The predators' ball

August 09, 2008
Roy Barnes is a self-described "small-town" lawyer with a mane of silver hair and an Andy Griffith drawl. But like Griffith's Ben Matlock, the TV character he resembles, Barnes is the furthest thing from a rube. He comes from a family of bankers, and back in the '90s Barnes saw, far before many in Washington, what was happening as deregulation took lending further away from the local banks and gave it to mortgage brokers and Wall Street. So when Barnes was elected governor of Georgia in 1998, he decided to push through the toughest antipredatory lending law in the country. The 2002 law made everyone up the line, including investment banks on distant Wall Street and rating agencies like Standard & Poor's, legally liable if the loans they sold, securitized or rated were deemed unfair. "There has to be accountability," Barnes told NEWSWEEK. "In the end you have to be able to say, do I really want to make this loan? Because I may have to eat it." "A victory for Georgia consumers," the Atlanta Journal-Constitution called the new law, which was also hailed by AARP and the NAACP.
     It was when Roy Barnes started talking about accountability that the Feds began marching into Georgia. Barnes found himself besieged by lobbyists from major banks and national regulators—as well as Fannie Mae and Freddie Mac, the government-sponsored mortgage issuers whose mandate is to help people obtain affordable homes at fair prices; today, Fannie and Freddie are so financially fragile that the government has agreed to bail them out if necessary.