Barney Frank Revises History
Greg Mankiw notes a curious revisionism in Barney Frank's pronouncements on Fannie Mae and Freddy Mac.
Greg Mankiw notes a curious revisionism in Barney Frank’s pronouncements on Fannie Mae and Freddy Mac.
In September 2003, when the Bush Administration was pushing a new oversight agency to monitor Fannie and Freddy:
Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Yesterday, debating his Republican challenger:
“He has long been an advocate for extending homeownership, even to those who couldn’t afford it, regardless of the cost to the American people,” said Bielat, 35.
Frank, a leading liberal who has represented the state’s Fourth Congressional District for nearly 30 years and became chairman of the House Financial Services Committee in 2007, said he and other Democrats fought to curb predatory lending practices before the recession but were thwarted by Republicans. He said he had supported efforts to help low-income families rent homes, rather than buy them.
“Low-income home ownership has been a mistake, and I have been a consistent critic of it,” said Frank, 70. Republicans, he said, were principally responsible for failing to reform Fannie Mae and Freddie Mac, the mortgage giants the government seized in September 2008.
Unfortunately for Frank, Google makes blatant lies harder to pull off.
A bit of porky by Frank but Mankiw is being a little disingenous. He was I think chairman of Bush’s council of economic advisors at the time when his admin was pushing minority home ownership very hard. And F/F had precious little to do with the economic meltdown despite some Republican myth making. Until mid 2007 when the Bush admin was pushing them to increase their share as private capital fled the market F/F only had abot 25% of the market.
Yeah, that’s pretty bad. He’s been Mr. Freddy-Fannie since way back.
Congressional history and the machinations of law-making are not my forte. So please grant me a small measure of salt (or maybe a whole salt lick) instead of just a small grain when I add my perspective and understanding:
In 2005 [Frank[] in fact worked together with [his] Republican colleague Michael Oxley, then Chairman of the Financial Services Committee, to write a bill to increase regulation of Fannie Mae and Freddie Mac. [They] passed the bill out of committee with an overwhelming majority — every Democrat voted in favor of the legislation. However, on the House floor the Republican leadership added a poison pill amendment, which would have prevented non-profit institutions with religious affiliations from receiving funds. [Frank] voted against the legislation in protest, though [he] continued to work with Mr. Oxley to encourage the Senate to pass a good bill. But these efforts were defeated because President Bush blocked further consideration of the legislation. In the words of Mr. Oxley, no flaming liberal, the Bush administration gave his efforts ‘the one-finger salute.’
In addition:
In 1999 they passed the Gramm-Leach-Bliley Act, which overturned a Depression-era law preventing commercial banks from acting like investment banks. In 2000, they passed another bill which loosened regulation of derivative markets. I voted against these bills — but to no avail.
Under Republican President George W. Bush, many federal agencies turned a blind eye to activities which would later precipitate the global financial meltdown. The Securities and Exchange Commission decided to allow the nation’s largest financial institutions to “self-regulate;” the Federal Reserve under Alan Greenspan declined to use its power to regulate subprime mortgages; the Comptroller of the Currency decided to preempt state consumer laws on subprime mortgages.
In March 2007, just two months after [he] became the Chairman of the Financial Services Committee for the first time, [he] moved quickly to forge a bill which would regulate Fannie Mae and Freddie Mac. The bill passed the House in May, with all 223 Democrats voting for it, and 103 Republicans voting against it. President Bush later signed that legislation into law.
Later in 2007, [he] introduced legislation to restrict subprime mortgages. The bill passed the Financial Services Committee and the House, but it did not pass the Senate, where because of the filibuster rule, the Republican minority actually does have the power to hobble the majority. The bill passed the full House with all 227 Democrats and 64 Republicans voting for it, and 127 Republicans voting against.
sources:
http://www.huffingtonpost.com/rep-barney-frank/is-there-an-antidote-to-t_b_176538.html
http://mediamatters.org/research/200903190006
BTW, I know I gave you guys early warning on MERS last year. Count that as one of my good calls. The mortgage title thing continues to unravel. I’m not sure that you’ve done a post on title problems coming out of MERS and robo-signing, but it is big and getting bigger.
Todayy’s example of continued fallout:
http://www.bloomberg.com/news/2010-10-13/mortgage-flaws-may-lead-investors-to-challenge-1-3-trillion-of-securities.html
A quick recap of the MERS problem:
http://www.cnbc.com/id/39634568
A good headline piece for this bigger story at the WSJ:
Are We Headed for Housing Armageddon?