A new book on the financial crisis has some eye-catching passages on Fannie Mae, that government-sponsored enterprise that epitomizes public-private partnerships. This passage [via Marginal Revolution] begins by discussing Fannie Mae field offices:
There was a certain formula to these offices. They were staffed by someone close to power–the son of a senator, a governor’s assistant, a former congressional staffer. They held ribbon-cutting ceremonies, always with a politician present, to announce, for instance, that Fannie was going to put millions into a senior citizen center. There were as many as two thousand ceremonies a year in partnership offices all over the country….
Fannie Mae also funneled money to politicians….Over the years, the foundation became one of the largest sources of charitable donations in the country. It made heavy donations to, among others, the nonprofit arms of the Congressional Black Caucus and the Congressional Hispanic Caucus.
Fannie hired key insiders to plum jobs..[long list of names,AT]…”It was like the local Tammany Hall operation–a jobs program for ex-pols!” says one closer observer.
When you combine the profit motive with the government-like trait of playing with someone else’s money (the implicit bailout Fannie always enjoyed), you’re asking for corruption.