“Who Is James Johnson?”

David Brooks(!) belatedly discovers that a primary cause of the Great Recession was Fannie Mae.

But the most devastating scandal in recent history involved dozens of the most respected members of the Washington establishment. Their behavior was not out of the ordinary by any means.

For that reason, the Fannie Mae scandal is the most important political scandal since Watergate. It helped sink the American economy. It has cost taxpayers about $153 billion, so far. It indicts patterns of behavior that are considered normal and respectable in Washington.

Fannie Mae wasn’t the sole cause. For a more complete list and useful analysis see John Allison’s talk (or his slides). But federal housing policy, Fannie Mae in particular, was central.

Craig Newmark

Associate Professor of Economics, North Carolina State Univ.

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