Morgen Richmond from Verum Serum broke this story earlier this week at Big Government.
It’s worth repeating.
Democrat Barney Frank, the chairman of the House Financial Services Committee, sent a letter this week to the White House urging the President to reject the attempt by Republicans to include GSE (Fannie Mae-Freddie Mac) reform in any financial reform bill. Frank argued that had already been reformed and did not need to be included in the Senate’s financial reform bill. Frank told democratic senators, “As Fannie and Freddie operate today, going forward, there is no loss.”
Freddie and Fannie have already been reformed, to some extent, by virtue of being placed into conservatorship.
“So the argument that we have ignored the need to change the operation of Fannie and Freddie in our rush to do financial reform is of course exactly backwards,” Frank wrote. “We did Fannie and Freddie first.”
Frank also wrote that the Republican proposal to abolish Freddie and Fannie would remove an important government prop to the housing market. “It is the unanimous view of every profit and nonprofit entity concerned with the housing market in the United States that simply to abolish Fannie and Freddie, as the Republicans are proposing in the House bill, and not do anything to replace the functions they are now performing with a conservatorship, would be a disaster for housing, and therefore for the economy as a whole,” Frank said…
“This is an important point that has to be repeated – as Fannie and Freddie operate today, going forward, there is no loss,” Frank wrote.
These statements by Frank came one day before Freddie Mac requested an additional government bailout of $10.6 billion to cover losses incurred in the first quarter.
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.
President Bush warned the Democratic Congress 17 times in 2008 alone about the systemic consequences of financial turmoil at Fannie Mae and Freddie Mac and also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. Unfortunately, these warnings went unheeded, as the President’s repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those like Frank and Pelosi who emphatically denied there were problems.
Instead of curtailing the power of these failed mortgage giants, Frank passed legislation that limited oversight of Freddie and Fannie’s mortgage holdings.
Morgen Richmond added this on Frank’s failed record:
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 was a key figure at the center of the financial collapse in 2008. Today he’s still pushing his radical and misguided agenda on America. He never learns.
Isn’t it time Barney Frank was retired from his leadership duties?
