Wednesday, April 24, 2013

Clement Vallandigham

The Internet is filled with dumb statements.  Someone affiliated with Code Pink or some left wing Blue State kind of organization posted this quote online obviously in an attempt to embarrass Republicans.  I'm no fan of the Republican Party on most days but this quote is unfair.

"If you want to find your currency in a ruined condition, your Greenbacks worth thirty cents on the dollar; If you want the price of everything you buy to go up and everything you sell to go down vote for the Republican Party."

Clement Vallandigham
Speech to U.S. House of Representatives, January 14, 1863

Very clever.  But I'm sure this poster and quoter never bothered to look up who Clement Vallandigham actually was.  They likely would be shocked to learn he was an unapologetic racist and supporter of slavery.

He is also one of the most bizarre characters in all of American history.

An Ohio politician, he was elected to the U.S. House of Representative in 1856.  He actually delivered the speech quoted above after being defeated for reelection in 1862.  In other words, he was on the House floor just days before they threw him out of the body.

Vallandigham was a bitter foe of President Lincoln, the war against the Confederacy, and pretty much everything to do with the liberation of slaves.

In the very same speech quoted above, Vallandigham goes on to call the United States under Lincoln "one of the worst despotisms on Earth."  Remember, it is Lincoln's Republican Party he is bashing.

He goes on this same speech to criticize the Emancipation Proclamation which had gone into effect on January 1, 1863---just two weeks before Vallandigham's spoke in the House chamber.  "War for the Union was abandoned; war for the Negro openly begun" he shouted.

Vallandigham was once considered a Presidential candidate but his vehement anti-war and pro-peace stance made him toxic for both parties.  He advocated an immediate ceasefire towards the Confederacy and a return to the status quo ante for slavery in the winter of 1863 when nearly all the country realized it was far too late for that solution.

When he returned to Ohio after losing reelection, Vallandigham immediately gave a speech denouncing "King Lincoln" and was ultimately jailed for his provocations by Union troops in the state.  The entire Civil War history of President Lincoln suspending the Federal right of habeus corpus was to keep Vallandigham in jail.  Others were imprisoned, but keeping Vallandigham confined was personal for Lincoln.

The U.S. Supreme Court case that affirmed the right of the U.S. President to suspend the constitutionally guaranteed right of habeus corpus is Ex parte Vallandigham, 68 U.S. 243 (1863).

By May 1863, President Lincoln was so sick of Vallandigham and took the highly unusual step of having the jailed Copperhead supporter DEPORTED to the Confederacy against his will.

On May 19, 1863, Lincoln had Federal troops escort Vallandigham to Confederate military lines where he famously declared "I am a citizen of Ohio, and of the United States.  I am here within your lines by force, and against my will.  I therefore surrender myself to you as a prisoner of war."

The notion of a "Man Without a Country" inspired author Edward Everett Hale to write his famous short story about Vallandigham and his strange fate.  Published in December 1863, this tale of the exiled man with no national home to call his own is still a staple of high school English classes.  I read it in 10th grade.

But the resourceful and always wily Vallandigham was not finished fighting Lincoln.  After traveling to Richmond, the capitol of the Confederacy, to explain his personal circumstances, he made his way to Canada (via Bermuda!) where he declared himself a candidate for Governor of Ohio!  Believe it or not, he won the Ohio Democratic nomination for Governor in July 1863---just two months after being deported from the USA.

Vallandigham lost the general election in a landslide.  After all, he was running his entire campaign out of a hotel room in Ontario, Canada and was threatened with arrest if he campaigned or even set foot in the state of Ohio.

After the Civil War, Vallandgham continued his racist tirades against the newly freed black slaves, although his views did moderate since he made two more attempts to reenter Ohio politics.  For a time he was involved with the Klu Klux Klan in a senior capacity but quickly found them too extreme and violent for a young man with political ambitions.

In 1871, Vallandigham was practicing law in Ohio and representing a man in a murder case.  While attempting a courtroom demonstration to show how the victim accidentally shot himself and was not a homicide, Vallandigham went the actual mile for his client and indeed did prove an accidental shooting was possible.  During his demonstration to the jury with a LOADED gun, Vallandigham accidentally shot himself and died of his wound.  His client was immediately acquitted and released from custody.

Clement Vallandigham died at the age of 50.

The whole point of this story is simple.

Don't always believe what you read online, even if the quotation is 100% accurate.

Context is key.

Monday, April 15, 2013

Fateful History of Fannie Mae

The history of the Federal National Mortgage Association has been told many times but never as compelling and riveting as before than in a new book by author James R. Hagerty.

THE FATEFUL HISTORY OF FANNIE MAE reads almost like a soap opera or mythical tale, filled with rich characters, bizarre situations, and most of all, Mr. Hagerty's pointed commentary on all the events.  He slowly unwinds the tale of how a tiny Roosevelt Administration program to help home buyers get mortgage financing during the height of the Great Depression morphed into a hybrid public/private behemoth starting the year 2006 with $1 trillion of debt guarantees it could not meet.

The point of this book is not so much to point blame and make recriminations but tell the tale of how ordinary bureaucrats and career politicians usually with the best of intentions made one fateful decision after another, decade after decade, until Fannie Mae could not longer function as a viable entity.  In the end, FNMA was held together by the proverbial spit and bailing wire, accounting gimmicks and oversight neglect.  Any straw would likely have broken its back, someday.  But the greatest real estate bubble in history had just burst and Fannie was helpless to even save itself let alone the housing market it was created to support.

Along with its baby brother Freddie Mac, taxpayers got a $154 billion lesson on business failure.

This book is filled with many photographs of smiling Fannie Mae officials over the years which gives them and their actions a greater personality, a welcome departure from much of the dry accounts of these events which focus more on numbers and budget entries than the people who actually put them on the ledger.

The tone of this book in some ways reminds me of the classic A NIGHT TO REMEMBER by author Walter Lord, where everyone knows before starting Page One how the book is going to end but readers are drawn into the story by all the cruel ironies and ignored warnings of disaster looming on the horizon.  In Lord's book, the ship is much like a stage and the passengers all doomed to share one grim night are like actors playing roles in the evolving drama, which is precisely why we remember the names of Captain Smith and J. Bruce Ismay so well today.  There is no suspense how the story of the ship ends, but there is much suspense in how each of the characters in the story fells along the way.

There is this same sense of eerie foreboding in THE FATEFUL HISTORY OF FANNIE MAE as critics of the never ending expansion of FNMA from its birth keep raising the alarm...but few pay attention...and more and more Federal guarantees seem to bless the supposedly private publicly traded entity.

One of many such warnings in the book comes in this form.  Miles Colean, an economist who worked for the mortgage lending industry, wrote a brief to the President of the United States saying government intervention in the U.S. housing market was "improvised in a progression of crises" and "lacked a recognized settled policy.  He said "no limit to the expansion of Federal jurisdiction is discernible."

Colean wrote this brief to President Eisenhower in 1952.

What I really liked about this book is the author's colorful commentary on the people and their events.  He likes bold adjectives and clever phrases which makes reading an account of what could be a boring subject extremely interesting.  For example, when he describes the testimony of a Treasury official up on Capitol Hill as "bland comments" we understand the frustration of listening to such nonsense in the room but also the implications for taxpayers in the future.  For decades, everyone knew Fannie and Freddie were like ships slowly sinking, not by huge gashes torn in their sides but slowly, a popped rivet there, a tiny stream of water here.  For generations the pumps held back the inevitable but in the end gravity always wins.

There are many accounts of the Fannie Mae disaster and many worth reading.  This book by James R. Hagerty is the most riveting I know.  MUST READ.