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.

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Protests following the fatal police shooting of Walter Wallace Jr quickly devolved into violence, rioting, and looting in Philadelphia, and BlazeTV's Elijah Schaffer was there to document what the mainstream media won't. But while filming the carnage inside a Five Below on Tuesday, Elijah was surrounded and attacked by looters.

Elijah joined Glenn Beck on the radio program Wednesday to detail his experience and to explain why mainstream media efforts to downplay the violence just show that independent media has never been more important.

"Unfortunately, [the attack] escalated from one person to about a dozen very quickly," Elijah explained. "I'm actually really happy to be alive. Because in that same shopping center, right there, there was a 15-year-old girl who was shot, according to reports. And I heard multiple gunshots throughout the night. Another individual is reported to have heard a gunshot as well, so we try to confirm. I watched people get pummeled beyond belief."

Glenn asked Elijah to respond to mainstream media claims that conservatives are exaggerating the looting and violence in Philadelphia.

"It's so funny to hear people that aren't there try to counter what we're reporting," Elijah replied.

Watch the video below to catch more of the conversation:

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In the final days before the 2020 election, President Donald Trump is gaining among black voters, particularly men, because his record of accomplishments "speaks for itself" and the "façade" that President Trump is a racist "just doesn't ring true," argued sports columnist Jason Whitlock on "The Glenn Beck Radio Program" Tuesday.

Jason, who recently interviewed the president at the White House for OutKick.com, shared his thoughts on why he believes many black Americans — notably celebrities such as Kanye West, Ice Cube, and 50 Cent — are breaking from the "façade" that President Trump is a "flaming racist."

"I really believe the facts are starting to speak for themselves, and that Donald Trump's record of accomplishments, particularly as it relates to African Americans, speaks for itself," Jason told Glenn. "He actually has a record to stand on, unlike even Barack Obama. When [Obama] was president, I don't think he had much of a record to stand on, in terms of, 'Hey, what did he actually deliver for African Americans?' President Trump has things he can stand on and, you know, beyond that I think black people understand when he starts talking about black unemployment rate. And America's unemployment rate. And then, when you add in for black men, the façade we've been putting on [President Trump] … you know, this whole thing that he's some flaming racist, it just doesn't ring true."

Jason suggested that Trump's fearlessness, unabashed masculinity, and record of keeping his promises resonates with men in the black community. He also weighed in on how media and social media's bias plays a huge role in convincing people to hate President Trump while ignoring Antifa and others on the Left.

"I keep explaining to people, Twitter, Instagram, Facebook, they're some of the most secular places on earth. And we've reduced everyone to a tweet, that we disagree with," he added.

Watch the video below to catch more of the conversation:

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Megyn Kelly is not happy about the "disgusting" media coverage of President Donald Trump, specifically pointing to Lesley Stahl's "60 Minutes" interview on CBS Sunday.

On the radio program, Megyn told Glenn Beck the media has become so blinded by the "Trump Derangement Syndrome" that they've lost their own credibility — and now they can't get it back.

"It's disgusting. It's stomach-turning," Megyn said of the media's coverage of the president. "But it's just a continuation of what we've seen over the past couple of years. Their 'Trump Derangement Syndrome' has blinded them to what they're doing to their own credibility. They can't get it back. It's too late. They've already sacrificed it. And now no one is listening to them other than the hard partisans for whom they craft their news."

Megyn also discussed how she would have covered the recent stories about Hunter and Joe Biden's alleged corruption. Watch the video below to catch more of the conversation:


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