Tuesday, March 30, 2010

Experts shocked as Jamie Gorelick executes another massive fail

Let me get this straight: your company wants to prevent an out-of-control federal government from nationalizing your sector of the economy. So you hire a key lobbyist to represent your case. And -- of the thousands of connected lobbyists in DC -- you hire "the Mistress of Disaster"? FireDogLake explains:

When President Obama signed the Student Lending and Fiscal Responsibility Act today, it dealt an enormous blow to Wall Street banks...

Sallie Mae spent $3 million on lobbyists last year, and got none of what they wanted.  Zero, zip, nada (largely because lobbyists like Tony Podesta and Jamie Gorelick screwed up...).

Long before this debacle, Gorelick earned her nomme de guerre by playing key roles in two massive disasters.

In 2004, observers were "astonished" to discover that a key member of the 9/11 Commission had a fatal conflict-of-interest. Jamie Gorelick had served as a Deputy Attorney General under Bill Clinton from 1994 to 1997.

It was later revealed that Gorelick had established a pre-Patriot Act "wall" that prevented the foreign intelligence and criminal investigative communities from collaborating.

Her 1995 memo, entitled "Instructions on Separation of Certain Foreign Counterintelligence and Criminal Investigations", stated explicitly that they would "go beyond what is legally required, [to] prevent any risk of creating an unwarranted appearance that FISA is being used to avoid procedural safeguards which would apply in a criminal investigation."

The result: shortly before 9/11, Gorelick's wall "specifically impeded the investigation into Zacarias Moussaoui", the so-called "20th hijacker."

At the time, an enraged FBI investigator wrote a memo to headquarters which included the sentence, 'Whatever has happened to this -- someday someone will die -- and wall or not -- the public will not understand why we were not more effective..."

The 2004 disclosure that Gorelick's service as a 9/11 Commissioner was the archetypical conflict-of-interest should have triggered a cacophony of complaints and demands for a new investigation. Instead, the mainstream media turned deaf and dumb and the controversy faded into the background.

Gorelick's "wall" wrapped a blindfold around America just when it needed its vision to stop the attacks that killed thousands and which sucked a half a trillion dollars out of the economy.

Where did Gorelick turn up next?

Though she had no training or experience in finance, Gorelick was appointed the Vice Chairman of Fannie Mae and served in the role from 1997 to 2003. During that six-year period, she earned over $26 million.

During Gorelick's tenure, FNMA suffered a $10 billion accounting scandal, an ominous harbinger of the firm's looming troubles. One of the falsified transactions helped FNMA hit earnings targets for 1998, which triggered bonuses for top executives including nearly $800,000 to Gorelick.

Put simply "Jamie Gorelick was one of the Fannie executives who benefited from inflated bonuses based on Enron-style accounting."

In 2002 Business Week interviewed Gorelick concerning the health of FNMA. She responded, "We believe we are managed safely. We are very pleased that Moody's gave us an A-minus in the area of bank financial strength -- without a reference to the government in any way. Fannie Mae is among the handful of top-quality institutions."

Less than a year later regulators "accused Fannie Mae of improper accounting to the tune of $9 billion in unrecorded losses."

Today, of course, FNMA is on taxpayer-funded life support, hundreds of billions in the red. And because it was thought to have been "managed safely" (Gorelick's words), many top-flight financial services companies held its stock. That's how Fannie helped take out AIG, Lehman Brothers, and other financial institutions that had assumed the GSE was a sound investment. Put simply, mismanagement at Fannie played an indisputable role in the mortgage meltdown.

Now, given this history, you really have to wonder about Sallie Mae. What the hell were they smoking in the board room that day when someone blurted out, "Get me Gorelick on the phone, stat!"?

Update: Jamie Gorelick helping to rewrite the privacy laws.


Quilly_Mammoth said...

In the Spring of 2001 The Mistress of Disaster said:
"Our approach to our lenders is `CRA Your Way'," Gorelick said. "Fannie Mae will buy CRA loans from lenders' portfolios; we'll package them into securities; we'll purchase CRA mortgages at the point of origination; and we'll create customized CRA-targeted securities. This expanded approach has improved liquidity in the secondary market for CRA product, and has helped our lenders leverage even more CRA lending. Lenders now have the flexibility to use their own, customized loan products," Gorelick said.

Let's be clear: Jamie Gorelick greenlighted and directed the advancement of the shady paper that decimated the banking industry.

BTW: How'd that Duke assignment work out for her?

DANEgerus said...

Did Jamie Gorelick(D) actually fail or did she simply serve up SallieMae for (D)emocrat consumption?