Lawrence Lessig: Change Congress

By Michael Fraase

Sunday, 27 July 2008 01:42PM CST

Section: Politics

Change CongressFannieMae controls about US$2.6 trillion in mortgage-backed securities. The government-created institution was set up to provide low-income loans. The top 20 FannieMae employees each make more than US$1 million a year; in the last five years, almost US$250 million in bonuses was distributed. With these kinds of numbers, how can the institution be on the brink of insolvency?

According to Larry Lessig’s Netroots Nation keynote, it’s because of long-standing structural problems that have gone ignored. According to Rep. Richard Baker (R-Louisiana), the ignoring bit comes “because the entities had enormous political allies and were always able to squash any reform effort that might look like it would go somewhere.”

FannieMae has spent US$900,000 on campaign contributions this year. That’s right, Lessig says. “A government-created entity lobbying government.” The result is what Lessig calls “crony capitalism: socialized risk, privatized benefits.”

It’s suddenly less perplexing that the approval rate of the US Congress is currently nine percent.

Trust, Lessig points out, is built by keeping money out of the equation. “Money,” he says, “poisons trust.”

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