Enron was small potatoes. For all their imaginative corporate structures and creative accounting, Ken Lay and company only managed to soak investors for a couple hundred billion dollars—not even as much as a Kerry tax increase. Imagine if the Enron debacle had been 20 times as big and you're talking real money. Now imagine that the U.S. taxpayer has to pick up the tab and you’ve got the sort of stuff global depressions are made of.

As it turns out, we may not have to imagine much longer. A new circus of dubious management and questionable accounting threatens to make us all look back fondly on the tiny market blip that was Enron.

Fannie Mae and Freddie Mac are the largest privately owned financial institutions in the nation. Together, they own or guarantee upwards of $4 trillion (with a “t”) in home mortgages (if your house cost less than $330 grand, chances are either Fannie or Freddie holds a piece of your note). What’s more, because of their special status as “government sponsored entities,” Freddie and Fannie don't have to follow all the rules that other privately owned companies do: they don't have to register their securities with the government, their securities receive special treatment for investment purposes, they don't have to pay state income taxes and—most importantly—because of Freddie and Fannie’s government sponsorship, the markets widely assume that the federal government (read Joe and Betty Taxpayer) guarantees all of their notes. In other words, should Fannie and Freddie screw up, you and I will end up holding the bag. And just to give you an idea of how big a bag we’re talking about, as of the end of last year Freddie and Fannie carried a combined debt in the neighborhood of $2 trillion (by way of comparison, the 2005 federal budget runs about $2.3 trillion).

Screw up is increasingly what it looks like the two lending giants are doing. Last year, Freddie “discovered” that it had “misstated” its earnings to the tune of over $5 billion. As regulators investigated, Freddie Mac President David Glenn, Chief Executive and Chairman Leland Brendsel and Chief Financial Officer Vaughn Clarke all found the door rather than cooperate with investigators (though not without pausing to collect more than $20 million in severance packages). Ken Lay wishes he’d had it so good! Nor is Freddie alone in its mismanagement. Frannie has seen 15% of its value—$10 billion in market capitalization—evaporate since March 1 (in one of the hottest home buying markets in history). Just last month Fannie Mae’s chief regulator, the Office of Federal Housing Enterprise Oversight, cited the company for accounting for its assets “in a way that fails to reflect losses.” Sound familiar?

Fortunately we’ve learned our lesson from Enron. No more will our leaders in Congress turn a blind eye to Enron-style accounting shenanigans. Just last week, Minority Leader Nancy Pelosi trumpeted both her indignation and her resolve to settle the score:

We knew all along that Enron and the energy companies were gaming the system. The now notorious tapes, which every member of this body has an obligation to observe, of Enron traders confirm what we knew all along—Enron and the other energy companies were laughing all the way to the bank usas they stole from families and businesses of California. Enron and its kind lied, cheated, and stole, and it is long past time for Enron to pay consumers and the states back.

Surely with watchdogs like Pelosi guarding our interests, we don’t need to worry that Freddie and Fannie could brew up a new Enron disaster…or do we? Even in the wake of the accounting scandals at Enron, the attempts of federal regulators to tighten oversight of Freddie and Fannie have been thwarted in Congress. Just yesterday, Pelosi joined Barney Frank and other top Democrats in appealing to the adminstration to ease up in its efforts at regulatory reform.

What gives? How could the same Nancy Pelosi who was seemingly ready to go to work on Ken Lay with thumb screws and branding irons be so forgiving of Freddie and Fannie despite their growing accounting crises? Thomas Ryan may have the answer. Mr. Ryan has discovered that, in addition to misstating profits and providing multi-million dollar golden parachutes to disgraced management, Fannie and Freddie give piles of money to left wing causes. Lefty outfits like the Center for Policy Alternatives, the Alliance for Justice, and Jesse Jackson’s Rainbow PUSH Coalition head the long list of beneficiaries of their largesse—generosity amounting, in Rainbow PUSH’s case, to the purchase of a billion dollars worth of mortgages.

As Enron collapsed, its management reached out to every contact they had in a desperate attempt to save the sinking ship. They seem to have had contacts at some level with Vice President Dick Cheney, a fact that the Democrats have urged support dire conclusions of corruption in the very highest levels of the administration—despite the fact that Cheney and the administration don’t seem to have taken the smallest action on Enron’s behalf. Now Fannie Mae and Freddie Mac have been caught cooking the books. The stock of both companies is falling fast, and their management aren’t just meeting with top Dems, they’re giving billions of dollars to lefty causes. Meanwhile, top congressional Democrats are asking regulators to “ease up.”

Enron was small potatoes.