their firms, laymen and wamu, also decided to increase risk around the same time. some firms, countrywide, aig and city simply continued the blind pursuit of market share without regard to changing market circumstances. so where were the regulators? to say the least, governments actions before the crisis were seriously inadequate to protect against an economic debacle. not unrelated is the fact that the financial insurance and real estate sector was by far the greatest source of campaign contributions to federal candidates and parties contributing almost half a billion dollars in the election cycle 2007/2008 alone. the financial services industry to offense used its clout to lobby for government policies that ultimately hurt rather than benefited major financial firms. it was the way the fannie mae and freddie mac pot for bought for years against more capable supervision to and standards that might save them from making the bad decisions that destroyed the two companies in 2008. the industry's political strength impeded other supervisory actions as well such is the

at freddie and fanny which were the first ones to get in trouble in september, more or less, then wamuthen lehman and then merrill lynch and suddenly people realized they had bank lines that wasn't going to happen so it was as close -- to the wildest panic i ever saw. >> rose: the wildest you ever saw? >> by far. >> rose: you got out of the hedge fund business in -- >> end of 1969. >> rose: because? >> i got out because i didn't -- i had a good record up to then. i had all these people counting on me and i thought things were getting speculative and i didn't know how to make money in that period and i was competitive enough to feel that i don't want to do lousy compared to other people yet i didn't want to do the other things they were doing so the only thing i wanted to do was give the money back and i gave the money back. >> rose: what do you think of hedge funds today? >> well, i think that -- i made a famous bet that carol has been keeping track of where i'm betting that hedge -- a large group of hedge funds, funds of funds will underperform the s&p over time. >> rose: what's the b

much was made of wamu having a slogan like that. fannie had in the press release in 1994. they promise clear and flexible underlying standard. flexible and to what extent or another word for loose lending. that's what they mean. affordable housing is another word for -- that's what it means that fannie and freddie were famous for the cross subsidies, well documented by oco and now fhfa. the one that really was probably the worst that really politicize danny as bob talked about, opened 25 fannie mae partnership offices eventually grew to 50 something. that will form long-term partnerships cities rural areas and underserved committee. really read political offices. that was a huge cultural change. it did not exist before the. i can testify to that. during the time which i was there. no standing the rhetoric and the noble sounding goal, this trillion dollar down payment on transform housing finance by showing america a new way home, the book that jim johnson wrote was really an effort to do a much more straightforward and monday objected, to accomplish and much more straightf