Though technically not in a recession, the U.S. economy is still in the dumps.
The recovery, if you can really call it that, is the most anemic in decades. The official unemployment rate is still above 8 percent and, if you factor in the number of people who have given up looking for work and are no longer officially counted, the number may be almost twice that.
President Barack Obama continues to place the blame on the previous administration but people aren't buying it. Pollster Scott Rasmussen's latest figures show just 31 percent of likely voters giving him positive marks for the way he handles economic issues.
[Check out a roundup of editorial cartoons on the economy.]
As the campaign gets underway and the voters begin to focus on the future, they are even more likely to find fault with Obama's handling of the economy. The "crony capitalism" that has been the hallmark of his economic program will not stand up to close scrutiny, if it gets it that is. Worse for Obama, it's a reminder of how the whole crisis came to be in the first place.
Most people don't talk about it anymore, but the current economic crisis is rooted in the corruption of the mortgage market, particularly in instruments known as "sub-prime loans" and in the Democrats stonewalling of Republican efforts to force reform on the lending giants Freddie Mac and Fannie Mae. The whole business stinks like fish left out too long in the hot sun, not that anything has really been done about it.
Hopefully that may change now that the House Oversight and Government Reform Committee released a new report following the committee's three year investigation into the activities of Countrywide Financial Corporation—which was acquired by Bank of America in 2008. It's a frightening account, documenting the company's use of what the committee called "discounted mortgages to influential Washington policy figures" to win friends and influence people.
[See a slide show of 6 ways to fix the housing market.]
"Countrywide used its VIP Program to aid its lobbying efforts as well as to strengthen its relationship with taxpayer backed Fannie Mae. Countrywide partnered with Fannie Mae in a strategic business alliance that also included joint lobbying efforts," said a committee release.
According to committee chair Darrell Issa, the investigation determined that "Countrywide lobbyists and CEO Angelo Mozilo used discounted loans as a tool to ingratiate itself with policymakers in an effort to benefit the company's business interests."
"A former lobbyist for Countrywide testified that Members of Congress, staff, and other government officials were directed to the company's VIP program as part of an effort to create a favorable impression of the company on Capitol Hill. This preferential treatment—that varied depending on the influence of the borrower—was not routinely offered to the public," Issa said in a release.
These relationships, the committee concluded, helped Countrywide and its CEO increase company profits "while dumping the risk of bad loans on taxpayers." The favoritism shown to insiders, the "crony capitalist" nature of what the committee found Countrywide to have been doing, is emblematic of what is wrong with the way Washington works today—or, more accurately, doesn't.
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