Government Influence and the Failure of Fannie Mae and Freddie Mac

In 2008 two government-sponsored enterprises, Fannie Mae and Freddie Mac, were placed into conservatorship due to insolvency. The financial bailout of the two publically traded corporations came at the expense of the American tax payer. This study investigates the relationship between direct and indirect government influence and the increasing risk taking of Fannie Mae and Freddie Mac from the late 1990’s through their conservatorship in 2008. As government-sponsored enterprises Fannie Mae and Freddie Mac have many special advantages that other publically traded companies did not possess. These advantages allowed Fannie Mae and Freddie Mac to increase their profitability. Theoretical literature regarding Congress and the bureaucracy suggests that the actions of bureaucrats can be linked to the preferences of Congressional members because bureaucrats are responsive to potential threats or perceived threats from the legislature. This theory is applicable to Fannie Mae and Freddie Mac, and is used to explain why the government was able to directly and indirectly influence the government-sponsored enterprises. Overall this investigation has determined that the United States government pursued a clear mission that determined to increase the availability of housing to all Americans, specifically to low-income and under-served individuals, through the use of the government-sponsored enterprises. Despite this link there is no conclusive data to show that the pursuit of this housing mission led Fannie Mae and Freddie Mac to operate in riskier business segments. This study has also found that motivation regarding profit-seeking and compensation structure provide a more plausible explanation for why the government-sponsored enterprises began to engage in riskier business practices that led to their insolvency.

Non-State United States Support For The Contras During The Reagan Era

Under President Ronald Reagan, the White House pursued a complex foreign policy towards the Contras, rebels in trying to overthrow the Sandinista regime in Nicaragua, in Nicaragua. In 1979, the leftist Sandinista government seized power in Nicaragua. The loss of the previous pro-United States Somoza military dictatorship deeply troubled the conservatives, for whom eradication of communism internationally was a top foreign policy goal. Consequently, the Reagan Administration sought to redress the policy of his predecessor, Jimmy Carter, and assume a hard line stance against leftist regimes in Central America. Reagan and the conservatives within his administration, therefore, supported the Contra through military arms, humanitarian aid, and financial contributions. This intervention in Nicaragua, however, failed to garner popular support from American citizens and Democrats. Consequently, between 1982 and 1984 Congress prohibited further funding to the Contras in a series of legislation called the Boland Amendments. These Amendments barred any military aid from reaching the Contras, including through intelligence agencies. Shortly after their passage, Central Intelligence Agency Director William Casey and influential members of Reagan¿s National Security Council (NSC) including National Security Advisor Robert McFarlane, NSC Aide Oliver North, and Deputy National Security Advisor John Poindexter cooperated to identify and exploit loopholes in the legislation. By recognizing the NSC as a non-intelligence body, these masterminds orchestrated a scheme in which third parties, including foreign countries and private donors, contributed both financially and through arms donations to sustain the Contras independently of Congressional oversight. This thesis explores the mechanism and process of soliciting donations from private individuals, recognizing the forces and actors that created a situation for covert action to continue without detection. Oliver North, the main actor of the state, worked within his role as an NSC bureaucrat to network with influential politicians and private individuals to execute the orders of his superiors and shape foreign policy. Although Reagan articulated his desire for the Contras to remain a military presence in Nicaragua, he delegated the details of policy to his subordinates, which allowed this scheme to flourish. Second, this thesis explores the individual donors, analyzing their role as private citizens in sustaining and encouraging the policy of the Reagan Administration. The Contra movement found non-state support from followers of the New Right, demonstrated through financial and organizational assistance, that allowed the Reagan Administration¿s statistically unpopular policy in Nicaragua to continue. I interpret these donors as politically involved, but politically philanthropic, individuals, donating to their charity of choice to further the principles of American freedom internationally in a Cold War environment. The thesis then proceeds to assess the balance of power between the executive and other political actors in shaping policy, concluding that the executive cannot act alone in the formulation and implementation of foreign policy.

Studying the Roles of Nonprofits, Government, and Business in Providing Activities and Services to Youth in the Phoenix Metropolitan Area

The article addresses the questions, What do children in urban areas do on Saturdays? What types of organizational resources do they have access to? Does this vary by social class? Using diary data on children's activities on Saturdays in the Phoenix-Mesa-Scottsdale metropolitan area, the authors describe the different types of venues (households, businesses, public space, associations, charities, congregations, and government/tribal agencies) that served different types of children. They find that the likelihood of using a charity or business rather than a government or tribal provider increased with family income. Also, the likelihood of using a congregation or a government facility rather than a business, charity, or household increased with being Hispanic. The authors discuss the implications for the urban division of labor on Saturdays and offer research questions that need further investigation.