And as Fannie Mae provided the inside-man with root access to all the main systems, it was apparently just as easy to destroy the backups.

Edit: also in reference to this comment: http://news.ycombinator.com/item?id=2054679

If root access to systems lets you destroy backups then they cannot rightly be considered backups.

The Tao of Backup: http://www.taobackup.com/

Also, while it will probably always be easy to accomplish inside-man attacks, it will also be generally harder to get away with them than you might think. (Especially if real money is involved!)

Just imagine if that guy had been successful. Americans would have been debt free!!

Actually what would happen is taxpayers would have to pay more to recover the data and go through the physical copies. So in reality we would be in more debt. Life isn't Fight club. (Movie not book)

Nope. There are plenty of backup records for all of the debts. Physical records of deeds, contracts, etc. And it's possible much of the data could have been restored through backups and data retrieval methods. What this would have caused would be delays and difficulties in handling existing mortgages but the biggest impact would have likely been an inability of people to apply for new mortgages using fanny mae, which is hardly a win for anybody.

In retrospect, it probably would have been a good thing.

You think that debt wasn't leveraged? You think people can just not pay back loans and no one gets hurt?

Yeah it's easy, just convince everyone you're too big to fail and have the American taxpayer pay it off.

The way the US economic/legal system works is that banks can just not pay their debts and the banks' owners don't get hurt.

If debts owed by banks aren't legally enforceable, debts owed to banks shouldn't be either. To put it another way, limited liability, if it exists, should go both ways.