David Brooks has an important column today about Fannie Mae, and what he calls “the most important political scandal since Watergate”:
It helped sink the American economy. It has cost taxpayers about $153 billion, so far. It indicts patterns of behavior that are considered normal and respectable in Washington.
The column is pegged to the new book “Reckless Endangerment” by Gretchen Morgenson and Joshua Rosner, which details causes of the financial crash including, but not limited to, Fannie Mae. Much has been said about the failings of the government-sponsored enterprise, on this blog and elsewhere. But Morgenson and Rosner, and in turn Brooks, add much more about how Fannie Mae came to be so untouchable in Washington. As Brooks summarizes it:
Fannie Mae co-opted relevant activist groups…. Fannie ginned up Astroturf lobbying campaigns….
Fannie lavished campaign contributions on members of Congress. Time and again experts would go before some Congressional committee to warn that Fannie was lowering borrowing standards and posing an enormous risk to taxpayers. Phalanxes of congressmen would be mobilized to bludgeon the experts and kill unfriendly legislation.
Fannie executives ginned up academic studies. They created a foundation that spent tens of millions in advertising. They spent enormous amounts of time and money capturing the regulators who were supposed to police them.
In other words, Fannie Mae did all those things that Democrats accuse Big Oil, Big Finance, the military-industrial complex, et al. of doing.
But the importance of Brooks’ column — and the point I want to make today — is not to revel in “everybody does it” but to denounce the fact that everybody does it:
The scandal has sent the message that the leadership class is fundamentally self-dealing….It has sent the message that we have hit the moment of demosclerosis….
The final message is that members of the leadership class have done nothing to police themselves. The Wall Street-Industry-Regulator-Lobbyist tangle is even more deeply enmeshed.
Folks, neither major party and its allied groups has a monopoly on the self-dealing or lack of self-policing. That is the reason anti-elitism has gained currency. Anti-elitism, especially on the tea-party right, has been mislabeled as anti-intellectualism. But broadly speaking it is best identified as anger at Fannie Mae-style cronyism and unaccountability — that the elites, the intellectuals, the ruling class, whatever you want to call them, have failed us while enriching and empowering themselves.
There will be politicians who try to gain personal advantage from the situation. But if they are smart, they will not make it a partisan issue. That was the political wisdom in the following statement on TARP in Monday’s debate by Michele Bachmann:
I fought behind closed doors against my own party on TARP. It was a wrong vote then. It’s continued to be a wrong vote since then. Sometimes that’s what you have to do. You have to take principle over your party.
Brooks names Bachmann as one candidate trying to tap a populist nerve, and I agree with him that there’s a hunger out there for that kind of willingness to buck one’s own teammates once in a while when it matters — the “maverick” tendency that John McCain and Sarah Palin tried to play up but which, ironically, Barack Obama ultimately tapped into with his “post-partisan” talk. In fact, I still think Obama’s biggest political mistake came at the very beginning of his presidency, when he delegated the stimulus package to the old liberal lions in Congress and first gave Republicans an opening to portray him as any old spendthrift Democrat.
That gave rise to the tea party, and the rest is history.
I don’t know whether Bachmann will be the one to seize that opportunity. But it’s waiting for someone who demonstrates the will and wherewithal to follow through on it.
– By Kyle Wingfield