04/07/11 Rewarding Incompetence

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The housing bubble burst in 2008.  Through laws and regulations, Congress forced lenders to give mortgages to people who couldn’t afford them.  The result was inevitable. 

Also guilty were Fannie Mae and Freddie Mac.  They are the government-owned corporations that gobbled up billions of dollars in toxic mortgages, packaged them as securities, and sold them to Wall Street as safe investments. 

In reality, they were junk

Then 2008 happened.

Fannie and Freddie collapsed costing taxpayers $153 billion. This bailout is expected to skyrocket to more than $360 billion by 2013. 

An Inspector General’s report revealed the Fannie and Freddie CEOs were paid $17 million the last two years.  The top six officers were paid a combined $35 million.

The federal government rewards incompetence and promotes failure.  People rarely get disciplined or – shock – get fired.

Here’s another example.  I recently told you about a Government Accountability Office undercover sting and report.  Some things just didn’t add up. 

So we filed a Freedom of Information Act Request.  The GAO responded by rewriting its report.  Further investigation found the GAO fabricated nearly all of it.

Last month, the head of GAO’s special investigations unit was relieved of his duties over his role in the fraudulent report.  But he still got to keep his job.