Morgen on May 7, 2010 at 7:01 am
If any further proof is needed that Barney Frank has been completely incompetent in his oversight of the financial services industry, one need look no further than this past week. Just one day after Frank sent a memo to the White House urging the President to reject the attempt by Republicans to include GSE reform in any financial reform bill, Freddie Mac requested an additional government bailout of $10.6 billion to cover losses incurred in the first quarter. Only one day (!) after Frank defended the GSE’s, writing that “as Fannie and Freddie operate today, going forward, there is no loss”.
There is no loss.
Rep. Frank, of course, has a distinguished history of ineptitude when it comes to regulation of the housing industry, and his role in the financial market collapse. But when it comes to avoiding culpability, he is second to no one in his ability to spin a web of deceipt and reinvent history.
Lies, demonstrable lies.
But let’s not forget that Frank became chair of the House Financial Services Committee in January 2007, after the Democrats re-took congress. While the housing market decline had already begun, it would be well over a year before the financial crisis really began to accelerate. Fannie and Freddie, in fact, were not placed under federal control until September 2008.
Surely Barney Frank, with his vast intellect and experience, saw these problems developing and was preparing to do everything within his power to reign in the mortgage industry, and stem this crisis, as he assumed his new leadership role. Right?
Let it be noted that in May 2007 Barney Frank and the Democrat-controlled House would go on to pass GSE reform legislation. Legislation which was adamantly opposed by the Treasury Dept. and the Bush Administration for limiting federal oversight of Fannie and Freddie’s mortgage holdings. Legislation which included Frank’s pet project, an “affordable housing” fund backed by tax payers.
Let it also be noted that going into 2007 Fannie and Freddie had never in history been allowed to purchase or finance sub-prime mortgages. But under pressure from Democrats in Congress (including Frank), they were granted this authority by regulators in September 2007.
Let it also be noted that in 2007 Frank aggressively pushed to increase the maximum loan limits which could be underwritten by the GSE’s. A move which would ultimately transfer tens of billions of dollars of loan liabilities from private financial institutions to tax payers.
It’s no wonder that even after the total collapse of Fannie and Freddie in 2008, at an ultimate cost to tax payers which could exceed $400B, Barney Frank is still adamantly opposed to legislation which would prevent any further federal bailouts of the GSE’s. For Democrats like Frank, continued control over Fannie and Freddie represents the effective nationalization of the entire mortgage industry. It’s a dream come true for those who wish to use the power of the federal government to implement their desired social and redistributive policies.
Barney Frank’s willful ignorance and gross negligence leading into the financial crisis has already burdened tax payers with hundreds of billions of dollars of debt. It is incomprehensible to me that someone so cavalier about the damage this crisis has done, and his role in it, remains in a position to inflict further damage on the American public.
Senate Republicans should filibuster financial reform legislation until GSE reform is addressed. And it’s time for Barney Frank to go.