The Radio Equalizer: Brian Maloney

27 September 2008

Focus Of Financial Meltdown Blame Shifts To Barney Frank (D-MA)


Congressman's Key Meltdown Role Increasingly Clear


Though conservative talk hosts may not agree on what kind of financial rescue plan should be adopted, there is a growing consensus regarding who should take the largest share of the blame. With his sharp wit, yet mumbled vocal delivery, Congressman Barney Frank has emerged as the poster child for How We Got Into This Mess.

While both parties continue to hash out an agreement that would hopefully save our financial system from a total collapse, more details have emerged in recent days about Frank's role in the crisis, including past personal ties to one of the real villains.

This comes as Frank himself has gone on the offensive, blaming congressional Republicans for supposedly backing out on a "deal" that never existed.

Unfortunately for him, the subprime mortgage mess that now threatens the global banking system is full of Barney's fingerprints.

As Bill Conerly at points out, a lack of government regulation wasn't behind the meltdown at Fannie Mae and Freddie Mac, it was a push by the feds, akin to a mandate, to make risky loans to people with poor credit histories in the name of "social justice". Frank was at the very center of this effort, even to the point of dismissing concerns about their financial health:

The government wanted more risky loans made, not less. For example, the Community Reinvestment Act pressured banks to make loans in poor neighborhoods. Banks (and I was a banker under the CRA) figured that making some bad loans was just another tax., a cost of doing business as a regulated company. In 1995, the Clinton administration revised the CRA to increase pressure on banks to make more loans to risky borrowers. In 1997, the first pool of subprime mortgages was securitized (by Bear Stearns!)

The law regulating Fannie Mae and Freddie Mac was rewritten to reduce their capital requirements, meaning they would become riskier. Some critics were concerned about the risk, but here’s what the distinguished Congressman Barney Frank had to say at the time:

''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.''

New York Times, September 11, 2003

Hey, why shouldn't he defend these Democrat-led agencies, given that his former boyfriend was an executive at Fannie Mae, as Jeff Poor of the Business and Media Institute writes:

Prominent Democrats ran Fannie Mae, the same government-sponsored enterprise (GSE) that donated campaign cash to top Democrats. And one of Fannie Mae’s main defenders in the House – Rep. Barney Frank, D-Mass., a recipient of more than $40,000 in campaign donations from Fannie since 1989 – was once romantically involved with a Fannie Mae executive.

The media coverage of Frank’s coziness with Fannie Mae and his pro-Fannie Mae stances has been lacking. Of the eight appearances Frank made on the three broadcasts networks between Jan. 1, 2008, and Sept. 21, 2008, none of his comments dealt with the potential conflicts of interest. Only six of the appearances dealt with the economy in general and two of those appearances, including an April 6, 2008 appearance on CBS’s “60 Minutes” were about his opposition to a manned mission to Mars.

Frank has argued that family life “should be fair game for campaign discussion,” wrote the Associated Press on Sept. 2. The comment was in reference to GOP vice presidential nominee Sarah Palin and her pregnant daughter. “They’re the ones that made an issue of her family,” the Massachusetts Democrat said to the AP.

The news media have covered the relationship in the past, but there have been no mentions since 2005, according to Nexis and despite the collapse of Fannie Mae. The July 3, 1998, Reliable Source column in The Washington Post reported Frank, who is openly gay, had a relationship with Herb Moses, an executive for the now-government controlled Fannie Mae. The column revealed the two had split up at the time but also said Frank was referring to Moses as his “spouse.” Another Washington Post report said Frank called Moses his “lover” and that the two were “still friends” after the breakup.

Frank was and remains a stalwart defender of Fannie Mae, which is now under FBI investigation along with its sister organization Freddie Mac, American International Group Inc. (NYSE:AIG) and Lehman Brothers (NYSE:LEH) – all recently participants in government bailouts. But Frank has derailed efforts to regulate the institution, as well as denying it posed any financial risk. Frank’s office has been unresponsive to efforts by the Business & Media Institute to comment on these potential conflicts of interest.

