Yeah, Where's The Perp-Walk...?

Read and think about this:

Should Congress Be 'Perp-Walked'?

By INVESTOR'S BUSINESS DAILY | Posted Tuesday, September 30, 2008 4:20 PM PT

Justice: A federal grand jury in New York is probing the accounting shenanigans at Fannie Mae and Freddie Mac. It's about time, and we hope it doesn't end there.

Remember the early 2000s, when companies such as WorldCom, Enron, Tyco and Xerox suddenly and spectacularly were revealed to have been cooking their books?

Remember the glee expressed by Washington politicians, especially Democrats, as they watched CEOs and their underlings get perp-walked out of their buildings and into federal custody?

Enron became the poster child for corporate misdeeds. In the accounting crisis of 2002, CEO Ken Lay was one of the most loathed human beings on Earth. And no, that's not an exaggeration.

Here was California Attorney General William Lockyer, one of many Democrats on the national scene who gloated at the downfall of the Enron chief and others: "I would love to personally escort Lay to an 8-by-10 cell that he could share with a tattooed dude who says, 'Hi, my name is Spike, honey.'"

Lockyer wasn't the only one swept up in a spiteful prosecutorial frenzy. Sure, some of the prosecutions were deserved. But some were excessive, part of a corporate witch hunt.

As noted in a 2003 study by Kathleen Brickey, a Washington University law professor, the Justice Department brought 50 major fraud prosecutions from March 2002 to August 2003. An estimated 90 corporate officers were involved. That's a lot of prosecutions.

Basically, any major-company CEO whose stock price fell sharply could be sued or charged with a crime and sent to prison.

Democrats wasted no time calling this a "GOP" scandal, tarring any Republican official with charges of corruption for taking so much as a dollar from any of the companies. Never mind that Democrats were also prominent on the political gift lists.

Fanning the fire were news media highlighting Republican ties to scandal-plagued firms while all but ignoring Democrat links.

In the end, what emerged from this atmosphere of retribution and attack was Sarbanes-Oxley — the toxic corporate regulatory law that has arguably destroyed more wealth than anything WorldCom, Tyco or Enron ever did.

We mention all this because we now have an opportunity, thanks to the New York grand jury, to probe perhaps the greatest financial crime ever — one that dwarfs Enron in size and scope.

Yes, we're talking Fannie and Freddie.

Here's how James B. Lockhart III, head of the Office of Federal Housing Enterprise Oversight, described the two companies back in 2006, before the meltdown occurred:

"The result of (Fannie's and Freddie's) rapid growth unconstrained by market forces and a weak regulator was years of mismanagement, flagrant earnings manipulation, and systems-and-controls problems. Managements of both companies were forced out, earnings were misstated by an estimated $16 billion, fines exceeding one-half billion dollars were imposed, and remedial costs will exceed $2 billion."

Yet Congress did nothing. Fannie and Freddie continued to enjoy a virtual monopoly of the housing finance market, holding nearly half the nation's $12 trillion in mortgage assets in 2007.

And what happened to Fannie's and Freddie's top executives, almost all with deep ties to the Democratic Party? Did they get perp-walked to prison like WorldCom's Bernie Ebbers, Tyco's Dennis Koslowski, Adelphia's John Rigas, ImClone's Sam Waksal, or any of the others who did time for corporate misdeeds in the early 2000s?

No. Jim Johnson, former Walter Mondale aide, became head of Barack Obama's vice presidential search committee. Franklin Raines, who headed Fannie from 1998 to 2004, the years of its worst excesses, pocketed nearly $100 million in pay and bonuses from Fannie. He, too, became an adviser to Obama.

Other Fannie-Freddie alumni did equally well. Rep. Rahm Emanuel has been front and center in crafting a new rescue bill. Ex-Clinton Justice official Jamie Gorelick careens from career catastrophe to catastrophe, and still gets top jobs. It pays to have ties.

Meanwhile, as previously documented, Rep. Barney Frank and Sen. Chris Dodd repeatedly thwarted reforms. Yet today they stand front-and-center as Democrats try to "fix" a problem they created.

As such, any investigation into Fannie and Freddie must include Congress, both current and past.

There's lots of evidence that the two mortgage giants had become little more than taxpayer-guaranteed front companies for Democrats, who used them to reward supporters with cheap loans and to provide jobs for out-of-work politicians.

So...where's the Congressional perp-walk? I have a feeling that the American public would overwhelmingly support it...

There's my two cents.