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I think the behavior of both public officials and private sector managers over the past decade is at direct odds with our message to the developing world regarding transparency and accountability. For example, my research shows that influence peddling is a serious impediment to growth in Africa, and that the development community needs to devise solutions that recognize and overcome such problems.

But we lecture governments in the developing world on these topics, they are observing that the people running Fannie Mae, Freddie Mac, and businesses like AIG have not been held to even the minimum standards of accountability. Government officials in this country have also ignored the warnings of such distinguished economists such as Larry Summers and Ed Gramlich, instead giving Fannie and Freddie even more leeway with their accounting practices and their portfolio of high risk investments over the past few years. This crisis may or may not have long term economic impacts but its negative impact on progress towards good governance is quite clear.

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CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.