While the relationship reportedly ended 10 years ago, Frank was serving on the House Banking Committee the entire 10 years they were together. The committee is the primary House body which along with the Office of Federal Housing Enterprise Oversight (OFHEO) has jurisdiction over the government-sponsored enterprises.

He has served on the committee since becoming a congressman in 1981 and became the ranking Democrat on the committee in 2003. He became chairman of the committee, now called the House Financial Services Committee, in 2007.

Moses was the assistant director for product initiatives at Fannie Mae and had been at the forefront of relaxing lending restrictions at the company for rural customers, according to the Feb. 23, 1998, issue of National Mortgage News (NMN).

And as Bill O'Reilly
points out in his latest column:

Congressman Barney Frank also sat by as mortgage brokers Fannie Mae and Freddie Mac made bad loans even though Frank, as head of the House Banking Committee, certainly knew the score. Instead of demanding responsible business practices from Fannie and Freddie, Frank continued to pound the table to extend even more credit to "low income" families. The mortgage companies were happy to accommodate him giving big money to folks with little collateral.

For his part, Rush Limbaugh has been picking apart Barney Frank's words bit-by-bit:

FRANK: I didn't know I was going to be the referee of the internal Republican ideological civil war.


FRANK: To my surprise yesterday the House Republicans came up with their own entirely new plan. And it is a -- an ambush plan.

RUSH: There's nothing new about what the House Republicans believe. Conservatism is conservatism. The House Republicans were never involved in the deal. They announced a deal yesterday that didn't exist, the Democrats did. They announced a deal that didn't exist to try to head off McCain's presence having any impact on this. So now they're doing a 180 turning this all the way around, the Drive-Bys are not going to tell you this, you're not going to hear this anywhere else. They're carrying the water for people like Barney. It was an ambush. They're trying to portray the White House plan as an ambush 'cause their candidate botched it. Barney Frank again, the anchorette at CBS, "Well, do we have a solution by the end of the weekend, yes or no?"

FRANK: It depends on the House Republicans dropping this revolt against the president and cooperating and trying to amend the plan and at this point I can't give you a yes or no because it's up to the House Republicans and their war, I think on behalf of Senator McCain, with President Bush.

RUSH: Nothing could be further from the truth. The fact of the matter is there never, ever, was a deal. The Democrats have the votes to pass everything that they want. We don't need the Republicans. Ask yourself why. If it's such a great deal, if this will save America, if this will prevent disaster, if this will prevent a depression, why don't the Democrats, thinking the country is important first, pass the bill? Why do they want Republican votes on this? If this is so wonderful, if this is the best deal ever, why don't they just embarrass the Republicans, pass this and leave the Republicans out of it? As I said earlier, they want the Republicans to refute their beliefs. They want the Republicans to repudiate conservatism so that they can go back and make 'em do it over and over again This is pure, 100% politics. It's not about the deal right now, it's not about the economy, it's not saving it. This is about presidential politics, and this is about destroying House conservatives. Last night, Washington, Capitol Hill, after a meeting at the White House, Barney Frank spoke to the press.

FRANK: Senator McCain's not -- did not have anything substantive to say, said the most general things. Based on what's now going on, I can tell you this. There is no reason in the world why anybody should use this as an excuse to stay away from a debate. There is absolutely no reason at all why Senator McCain should not debate tomorrow except he doesn't want to.

RUSH: Well, now, Congressman Frank, I have a question. You guys are saying that McCain's presence blew this up. You're saying McCain showed up and you were ambushed, and Dingy Harry and Claire McCaskill and Chuck Schumer are all saying, "Get McCain outta town. McCain blew this. McCain went into that meeting and it all fell apart." Now, I want to know, if McCain didn't say anything, if McCain didn't say anything substantive, and if he didn't say anything 'til the end of the meeting, how could he have blown it up? And Dingy Harry has been saying today that McCain didn't say much, frankly couldn't understand what he was saying. Dingy Harry said he spoke at the end of the meeting, "I don't really know what he said." Then how could he have blown it up? How could McCain have blown it up? We know that that did not happen. Last night, same press conference, Barney Frank.

