mae and Freddie Mac grow even bigger as a way to pump liquidity into the financial system. The Journal hopes “he now realizes he was lied to” by Fannie Mae’s friends on Capitol Hill.
Fannie Mae engaged in massive accounting fraud to inflate the size of its managers’ bonuses. (Fannie Mae’s lawyer threatened to sue former Congressman Richard Baker (R-La.) after he attempted to publicize their huge pay). The Fannie Mae managers who profited from the fraud included former Clinton Administration official Franklin Raines, liberal power broker Jim Johnson, and Jamie Gorelick.
Few lawyers have done more harm to America than Jamie Gorelick. Gorelick created a bureaucratic “wall” against sharing intelligence data between foreign and domestic agencies that prevented the FBI from learning more about the 9/11 hijackers before they carried out their terrorist attacks. “In the days before September 11, the wall specifically impeded the investigation into Zacarias Moussaoui, Khalid al-Midhar and Nawaf al-Hazmi. After the FBI arrested Moussaoui, agents became suspicious of his interest in commercial aircraft and sought approval for a criminal warrant to search his computer. The warrant was rejected because FBI officials feared breaching the wall.”
Moreover, Gorelick and other lawyers blocked attempts to capture or kill Bin Laden. As Michael Scheuer, former head of the CIA’s Bin Laden desk, notes, “When we were going to capture Osama bin Laden, for example, the lawyers were more concerned with bin Ladenâ€˜s safety and his comfort than they were with the officers charged with capturing him. We had to build an ergonomically designed chair to put him in, special comfort in terms of how he was shackled into the chair. They even worried about what kind of tape to gag him with so it wouldnâ€˜t irritate his beard. The lawyers are the bane of the intelligence community.”
CEI has long warned about the dangers of government-backed lenders like Fannie Mae. CEI’s Fred Smith calls it “profit-side capitalism and loss-side socialism.”