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Corruption at the heart of financial mess | Adele Ferguson
An old friend of mine in the newspaper business, long gone, told me that just before the Great Depression hit in 1929, her devout Catholic widowed mother was warned by her priest to go immediately to the bank and draw out all her money.
The mother couldn’t find her girdle and put off going to the bank until the next day. Too late. The bank didn’t open that day and the family never saw a dime of their money.
I believe the story which means believing that some people knew what was coming in time to save whatever they had in the bank. It doesn’t surprise me that one of them was a priest, tipped off by an in-the-know parishioner, who passed it on to his flock.
My own family, I’m sure, didn’t even have a bank account at that time, my father an Army enlisted man and my mother a Norwegian immigrant. They had three kids.
They were lucky, in fact, that my father was in the Army. He at least had a job and a regular salary, small though it was. I remember being told by my mother how her five brothers used to make fun of my father being in uniform while they pulled down pretty good dough as floor layers. The teasing stopped when he was still being paid by the Army and they were out of work, along with millions of others.
In “A Short Banking History of the United States” in the Wall Street Journal, author John Steele Gordon wrote that “With the Great Depression, a tsunami of bank failures threatened the collapse of the system. Reorganization of the Federal Reserve and creation of the Federal Deposit Insurance Corp. hugely reduced the number of bank failures and mostly ended bank runs.”
There were still thousands of banks, along with savings and loans, mutual savings banks and trust companies regulated by different authorities. What caused the current mess, says Gordon, is “Congress’s attempt to force banks to make home loans to people who had limited creditworthiness, while encouraging Fannie Mae and Freddie Mac to take these dubious loans off their hands so that the banks could make still more of them, creating another crisis in the banking system that is now playing out.”
Now, we know who those members of Congress are who succeeded in blocking oversight of Fannie Mae and Freddie Mac over the years and were recipients of hefty campaign donations from FM employees. Chief among them Rep. Barney Frank, chair of the House Financial Services Committee under the D’s, ranking member under the R’s, Sen. Christopher Dodd, chair of the Senate Banking Committee, and Sen. Barack Obama, who got almost as much donated moolah as his chair who was tops.
Statements made by Frank, Christopher and Obama in support of the stability and trustworthiness of Fannie and Freddie when attempts were made by John McCain and others to bring in a regulator, have appeared in the Journal and other papers.
Chairs Dodd and Frank belong in jail, if not impeached, for shielding the corruption of the organizations they oversaw whose managers pocketed millions of dollars in bonuses while the mortgage business went on the rocks. Instead, the fired FM managers got huge payoffs and the two chairs wound up helping write the bailout bill. I heard a fellow say on TV that was like asking O.J. Simpson to do something about domestic violence.
I’ve been writing politics for more than 40 years and I am convinced there is no more hope for ending the corruption of Congress than we’ve had in ending the drug war. So long as there are people who want the money or the drugs, there will be people willing to offer it to them. The only answer for Congress is term limits to put an end to the lust for power fueled by seniority, and that won’t happen because incumbents have to vote for it.
Adele Ferguson can be reached at P.O. Box 69, Hansville, WA 98340.