There is real history — and then there is perceived history.
All too often, the two are wildly different.
In 1963, John F. Kennedy was assassinated by a Marxist named Oswald, who had previously defected to the Soviet Union and then returned to the U.S. with a Soviet wife. He was an active member of the Fair Play for Cuba Committee, and had attempted to assassinate a right-wing general named Edwin Walker earlier in the year.
But, the liberals who write the history books found these facts inconvenient, so they created a very different version in which the "atmosphere of hate" in of Dallas Texas, led to the terrible political violence. In other words, it was right-wing extremist that assassinated John F. Kennedy. This perceived history was recycled as recently as the shooting of Rep. Gabrielle Giffords. ABC's Christiane Amanpour, interviewing Jean Kennedy Smith, noted that the Kennedy assassination was "eerily relevant" and asked Kennedy to evaluate the "political atmosphere" in the country today.
During the Viet Nam war protest years, American liberals began to consider anti-communism a kind of prejudice or mental disorder. Hostility to communism was akin to racism, sexism and other character flaws. Reagan's description of the Soviet Union as an "evil empire" convinced liberals that Reagan was a dangerous buffoon. Yet starting in 1989, when the Berlin Wall fell, liberals began to find their anti-anti-communism embarrassing. And so they created a perceived history — one in which the Cold War was a time of consensus, a time when, as former Sen. Bill Bradley put it, "We knew where we stood on foreign policy."
More recently we've witnessed the creation of new historical narrative about the financial crisis of 2008. The perceived history, eagerly peddled by liberals and Democrats, is that the crash of 2008 was the result of Wall Street greed. It was unregulated capitalism that brought us to the brink of financial meltdown, the Democrats insisted. And they codified their manufactured history in a law, the Dodd-Frank Act, which completely avoided the true problem.
One of the most liberal biased newspapers on the planet is the New York Times, but apparently some of their reporters are not as far left as the rag they work for. I say this because a great account of the financial crisis "Reckless Endangerment," has just been published by none other than a New York Times reporter, Gretchen Morgenson, and a financial analyst, Joshua Rosner. http://www.amazon.com/Reckless-Endangerment-Outsized-Corruption-Armageddon/dp/0805091203
The story centers around James Johnson, a Democrat with a raft of prestigious connections who was an adviser to Walter Mondale and John Kerry. He was appointed as chief executive of Fannie Mae in 1991, and started an aggressive effort to expand homeownership.
Back then, Fannie Mae could raise money at low interest rates because the federal government implicitly guaranteed its debt. In 1995, according to the Congressional Budget Office, this implied guarantee netted the agency $7 billion. Instead of using that money to help buyers, Johnson and other executives kept $2.1 billion for themselves and their shareholders. They used it to further the cause — expanding their clout, their salaries and their bonuses. They did the things that every special-interest group does to advance its interests.
Fannie Mae co-opted relevant activist groups, handing out money to Acorn, the Congressional Black Caucus, the Congressional Hispanic Caucus and other groups that it might need on its side.
Fannie ginned up lobbying campaigns, for example, in 2000, a bill was introduced that threatened Fannie’s special status. The Coalition for Homeownership was formed and letters poured into Congressional offices opposing the bill. Many signatories of the letter had no idea their names had been used.
Fannie lavished campaign contributions on members of Congress. Time and again experts would go before some Congressional committee to warn that Fannie was lowering borrowing standards and posing an enormous risk to taxpayers. Phalanxes of congressmen would be mobilized to bludgeon the experts and kill unfriendly legislation.
Fannie executives ginned up academic studies. They created a foundation that spent tens of millions in advertising. They spent enormous amounts of time and money capturing the regulators who were supposed to police them.
Johnson made $100 million while supposedly helping the poor. Representative Barney Frank, whose partner at the time worked for Fannie, was arrogantly dismissive when anybody raised doubts about the stability of the whole arrangement. With a couple of prominent exceptions, the politicians were all Democrats claiming to do good for the poor. Along the way, they enriched themselves and their friends, stuffed their campaign coffers, and resisted all attempts to enforce market discipline. When the inevitable collapse arrived, the entire economy suffered, but no one suffered more than the poor.
Fannie Mae lied about its profits, intimidated adversaries, bought off members of Congress with lavish contributions, hired (and thereby co-opted) academics, purchased political ads (through its foundation) and stacked congressional hearings with friendly bankers, community activists and advocacy groups (including ACORN). Fannie Mae also hired the friends and relations of key members of Congress (including Rep. Barney Frank's partner).
"Reckless Endangerment" includes the Clinton administration's contribution to the home-ownership catastrophe. Clinton had claimed that dramatically increasing homeownership would boost the economy, instead "in just a few short years, all of the venerable rules governing the relationship between borrower and lender went out the window, starting with ... the requirement that a borrower put down a substantial amount of cash in a property, verify his income, and demonstrate an ability to service his debts."
"Reckless Endangerment" utterly deflates the perceived history of the 2008 crash. Yes, there was greed — when is there not? But it was government distortions of markets — not "unregulated capitalism" — that led the economy to disaster.
– History will be kind to me for I intend to write it. — Winston Churchill
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