Dr. Frankenstein at Fannie

By David Freddoso

If Barack Obama is so concerned about the current economic crisis, why is he consulting those who played such a large role in causing it? That question came up again when Ben Smith of the Politico reported last month that Jim Johnson, former CEO of Fannie Mae, would be delivering an Obama campaign briefing to a group of Democratic luminaries, mostly former members of Hillary Clinton’s campaign brain-trust today.

Jim Johnson served as Fannie’s CEO from 1991 to 1998 and since then has served as a consultant to the company with a lucrative $600,000 annual contract. A Minnesotan who once served as an aide to Vice President Walter Mondale and made a career on Wall Street, Johnson received some publicity for his brief stint with the Obama campaign’s vice-presidential vetting operation earlier this year. Despite the fact that Johnson had helped choose running mates for Mondale and for John Kerry, Obama brought him on for this process anyway. Johnson had to quit that unpaid position, however, after the Wall Street Journal revealed that he’d accepted $5 million in loans from the now-defunct company Countrywide Home Loans — loans made outside of the company’s normal underwriting channels.

Countrywide had been an official partner of Fannie Mae, selling most of its loans to Fannie. It was one of the prime offenders in making bad mortgage loans; it was also one of the first dominoes to fall in the sub-prime crisis, and Barack Obama had denounced the company by name. Johnson was one of those who had received sweetheart loans in part of a program for friends of Angelo Mozilo, Countrywide’s CEO.

But Johnson’s time at Fannie Mae, which was founded in 1938, is also very interesting to study. Fannie, along with Freddie Mac, is a critical institution in today’s crisis of economic confidence. These institutions have historically controlled about half of what is called the “secondary mortgage market,” where mortgages are rolled into securities and re-sold in large packages to investors -- usually banks or other large financial institutions. This is how bad loans made their way from Main Street to Wall Street.

Prior to the crisis, Fannie and Freddie dominated the secondary mortgage market thanks in large part to the special tax exemptions and regulatory advantages they enjoy over competing private institutions. They do not have to keep as much money in reserve as do banks. They are exempt from taxes. Prior to their recent takeover by the federal government, they had a $4.5 billion line of credit with the U.S. Treasury. The implicit government guarantee behind the two companies made it possible for them to borrow money more cheaply than others.

Beyond these advantages, U.S. bank regulators gave preference to Fannie and Freddie debt, allowing banks to hold it instead of just government bonds and cash as part of their “tier-one capital” -- the rainy-day funds that banks are required to keep on hand in case all else fails. This encouraged American banks to accumulate more than $1 trillion in GSE-related securities by 2004, according to the FDIC, and kept Fannie and Freddie flush with cash -- for a time, anyway.

The Washington Post and Fortune magazine have reported on Johnson’s most important work -- the creation of Fannie’s clout machine in Washington and on Capitol Hill. Johnson, a true believer in Fannie’s role of expanding homeownership to less credit-worthy individuals, honed the company’s response to criticisms of its mission and its special advantages in the market. In order to ramp up Fannie’s lobbying operation, Johnson hired powerful Democratic and Republican staffers when they left the government.

Beginning in 1994, he established field offices for grassroots lobbying—“Partnership Offices,” they were called—from which Fannie operatives pressured uncooperative politicians. His strategy was to demonize anyone who worked against his goals as an enemy of affordable housing.

Johnson was never implicated in the accounting scandal that ensued immediately after he left Fannie, but his role at the company was to create an expensive noise machine, a lobbying operation that would spend $94 million over the following nine years under his successor, Franklin Raines. When Fannie’s accounting irregularities, which began in 1998, became known to members of Congress in 2003, Raines would set Fannie’s massive influence-machine to work in an effort to discredit the company’s regulators.

What Johnson had created in order to defend the principle of “affordable housing” would be used to shout down critics of Fannie Mae at a time when they needed to be heard -- as they helped plunge America into its current crisis of liquidity and confidence.

Terry Trobiani owns Gianelli's Drive Thru in Prairie Grove, Illinois, where he put up a row of American flags for the Fourth of July. But the city claimed he was displaying two of them improperly and issued him a $100 ticket for each flag.

Terry joined Glenn Beck on the radio program Tuesday to explain what he believes really happened. He told Glenn that, according to city ordinance, the American flag is considered "ornamental" and should therefore have been permitted on a federal holiday. But the city has now classified the flag as a "sign."

