Eric O’Keefe

Fannie Mae and Freddie Mac have been essentially taken over by the federal government. This is a major step in the most expensive financial scandal in U.S history. These two mortgage giants guarantee $5.5 trillion of debt. They fueled the recent housing boom riding an implied federal guarantee of their debt. They used creative leverage which ballooned their phantom profits, their management bonuses, and the ultimate losses to U.S. taxpayers — which I predict will exceed $100 billion.

These organizations were classic rent-seeking companies; Fannie has a large headquarters on Wisconsin Ave. in Washington, D.C., because the source of their power and profits was Congress, not customers. They hired people for their political pull, not their financial acumen. And what we got was government-style extravagance, self-dealing, and ultimately a doubling of the publicly held debt of the United States.

This is a stunning financial development, and it should become a stunning political development. Of course Fannie paid the politically powerful from both parties, but they put their biggest dollars and biggest hires on the side of the biggest spenders.

Here is how much some of the winners profited from this scandalous operation, according to an insightful Wall Street Journal editorial:

Franklin Raines, CEO: $90,128,761 (1998-2003)

Jamie Gorelick, vice-chair: $26,466,834 (1998-2003)

Jim Johnson, CEO: $21,000,000 (1998 alone)

Who are these people? Let’s ask wikipedia:

Franklin Delano Raines (born January 14, 1949 in Seattle, Washington) is the former chairman and chief executive officer of Fannie Mae who served as White House budget director under President Bill Clinton.

Jamie S. Gorelick (born May 6, 1950) is an American attorney and judicial officer who was Deputy Attorney General of the United States during the Clinton administration. She was appointed by former Senate Democratic Leader Tom Daschle to serve as a commissioner on the bipartisan National Commission on Terrorist Attacks Upon the United States, which sought to investigate the circumstances leading up to the terrorist attacks of September 11, 2001.

James A. Johnson is a United States Democratic Party political figure. He was the campaign manager for Walter Mondale’s failed 1984 presidential bid and chaired the vice presidential selection process for the presidential campaign of John Kerry. In the 2008 election, he is a member of the vice-presidential selection process for the presumptive Democratic nominee, Senator Barack Obama.

And Raines was a donor to Obama’s 2006 Senate campaign.

Notice a pattern?

It is “open season on Michigan’s public officials,” writes the Detroit Free Press in an editorial titled “Recall Madness.”

The editorial denounces a federal court decision upholding the First Amendment rights of petitioners. The Free Press agrees with the court “that circulating recall petitions constitutes core political speech.”

But it calls on the state to appeal the decision, and calls for constitutional reform to restrict the recall process “that is already too easy.”

Let’s see — there has not been a recall vote on a Michigan legislator since 1983, the last time the legislature passed a tax hike, according o a comprehensive survey in Ballotpedia.

So what is the panic about? Could it be that the Free Press fears a voter revolt over the massive tax hikes Speaker Dillon and Governor Granholm pushed through, which triggered this recall?

The Free Press performance throughout the recall campaign has been disgraceful. Dillon and local political boss Miles Handy — who was defeated for re-election earlier this month — used paid street blockers to harass petitioners; the local police participated in the harassment; the Dillon agents made slanderous attacks on taxpayers and hired lawyers to make spurious arguments in court. The Free Press did nothing to come to the defense of citizens being abused by powerful government officials and their hired agents.

And now they panic because federal judge Robert Holmes Bell has ruled that the First Amendment applies to more than just the hired hands at the Free Press. It also applies to citizens who question the actions of politicians.

The Free Press is good at covering the Tigers and Red Wings. It should stick to covering sports, the weather, and the continuing decline of Michigan’s over-taxed economy.

Taxpayers in Michigan today filed 15,498 signatures to meet the 8,724 signature requirement to place the recall of House Speaker Andy Dillon before the voters in his district. Dillon pushed a $1.4 billion tax hike through the Michigan legislature last year, as the state’s taxpayers were already suffering from the worst economic performance of any state in the union.

Dillon’s big government allies say that his constituents love him and don’t want a recall. But they fought on the street to deter circulators and signers with paid blockers; they have fought in the courtroom, and claim they will keep fighting to prevent a vote. And speaker Dillon today said that there is no support for a recall in his district; but when a reporter asked why he was going to court to prevent a vote, he said “Recall elections are unfair. You have to run against yourself” because you don’t have an opponent.

Actually recalls are rare — and fair. They generally happen only when politicians act with extreme disdain for taxpayers. Though sometimes - as in the current Jeff Denham recall in California — they happen when Big Labor wants to punish someone for opposing their pursuit of taxpayer money.