Sense on Cents

Land of the free, home of the brave.

No doubt, the United States of America is the greatest nation on the face of the earth. I love my country. I love hearing the stories of immigrants from all parts of the world who have come here to make a better life. Even though there is current concern around our immigration policy (or lack thereof), there exist endless numbers of stories of people making real sacrifice and, in turn, real progress for their families. I am inspired by these stories.

Despite all our greatness, I am extremely concerned that our nation will erode from within unless there is serious change in one very large corner of our political and economic landscape. What is it?

I am not going to point out one simple program, but more the mindset of how Washington operates. If this does not change (and soon), I truly believe our nation will face severe fiscal and, ultimately, sovereign crises. My concern is that this Washington mindset which needs to change is becoming even more entrenched. What specifically is the mindset?

I witnessed it this morning in a fabulous commentary addressing the sinkholes at Freddie and Fannie. The commentary, written by M&T Bank CEO Robert G. Wilmers, is in today’s Wall Street Journal, What About Fan and Fred Reform?:

This is not private enterprise—it’s crony capitalism, in which public subsidies are turned into private riches. From 2001 through 2006, Fannie and Freddie spent $123 million to lobby Congress—the second-highest lobbying total (after the U.S. Chamber of Commerce) in the country. That lobbying was complemented by sizable direct political contributions to members of Congress.

Changing this terrible situation will not be easy. The mortgage market has come to be structured around Fannie and Freddie and powerful interests are allied with the status quo. I recall a personal conversation with a member of Congress who, despite saying he understood my concerns about the two GSEs, admitted he would never push for significant change because “they’ve done so much for me, my colleagues and my staff.”

I would have only wished that Mr. Wilmers publish this individual’s name. While he may have violated a confidence, he would have done the nation a public service. This individual Congressional member is sucking the life blood out of our nation. There are MANY more like him on both sides of the aisle. Our nation needs real statesman now more than ever. I see VERY few of them in Washington or the state capitols as well.

Unless this crony capitalism is exposed and the individuals are hung out to dry, I am extremely concerned that our nation’s future will be nowhere near its past. Make no mistake, the downfall of Greece is very much centered on this same sort of crony capitalism.

I also strongly believe that both Fannie and Freddie (and AIG as well) continue to serve as a conduit for the government to funnel funds into our large banks.

Those in Washington engaged in this behavior are not public servants. They are public parasites. They are a cancer and they must be extirpated if we truly think we have any hope of regaining our future.

LD

Please subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook. Thanks.

This entry was posted on Tuesday, May 4th, 2010 at 9:28 AM and is filed under Fannie Mae, Freddie Mac, General. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.