1. A 2005 internal Fannie Mae presentation, titled "Facing Strategic Crossroads"
The presentation is the smoking gun in the debate over whether Fannie and Freddie entered the subprime and Alt-A markets in order to satisfy government mandated affordable housing goals, or for market-related reasons. This presentation ends the debate: private market forces pushed Fannie and Freddie into the subprime and Alt-A markets. The presentation is simply incredible reading.
See especially page 5, which says: "We face two stark choices: (1) Stay the Course; (2) Meet the Market Where the Market Is." Page 9 lists the "significant obstacles [that] block our ability to pursue a 'Meet the Market' strategy," one of which is "lack of knowledge of credit risks." (Ya think?) Page 10 shows that Fannie essentially elected to pursue a hybrid strategy: Fannie continued to "test whether current market changes are cyclical vs. secular," but also "dedicate[d] resources and funding to 'underground' efforts to" enter the subprime and Alt-A markets. Page 11 is the real smoking gun though:
Funny, no mention of affordable housing mandates.
The presentation is like an incredible window into the mortgage market during the housing bubble; it perfectly captures the prevailing mentality of the time. Not that anyone should be surprised, but the presentation also proves, once again, that Tanta was right.
2. The DOJ press release on Illinois Gov. Rod Blagojevich's indictment on federal corruption charges
The charges are nothing short of stunning. The headliner is obviously Blagojevich's repeated and shockingly explicit attempts to sell President-elect Obama's vacant Senate seat. But the allegations relating to the pay-to-play scheme, as well as Blogajevich's misuse of state funds to induce a purge of unfriendly Chicago Tribune editorial writers, are also incredible. The DOJ press release contains all the highlights from the 76-page criminal complaint.
A lot of Blogajevich's alleged statements are so cartoonish that it's almost hard to believe the quotes are accurate, but as a colleague who practices white collar crime informed me in an email:
If the USA [U.S. Attorney] says in the complaint that they've got Blogajevich saying these things on tape, then they've got it. Instant classic in public corruption law.Read the whole DOJ press release.