FRANK: No. Ms. Pelosi will not bring a partisan bill to the floor. She will not say that you're going to have a one-sided Democratic bill being attacked by the House Republicans in response to a request by George Bush to do something. And that's not just internal politics. That's not good for the country.

RUSH: Once again, the question must be asked, who cares, Bush is a lame duck, if this is so wonderful, if this is so great, if you guys could own Washington for all those future years because you're the only ones that have the guts to do something right, why not do it? She won't bring forth a partisan bill to the floor? Meaning, they're not going to do this without Republican cover, 'cause it must have some problems.


RUSH: Yeah, it's fascinating to me to listen to Barney Frank lie and spin. Barney Frank is, I think, more than anybody else responsible for this situation -- and he twists it into the fault of the Republican minority in the House! The Republican minority, parliamentarily, cannot stop anything Barney Frank wants to do. Look at that layer of lies that we got. House Republicans coordinating with McCain against Bush, the Republicans have no role in this other than fixing the problem, and they're only responding 'cause Bush wants something done? This is the guy who said that he didn't know there was a male prostitution ring going on his own basement? Barney Frank needs to testify under oath for what he has done, and so does Chris Dodd!

Complaints by conservative hosts about the fluffy treatment Frank has received from the mainstream media do seem backed up by actual examples. Though an AP story on his role is more balanced, a story in today's Washington Post bypasses any criticism, instead allowing him to joke about his haircut:

Frank's indignation is punctuated by moments of self-deprecation. (Told a reporter is doing a story on him, he says, "If I'd known, I would've gotten a haircut. My boyfriend yells at me -- 'You need a haircut.' ") He says he's not sure how quickly a resolution will come on this bailout, and this worries him because he knows that many of his fellow Jewish members of Congress will be leaving soon to go home to celebrate the Jewish New Year, which starts Monday evening. ("It's a well-known rule," he says. "God will only hear your prayers if you're in your congressional district.")

But the Wall Street Journal is far less supportive of Frank:

The strategy of presenting themselves to Congress as the champions of affordable housing appears to have worked. Fannie and Freddie retained the support of many in Congress, particularly Democrats, and they were allowed to continue unrestrained.

Rep. Barney Frank (D., Mass), for example, now the chair of the House Financial Services Committee, openly described the "arrangement" with the GSEs at a committee hearing on GSE reform in 2003: "Fannie Mae and Freddie Mac have played a very useful role in helping to make housing more affordable . . . a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing."

The hint to Fannie and Freddie was obvious: Concentrate on affordable housing and, despite your problems, your congressional support is secure.

Now, with a deal imminent, the shameless Frank will likely be the first to crow about his role in facilitating the agreement, despite evidence that he was in the way more than anything else.

While there's little hope of convincing the knuckleheads in Newton, Taunton and Fall River (it's a truly gerrymandered seat that has changed shape many times over the years and once even covered the district of Maine!) to vote him out of office, conservative hosts can use Frank to attack the Democrat congressional leadership as a whole (after all, they've allowed him to chair the House Financial Services Committee.

If conservatives choose to make Frank the poster child for Democratic leadership excesses, it could prove the most effective available strategy for November's national elections.

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  • a lack of government regulation wasn't behind the meltdown at Fannie Mae and Freddie Mac, it was a push by the feds, akin to a mandate, to make risky loans to people with poor credit histories in the name of "social justice". Frank was at the very center of this effort, even to the point of dismissing concerns about their financial health

    All Barney needed to hear was "man date" and "Fannie" and he was all over it.

