Crony CapitalismMike Rappaport

In an unusual op ed, Paul Gigot illustrates how Fannie and Freddie avoided scrutiny.  Pretty disgusting, but that is how the game is played.  There is so much in the piece that is interesting, really you should read it all.  Still, I can't resist copying this slam on Paul Krugman by Mr. Gigot, who is no one to mess around with.

Trying to defend the mortgage giants, Paul Krugman of the New York Times recently wrote, "What you need to know here is that the right -- the WSJ editorial page, Heritage, etc. -- hates, hates, hates Fannie and Freddie. Why? Because they don't want quasi-public entities competing with Angelo Mozilo [of Countrywide]."

That's a howler even by Mr. Krugman's standards. Fannie Mae and Mr. Mozilo weren't competitors; they were partners. Fannie helped to make Countrywide as profitable as it once was by buying its mortgages in bulk. Mr. Raines -- following predecessor Jim Johnson -- and Mr. Mozilo made each other rich. Which explains why Mr. Johnson could feel so comfortable asking Sen. Kent Conrad (D., N.D.) to discuss a sweetheart mortgage with Mr. Mozilo, and also explains the Mozilo-Raines tag team in 2003.