William Hamilton " The financial fiasco: Off with their heads!
March 24, 2009
Following Barack H. Obama’s victory in the general election, a poll conducted by the Zogby polling organization found that 98 percent of those who voted for Obama in the general election could not articulate the policies that he promised to implement. Given an electorate notorious for voting for style over substance, the results of the Zogby poll should come as no surprise.
Obama voters who are suddenly shocked by what he is doing might want to dust off their copies of George Orwell’s Animal Farm, play a video of Alice in Wonder Land and find an English translation of Das Kapital by Karl Marx. That might help make sense of what we are witnessing. Also, check out the Latin phrase: Cui bono? It means: Who benefits? Or, in more modern parlance: Follow the money trail.
As a case study, the AIG fiasco contains all the elements needed to understand the disasters that result when politicians figure out ways to increase their personal wealth and power by wielding the weapons of government against free-market capitalism. It all began with Jimmy Carter’s Community Reinvestment Act. That started the process of forcing lenders to provide home mortgages to folks whose likelihood of making their mortgage payments was somewhere between slim and none. Under the rule of Janet Reno and Jamie Gorelick in the Clinton Justice Department, banks were fined a minimum of $10,000 for each time they failed to provide a mortgage for people whom Mesdames Reno and Gorelick felt should have them.
Then, along came Alan Greenspan and the Federal Reserve to interfere in the free markets by jacking interest rates up and down and increasing the money supply to the point that investors started looking for non-traditional places to invest the money, i.e., hedge funds and derivatives.
Meanwhile, traditional bankers realized that their government-forced loans were not likely to be repaid. Solution? Sell the likely-to-be-toxic loans on the secondary market. Assuming that most homeowners will, if nothing else, always make their mortgage payments, big financial players such as AIG and some of the now-failed investment banking houses started dealing in mortgage-backed securities.
Meanwhile, House Finance Chairman Rep. Barney Frank (D) and Senate Banking Chairman Sen. Chris Dodd (D) were at the controls of a mammoth government-controlled Ponzi scheme. Despite warnings, Rep. Frank and Senator Dodd ignored the risky lending excesses of the quasi-governmental Fannie Mae and Freddie Mac mortgage giants. Both Dodd and Frank were major recipients of political contributions from Fannie Mae and Freddie Mac. Cui bono?
According to the Center for Responsive Politics, Sen. Dodd has received $854,200 from various financial institutions. Of that, $281,038 came from AIG. That doesn’t count the two below-market mortgages that Dodd obtained from Countrywide Financial. Obama received $105,849 from AIG. From Fannie Mae and Freddie Mac, Rep. Frank received a comparatively paltry $40,100. Or, as Civil War-era Senator Simon Cameron famously said, “An honest politician is one who, when he is bought, will stay bought.”
According to CNN, only three Republicans voted for the $787 billion stimulus package. Meanwhile, Obama, Treasury Secretary Tim Geithner Sen. Dodd tacked the Dodd Amendment on the stimulus package, making it illegal to cap the compensation of employees whose firms receive stimulus package dollars. Sen. Dodd represents Connecticut. The financial services branch of AIG is headquartered in Connecticut. Cui bono?
Now, Dodd and Frank, the chief Knaves in this Alice in Wonder Land game of financially crooked croquet, cry: “Off with their heads!” as they attempt to pass clearly unconstitutional (See: Article I, Section 9, paragraph 3) bills of attainder and ex post facto laws to punish the executives of AIG for accepting the $165 million in bonuses that Obama, Geithner and Dodd made it possible for them to have. Go figure.
” William Hamilton, a syndicated columnist and a featured commentator for USA Today, studied at Harvard’s JFK School of Government. Dr. Hamilton is a former assistant professor of political science and history at Nebraska Wesleyan University.