    By Blogger Dave (in MA), at 27 September, 2008 17:18  

  • Bullskashit! The Republicans have done the same thing now that they did in 1929. Deregulate That's how thing went amok.Fast forward to now and the same thing. Then the Republicans want to blame the Democrats for their corruption and graft. The American People are waking up. Bush #1= Savings & Loan Bailout. Bush #2=The wall street bailout. The proofs in the pudding. This happened on their watch. It's time they took responsibility. Obama is going to be your next President and with a Democratic Majority. You will have no one but yourselves to thank for that.

    By Anonymous Anonymous, at 27 September, 2008 19:54  

  • If you haven't seen it, here is the video of the Democrats at a Congressional committee hearing trying to hide the facts that Fannie and Freddie were going down ... circa 2004. The bill was defiantly filibustered by the Democrats in the the Senate in 2005.

    By Blogger 10ksnooker, at 28 September, 2008 09:53  

  • deever dave thinks the financial meltdown is due to the Republicans???

    NEWS FLASH dd: Congress is controlled by the Democrats. How about using some common sense. If there was a Republican who caused this meltdown, the Democrats would have drawn and quartered the fellow already.

    The Democrats are flummoxed because their own people caused the problem and they even resisted the Republican attempts to clean up the problem over the past 10 years.

    By Blogger The Benson Report, at 28 September, 2008 11:48  

  • simpleton knuckle dragging wing nuts blaming working people for the melt-down......bull crap

    once more displaying how the right hates working people

    nobody buys it... scum bags

    By Anonymous Anonymous, at 28 September, 2008 20:17  

  • Remember the days of yore in 1977 when Democrat President Carter signed off on the Community Reinvestment Act? The purpose of the CRA was to provide credit, including home ownership opportunities to underserved populations.

    And the days of yore in 1995 when Democrat President Clinton's regulatory revisions were credited with substantially increasing the number and aggregate amount of loans to low- and moderate-income borrowers for home loans.

    And the days of yore in 2003 when Democrat Barney Frank stood in the way of financial correction legislation. "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.

    And the days of yore in 2005 when Chris Dodd, the chairman of the Senate Banking and Urban Affairs Committee, who has oversight over the quasi-public-private agencies that had been living large over the years, made bad decisions resulting in billions of debt.

    Yeah, I remember the days of yore.

    By Blogger The Benson Report, at 29 September, 2008 11:11  

  • remember the days of Ronald Reagan

    "the 6 scariest words in the english language, I'm from the government and I'm here to help you"

    35 years of conservative dismantlement of the government.... resulted in bank after bank after bank collapsing

    maybe a Hannity listener will buy your theory...... good luck

    and Community Reinvestment Act, was designed to prevent discrimination to to give loans to people with no jobs or money idiot. Read the actual bill.

    remember this term

    "ownership society". your hero Bush, promoted giving "zero money down loans" to everyone.... that was Bush, not clinton, Carter or anyone else

    Nobody on the left wanted to give loans to people with no jobs.... De-regulation allowed for them to give loans to people with no money, not the Community Reinvestment Act, not Bill Clinton. Read the Community Reinvestment Act, won't you?

    I agree with you on Dodd and Frank though....... Screw them, garbage senators, both of them

    By Anonymous Anonymous, at 29 September, 2008 13:11  

  • I love this new Rush Limbaugh fan boy blog. It is so exciting and original!

    By Anonymous Anonymous, at 29 September, 2008 15:59  

  • Yeah who can ever forget that Reagan made the word government a dirty word and you dolts fell for it. Your Bush lackies are the one asking for the 700 billion to save your collective asses. It's Hovver all over again. Make no mistake.

    By Anonymous Anonymous, at 29 September, 2008 17:58  

  • Thank you!!! I wish more people would point the finger where the blame is actually due.

    By Blogger Jewels, at 30 September, 2008 18:30  

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