"Apparently, the village of Prairie Grove has classified the American flag as a sign and they've taken away the symbol of the American flag," Terry said. "So, as a sign, it falls under their temporary sign ordinance, which prohibits any flying, or any positioning of signs on your property — and now this includes the American flag. [...] The only way I could fly the American flag on my property is if I put it on a permanent 20 to 30-foot flagpole, which they have to permit."

Terry went on to explain how the city is now demanding an apology for his actions, and all after more than a year of small-business crushing COVID restrictions and government mandates.

"COVID was tough," Terry stated. "You know, we're in the restaurant business. COVID was tough on us. We succeeded. We made it through. We cut a lot of things, but we never cut an employee. We paid all our employees. I didn't take a paycheck for a year just to keep our employees on, because it was that important to me to keep things going. And, you know, you fight for a year, and you beat a pandemic, and then you have this little municipality with five trustees and a president, who just have no respect for small businesses. And right now, what I see is they have no respect for the republic and the United States ... I think it's terrible. The direction that government, at all levels, have taken us to this point, it's despicable."

Watch the video below to catch more of the conversation:


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The Biden administration is now doing everything it can to censor what it has decided is COVID-19 "misinformation." But Glenn Beck isn't confident that the silencing of voices will stop there.

Yeonmi Park grew up in North Korea, where there is no freedom of speech, and she joined Glenn to warn that America must not let this freedom go.

"Whenever authoritarianism rises, the first thing they go after is freedom of speech," she said.

Watch the video clip below from "The Glenn Beck Podcast" or find the full episode with Yeonmi Park here:

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Most self-proclaimed Marxists know very little about Marxism. Some of them have all the buzzwords memorized. They talk about the exploits of labor. They talk about the slavery of capitalist society and the alienation caused by capital. They talk about the evils of power and domination.

But they don't actually believe what they say. Or else they wouldn't be such violent hypocrites. And we're not being dramatic when we say "violent."

For them, Marxism is a political tool that they use to degrade and annoy their political enemies.

They don't actually care about the working class.

Another important thing to remember about Marxists is that they talk about how they want to defend the working class, but they don't actually understand the working class. They definitely don't realize that the working class is composed mostly of so many of the people they hate. Because, here's the thing, they don't actually care about the working class. Or the middle class. They wouldn't have the slightest clue how to actually work, not the way we do. For them, work involves ranting about how work and labor are evil.

Ironically, if their communist utopia actually arrived, they would be the first ones against the wall. Because they have nothing to offer except dissent. They have no practical use and no real connection to reality.

Again ironically, they are the ultimate proof of the success of capitalism. The fact that they can freely call for its demise, in tweets that they send from their capitalistic iPhones, is proof that capitalism affords them tremendous luxuries.

Their specialty is complaining. They are fanatics of a religion that is endlessly cynical.

They sneer at Christianity for promising Heaven in exchange for good deeds on earth — which is a terrible description of Christianity, but it's what they actually believe — and at the same time they criticize Christianity for promising a utopia, they give their unconditional devotion to a religion that promises a utopia.

They are fanatics of a religion that is endlessly cynical.

They think capitalism has turned us into machines. Which is a bad interpretation of Marx's concept of the General Intellect, the idea that humans are the ones who create machines, so humans, not God, are the creators.

They think that the only way to achieve the perfect society is by radically changing and even destroying the current society. It's what they mean when they say things about the "status quo" and "hegemony" and the "established order." They believe that the system is broken and the way to fix it is to destroy, destroy, destroy.

Critical race theory actually takes it a step farther. It tells us that the racist system can never be changed. That racism is the original sin that white people can never overcome. Of course, critical race theorists suggest "alternative institutions," but these "alternative institutions" are basically the same as the ones we have now, only less effective and actually racist.

Marx's violent revolution never happened. Or at least it never succeeded. Marx's followers have had to take a different approach. And now, we are living through the Revolution of Constant Whining.

This post is part of a series on critical race theory. Read the full series here.

Americans are losing faith in our justice system and the idea that legal consequences are applied equally — even to powerful elites in office.

Rep. Devin Nunes (R-CA) joined Glenn Beck on the radio program to detail what he believes will come next with the Durham investigation, which hopefully will provide answers to the Obama FBI's alleged attempts to sabotage former President Donald Trump and his campaign years ago.

Rep. Nunes and Glenn assert that we know Trump did NOT collude with Russia, and that several members of the FBI possibly committed huge abuses of power. So, when will we see justice?

Watch the video clip below:


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