Wednesday, April 22, 2009

The Suburbs of Northern Virginia

[David Kellerman's home]

According to the New York Times, the Chief Financial Officer of Freddie Mac, David Kellerman,was found hanged in his Northern Virginia home this morning. It is assumed to have been suicide.

Before becoming chief financial officer, Mr. Kellermann had served as senior vice president, corporate controller and principal accounting officer. He was a graduate of the University of Michigan and a volunteer board member of the D.C. Coalition for the Homeless.

Regulators with the Securities and Exchange Commission and Department of Justice have been interviewing Freddie Mac officials about possible accounting violations and other topics, the company disclosed in March. It is not known if Mr. Kellermann was one of those interviewed.

The company recently disclosed in a public filing that in September it received a federal grand jury subpoena seeking documents concerning the company’s accounting, disclosure and corporate-governance practices. The investigation is being overseen by the United States Attorney’s Office for the Eastern District of Virginia. Freddie Mac has said it was "cooperating fully in these matters."
One doesn't commit suicide because one has a good honest explanation of where all your employer's money went.

This is more and more starting to look like the 'bad loans' excuse for what happened to the capital of American financial institutions is a lie. More and more it looks like the capital of substantially all the huge financial institutions in the country was simply stolen by the top executives.

What are the chances the Obama Administration will engage in investigations and prosecutions as broad as the colossal thefts that have apparently occurred? None at all.

First, it would be devastating to the economy if it were even intimated how corrupt the financial system has become, and how little chance there is of reforming it. The new administration (how long do they remain 'new'?) is committed to repairing the economy and presumably is reluctant to press the apparently justified investigations and prosecutions because of the effect it would have on markets.

I suspect there is a deeper reason as well. They may be the liberal reformist wing of the managerial class, but they are the same class. They live in the wealthy suburbs of Northern Virginia too. Prosecuting an entire class, even a small elite class, would be class warfare, even if fully-justified. When that class is the ruling class, as the class of business executives surely is, the implications go beyond reform. Replacing the ruling class with a different one is revolution.

And that is not who the Obama Administration are. They are tepid reformers, institutional men. Interestingly, the Feds were closing in on Kellerman not because he stole, but because he stole from a government-regulated institution. Which is to say, the government men are protecting the institution of which they themselves are part.


  1. I got an interesting lesson in institutional perpetuity Saturday. It was Cal Day on the Berkeley campus. Forty years on, Guevara was gone, Lenin was gone, Savio was gone. But Oski, the banal smiling cartoon bear, the campus mascot, was in evidence everywhere.

  2. I love costco but security needs to get harsher on those that take one more sample at a time.

    Thank you.

  3. What do you propose be done with/to the miscreants?

  4. David Kellerman's death was not a suicide.

  5. What? Costco security whacked him for taking too many free samples?

    Does Ellen mean to suggest that people who stole tens of billions of dollars would do something bad to a) keep the money, and b) protect themselves from prosecution. Those seem like wild paranoid accustations. I am sure it was all a misunderstanding.

    The Cosa Nostra has not taken over the business sector. The business sector has BECOME the cosa nostra. My guess, like Ellen's, is that David Kellerman sleeps with the fishes.