Thursday, March 5, 2009


Don Boudreaux quotes a letter by Daniel Gallington. In part Daniel says: "...the economic power of the private sector, especially if unsupervised..."

Unsupervised!?! Are you kidding me? Here's a list of "supervisors" that failed to prevent various and sundry aspects of the financial meltdown:
  1. Congress (House and Senate, added 3/7/9)
  2. US Treasury
  3. Federal Deposit Insurance Corporation (FDIC)
  4. Federal Reserve ("The Fed")
  5. Office of the Comptroller of the Currency (OCC)
  6. Security and Exchange Commission (SEC)
  7. Bureau of the Public Debt (I bet they're busy these days!)
  8. Community Development Financial Institution Fund (CDFI)
  9. Financial Crimes Enforcement Network (FinCEN)
  10. Federal Inspectors General
  11. Office of Thrift Supervision (OTS)
  12. National Credit Union Administration (NCUA)
  13. Housing and Urban Development (HUD)
  14. Office of Fair Housing and Equal Opportunity (FHEO)
  15. Federal Housing Administration (FHA)
  16. Fannie Mae
  17. Freddie Mac
  18. Ginnie Mae
Oh, yeah. Yeah. No one was watching the hen house, Danny! Truth is, none of them did a very good job and some of them had conflicts of interest—Freddie and Fannie both gave generously to Obama.

Let's review the second rule of bureaucracy. Rule 1, of course, is: Spend Your Budget. Rule 2 is: Fail. "Why fail," you may ask, because once you've failed you can ask for more money and more power. Failure is how you grow your bureaucratic fiefdom. With failure you get a larger budget next year. If you were to succeed, then someone might want to "improve your efficiency" by reducing your budget.

Update: Director Blue's Meltdown post reminded me of the most important supervisor: Congress. I've added them to the top of my list. Go back to those rules of bureaucracy and pay particular attention to Rule 3: Cover Your Ass.


Unknown said...

Fannie and Freddie had connections with another person in the Obama administration long before Obama came on the scene:

The fannie/freddie debacle has more connections than Obama:

"relationship with a man called Herb Moses. Moses, whom Frank called his "spouse," was a high-level executive at Fannie Mae from 1991 until 1998. Dubbed a "mortgage guru" by the National Mortgage News, Moses boasted that he helped develop "many of Fannie Mae's affordable housing and home improvement lending programs."

Unknown said...

Another excerpt from the same link as above, it turns out Frank received monetary contributions as well from Fannie/Freddie:

"Frank continued to claim almost until the day of the collapse that the two mortgage giants were financially sound. If we lived in a sane world, Barney Frank would be compelled to testify about his culpability in the current crisis and what role his romantic involvement with Herb Moses -- as well as the campaign contributions he received from Fannie and Freddie -- played in his shilling for these two moribund institutions."

"Commenting on his shenanigans, Jeff Jacoby observed that under normal circumstances Frank's questionable relationships could have well landed him in prison. Voters in his very liberal congressional district, however, have awarded him with a string of easy re-elections."

dsm said...

Thanks Mia!

Fannie and Freddie also plowed piles of money into ACORN.

dsm said...

This was the ACORN link I meant to use... oops.