Henry Waxman is investigating whether the Bush Administration took a page out of Naomi Klein's book, "The Shock Doctrine" by deliberately precipitating a bear raid on Fannie Mae and Freddie Mac, according to the Washington Post.
Folks might recall that I have been speculating openly about whether the GSE crisis last month was the "mother of all Bear Raids." (A "bear raid" is when interests short a stock, then spread rumors of insolvency or other bad news in order to create a collapse of the stock, and then cash in). The run on Fannie and Freddie started with rumors at the end of June of an imminent collapse "within two weeks" of the US financial system. Then on Wednesday July 9, former Fed Governor Poole (now with the Heritage foundation), long a critic of Fannie and Freddie, claimed they were insolvent. This started a run which was only intensified two days later when somebody leaked a memo to the NY Times that the Administration was considering the nationalization of the two GSE's.
Fast forward three weeks and the Administration has been handed a blank check by Congress to spend as much as it wants without any limit whatsoever to "backstop" Fannie and Freddie, and a Morgan Stanley banker has been hired to oversee the same.