Justice Department ruling: 2008 law removed Fannie Mae’s watchdog

The inspector general who is supposed to expose corruption and prevent reckless behavior at the Fannie Mae and Freddie Mac mortgage giants quietly lost his power last year, the Justice Department has ruled.

In other words, those two financial institutions, responsible for backing and buying more than half of America’s home loans, are more open than ever to abuse and manipulation by people like Congressman Barney Frank.

How did this happen? According to The Huffington Post, the Democratic Congress last year passed a law that accidentally-on-purpose emasculated the position of Federal Housing Finance Agency inspector general. (Ed Kelley, the inspector general, was the financial watchdog for all these financial institutions. Now he's demoted to two-bit accountant. And don't forget the 2004 "hushing" of another financial watchdog.)

More dangerous. So Fannie Mae and Freddie Mac, the very agencies the Democrats pressured to make $1 trillion in bad loans from the early 1990s until 2008, now are totally vulnerable to more destructive political pressure.

Our financial system collapsed because Barney Frank and Chris Dodd abused Fannie and Freddie. Now, by firing the inspector general with a law, it appears Frank and Dodd have accidentally-on-purpose covered up their high crimes.

President Obama can appoint a new inspector general for Fannie Mae and Freddie Mac. Not surprisingly, Frank and Dodd haven't urged the president to hurry.

Frank Warner