Bankers of the World, Unite! (Or: Fannie & Freddie Meet Karl & Vladimir)

September 9, 2008 | 3 Comments

Ah, there’s nothing like a threat to Wall Street bankers that brings socialism front and center to America’s politics. With one, big “never mind” when it came to all their rhetoric about “free markets,” the glories and fairness of capitalism, and rugged individualism, Republicans and Democrats joined for a sloppy embrace and a gigantic tax-payer bailout of Fannie Mae and Freddie Mac last weekend.

Citizens take note: You know it’s prime fleecing season when both political parties, both houses of Congress, both presidential candidates and almost all of the mainstream media join together to provide a blank check to two banking institutions in financial trouble. And how quickly they acted! With one seemingly magical statement by Treasury Secretary Henry Paulson, the bankers’ worries were over. Viola! And, suddenly, the same government that only days before during the political conventions was being called big and bad was now essential to the well being of the nation. Imagine that.

But those of us with our thinking caps on and even a semi-functioning memory (thanks Google), will recall all the hemming and hawing from those same political parties, presidential candidates and members of the media when the mortgage crisis was primarily hurting the homeowners – not the lenders (yet). Back then, the words from Washington were all about tough love and tough luck, with nary a quick action or bailout in sight.

But then the mortgage crisis started to trickle up, making the bankers nervous and, finally, vulnerable. And then the Adam Smith-like lectures were tossed to the side and out came a surreal Marxian-like plan to – huh? — “save the bankers!”  Yes, indeed, bankers of the world, unite!

If, however, there is to be any true banker reunion in all this, it needs to be held in the courthouses and, eventually, the prisons. Because if the $30 million in salary and bonuses the heads of Fannie Mae and Freddie Mac were giving themselves – and themselves alone – just last year while millions of men, women and children were getting the boot from their homes isn’t illegal, I’m not sure what is. But don’t hold your breath while waiting for one of the political parties to run with that idea. Bankers are great campaign contributors, you know. And even better lobbyists.

Both parties have totally and completely dropped the ball on this mortgage crisis, sitting idly while families were evicted from their homes and failing to act until the moneyed elite started to feel the heat. The Bush administration might have been running the show but the Democratically-controlled Congress was nodding with approval and/or sleep all along the way.

It was the Democrats, for example, who handed Bush and Paulson the blank check and authority to manage this crisis in July. And now, proving once again that they have no shame, it’s those same Democrats who are crying foul over how Bush and Paulson are using the power that they gave them. Hmm, sound familiar? Hint: Think Iraq.

Here’s how the New York Times (9.9.08) reported on Senator Christopher Dodd’s (D-CT) reaction to Paulson’s handling of the crisis:

“We accepted [Paulson] at his word that all he needed was the authority and that he wasn’t going to exercise it. Then he used his authority very aggressively,” an angry-sounding Mr. Dodd said in a telephone conference call with reporters. He indicated that he would approach any future commitments by the outgoing administration more skeptically.

“Fool me once, your fault,” he said. “Fool me twice, my fault.”

He’s joking, right? Wrong. Sorry, Mr. Dodd, but you’ve been fooled a hell of a lot more times than twice. I mean, doesn’t his above quote sound exactly like the Democrats’ talking points when it came to the Iraq War? As in: We gave Bush the authority but we didn’t think he was going to use it. In fact, the same thing could be said about the Patriot Act, FISA, vote counting and so, so much more.

Oh, Mr. Dodd, we only wish you and yours had only been fooled twice.

But don’t expect this new-found socialism streak to last long. Well, unless some other economic trouble rocks the millionaires. Yep, in America, socialism is for the rich. While the rest of us will keep getting the free market lectures and fighting for the policy crumbs that happen to fall off their table.

Posted by M. Colby | Filed Under blog, essays & columns