The FOE Factor

One of my pet theories is that the depressing implosions we're experiencing are evidence of the Failure Of Elites in virtually every sector of society. Call it the FOE Factor. Obviously Governor Blagojevich is the most stunning new example, but at least his scandal ruins only his own life. The broader extent to which all of us been harmed by the failures of our "betters" includes the fallout from greedy or errant CEOs, priests, pols, ratings agencies, bankers, accountants, lawyers, you name it. These are people who by virtue of their privileged positions are supposed to act (at least in part) as stewards of the common good. Instead, every day the rot at the top produces headlines that make American society seem utterly debauched.

My new operating principle: Just when you thought there couldn't be any more emperors without clothes, another naked one pops up! Today's FOE Factor highlight comes courtesy of the WSJ from the latest post-mortem grilling of the unrepentant Fannie and Freddie CEOs.

As the hearings found:

"The emails show that the two government-backed mortgage companies were aware they were taking on more risk as the housing bubble peaked. But the companies pressed ahead with efforts to regain market share they had lost to Wall Street investment banks. They did so by buying loans and securities that increased their exposure to subprime mortgages, for people with weak credit records, and Alt-A mortgages, which typically spare borrowers from having to document their income and assets. Fannie "'has one of the weakest control processes I ever witness (sic) in my career," Enrico Dallavecchia, then chief risk officer of the company, wrote in a July 2007 email to Michael Williams, chief operating officer.

More WSJ:

Four former chief executives of Fannie and Freddie appeared before the committee to answer questions about their financial woes. They generally dodged demands by committee members that they accept the blame for those problems. "We did what we thought was the right thing at the time" but were then surprised by the most "violent" housing downturn for decades, Mr. Syron said.

Hey, coulda happened to anybody. But tell me again, why did you guys all get tens of millions of dollars for running these operations?