Fannie Mae and the Vast Bipartisan Conspiracy
A list of villains in boldface.
Read more about Wall Street's ongoing crisis.
Moving down the Democratic Party food chain, we meet William M. Daley, son of former Chicago Mayor Richard J. Daley and brother of current Chicago Mayor Richard M. Daley. Daley worked as special counsel to President Clinton and chairman of Al Gore's 2000 presidential campaign. He also served as a Clinton secretary of commerce from 1997 to 2000, and earlier as president of Amalgamated Bank in Chicago. He is now an executive at JPMorgan Chase & Co. Daley was appointed to the Fannie Mae board in 1993 by President Clinton.
As part of the "leave no Democrat behind" campaign, Johnson's Fannie Mae hired Walter Hubbell, son of Webster L. Hubbell, in 1994. Walter Hubbell got his job, the Times' Stevenson reports, "after Mr. Johnson and other executives received calls from Administration officials—including Mickey Kantor, who was then the United States trade representative—urging them to do so. At the time, the White House had undertaken an effort to help the Hubbell family financially after the senior Mr. Hubbell's resignation from the Justice Department." He got a slot in the marketing department, where Johnson said he was an ''outstanding" employee.
But Fannie Mae is nothing if not ecumenical. According to the Associated Press, Fannie Mae and Freddie Mac have spent $170 million on lobbying in the past decade. "Fannie Mae's 51-member lobbying stable" includes "former Reps. Tom Downey, D-N.Y., and Ray McGrath, R-N.Y.; Steve Elmendorf, a Democratic political strategist and former congressional aide; and Donald Fierce, a longtime GOP operative. Freddie Mac's list of 91 lobbyists includes former Reps. Vin Weber, R-Minn., and Susan Molinari, R-N.Y." The AP notes the Fannie Mae ties enjoyed by McCain campaign manager Rick Davis and Arthur B. Culvahouse Jr., who helped in McCain's veep search. According to Politico, McCain economic adviser Aquiles Suarez worked as Fannie Mae's director of government and industry relations, and McCain finance co-chairman Frederic V. Malek spent time on the Freddie Mac board.
A totally brilliant and prescient Washingtonianarticle from 2002 by Ross Guberman harvests a bunch of politicos who benefited from and supported Fannie Mae. Arne Christenson, a former Newt Gingrich aide, was senior vice president for regulatory policy. Tom Donilon was Fannie Mae's executive vice president for law and policy and secretary to the board of directors until 2005. He worked in the Clinton State Department and as part of the 1992 Clinton-Gore transition. William Maloni worked for Rep. William S. Moorhead, D-Penn., the Federal Home Loan Bank Board, and the Federal Reserve before joining Fannie Mae, where he worked in government relations for more than 20 years. * Of Fannie Mae's board of directors, Guberman writes that it is "political by design."
The company's charter gives the President the right to appoint five of the board's 18 members. The idea was to ensure that Fannie fulfilled its public mission. Today the five appointees, considered big winners in the capital's game of spoils, promote the interests of Fannie's shareholders. Recent directors include Ann McLaughlin Korologos, Ronald Reagan's Labor secretary; Ken Duberstein, Reagan's chief of staff; Bill Daley, former Commerce Secretary and Gore spokesman during the 2000 election controversy; and Jack Quinn, counsel to Bill Clinton and lawyer to pardoned fugitive Mark Rich. [Emphasis added.]
The bipartisan Fannie Mae gang appears to have broken few, if any, laws. Their crime was to have practiced—without any thought of the consequences—"access capitalism," which Michael Lewis defined in the New Republic as "a neat solution for people who don't have a whole lot to sell besides their access, but who don't want to appear to be selling their access."
The easiest way to end this article—and I'll take it—is to cite Michael Kinsley's tidy formulation: "The scandal in Washington isn't what's illegal. It's what's legal."
Addendum, Sept. 17:International Economy magazine identified additional Fannie Mae enablers in its July-August 1999 issue in an article by Owen Ullmann titled "Crony Capitalism: American Style." Ullmann fingers Duane Duncan, a Fannie Mae vice president who previously worked as staff director for Rep. Richard Baker, R-La., who chaired the House banking subcommittee; Ellen Seidman, Fannie Mae senior vice president, who worked as director of the Office of Thrift Supervision; Wendy Sherman, president of the Fannie Mae Foundation, who was counselor to Secretary of State Madeleine Albright; Dan Crippen, who lobbied for Fannie Mae after heading the Congressional Budget Office; Ann Logan, executive vice president, who was a policy adviser to Sen. Edward Kennedy, D-Mass., in the 1980s; Thomas Nides, senior vice president, who served as chief of staff to both U.S. Trade Representative Mickey Kantor and Speaker Tom Foley, D-Wash.; * and Eli Segal, director, who was a senior adviser to President Clinton.
No discussion of Fannie Mae is complete without mentioning how vociferously it denigrated its critics. See this recent column by Wall Street Journal Editorial Page Editor Paul Gigot. He writes, "The abiding lesson here is what happens when you combine private profit with government power. You create political monsters that are protected both by journalists on the left and pseudo-capitalists on Wall Street, by liberal Democrats and country-club Republicans." What members of the Fannie Mae gang did I neglect to name? Send nominations to firstname.lastname@example.org. (E-mail may be quoted by name in "The Fray," Slate's readers' forum; in a future article; or elsewhere unless the writer stipulates otherwise. Permanent disclosure: Slate is owned by the Washington Post Co.)