More on Freddie and Fannie

The outrageous scam perpetrated by the GSEs has predictably become a blame game, finger pointing typical Washington big government indictment.  Unsurprisingly Nan Pelosi has her footprints all over the history rewrite that has been going on in an attempt to deflect responsibility from the political class to the Wall Street bankers.  This article in the WSJ catches this unscrupulous politician in the act:

The SEC's case should embarrass Congress's Financial Crisis Inquiry Commission, which spent 18 months looking at the evidence and issued a report in January 2011 that whitewashed Fan and Fred's role. Speaker Nancy Pelosi created the commission to prosecute the Beltway theory of the crisis that private bankers caused it all, and Chairman Phil Angelides delivered what she wanted.

Wall Street's runaway greed which resulted in balance sheet leverage of up to 50 to one surely deserves some of the blame for the debacle, however the major fault lies with the politicians (Carter Administration) who created the CRA back in the '70's. and those who hyped it later on (Clinton Administration with a little contribution by Bush Administration) and the nefarious managers at the GSEs who hid and multiplied the risks to the point the program was bound to fail.  Hopefully as this article suggests this case will go to trial which would give everyone the opportunity to focus on the real culprits.  At the very least his example of political intervention in the economy should become a central issue in the upcoming presidential campaign.  However since the Republicans' hands are at least soiled, chances are this important issue will not be raised.  Meanwhile the depression will continue until all the toxic paper clogging up the credit machine is finally written off.  The Austrian economics school economists predicted all of this but of course have never been listened to for fear their philosophy would end the drunken party.  Jim Whelpley also saw this coming but, unfortunately or fortunately, did not live to see the chaos it caused.