Fannie Mae Wanted to be "Friends" With The Cato Institute

George Will reports:

In the 1994 elections, Republicans ended 40 years of Democratic control of the House of Representatives. So in 1995, a vice president of Fannie Mae wrote a letter to Ed Crane, president of the Cato Institute, saying that Fannie Mae intended to give that libertarian, free-market think tank a $100,000 grant.

Politics produced Fannie Mae. It was created by the government in 1938 to further the government objective of increased homeownership. It was sold -- semi-privatized, sort of -- for a political purpose: to help President Lyndon Johnson finance the Vietnam War. Fannie Mae has no objection to interventionist government; the regulatory state created and cosseted it. And it has always known which side its bread is buttered on -- on both sides, by taxpayers, through the implicit federal guarantee of Fannie Mae's obligations.

But in 1995, Fannie Mae, attempting to ingratiate itself with conservatives, approached Cato with cash, thereby proving that it understands libertarianism no better than it understands subprime mortgages. When Crane responded that Cato never accepts government funding, he received a starchy letter from Fannie Mae hotly denying that it was in any way a government entity.

Well. The implicit federal guarantees -- which enabled Fannie Mae and another "government-sponsored entity," Freddie Mac, to swell up with more than 11,000 employees and $5 trillion in mortgages -- have become explicit. Was Fannie Mae cynical or delusional in 1995?

You'll want to read the whole article.