Politics and Public Opinion

A mixed legacy for Barney Frank

It is always unfortunate to see a highly intelligent and knowledgeable member of Congress retire, and that is also true of Barney Frank (D-Massachusetts). Although he was the principal protector of Fannie Mae and Freddie Mac for many years—claiming that he could see no need for additional regulation and arguing that the Bush administration’s effort to control the GSEs would have the adverse effect of reducing their commitment to affordable housing—he had the good sense to change his mind and develop strong regulatory legislation that became law just before the financial crisis hit.

Still, his career was marred by excessive partisanship, defensiveness, and an intellectual arrogance that prevented him from recognizing his errors until it was too late to save Fannie and Freddie or prevent the 2008 financial catastrophe in which they played the primary role. By the time Fannie and Freddie failed, they had accumulated 12 million subprime and other low quality and risky loans—about 40 percent of the 27 million outstanding—mostly for the purpose of meeting the affordable housing goals he fought to protect. The defaults on these loans, which are continuing, will ultimately cost the U.S. taxpayers $300 to $400 billion.

He will say, of course, that he did not become chairman of the House Financial Services Committee until 2006—that the Republicans were at fault for failing to act sooner when they were in the majority. There is some truth in this, but if he had been willing to work with the Republicans on the HFSC instead of insisting that there were no problems with Fannie and Freddie, legislation might have been adopted in the early 2000s that could have prevented the financial crisis and saved the taxpayers from severe losses.

In the end, he realized his mistake, telling Larry Kudlow in a 2010 interview: “I hope by next year we’ll have abolished Fannie and Freddie . . . it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.”

9 thoughts on “A mixed legacy for Barney Frank

  1. Frank can do more than “hope” Freddie and Fannie are abolished. He is a leading Democratic congressman. He can advocate it, and sponsor a bill. He can show a tenth of the commitment he showed in protecting these disasters-in-the-making.

  2. Good riddance to an incompetent and possibly corrupt ideologue ! Both Frank and Senator Dodd enjoyed sweetheart mortgage deals from Angelo Mozillo’s Countrywide Financial. If it hadn’t been for Frank’s and Maxine Waters’s stonewalling , Fannie Mae and Freddie Mac’s worst abuses might have been reined in as early as 2003.

    The complete truth about the causes of 2008′s credit meltdown may never be admitted by the mainstream media, but Presidents Carter and Clinton , followed by Frank, Dodd, Waters, et.al bear the brunt.

  3. I am so tired of hearing retiring politicians admit their mistakes when they no longer face re-election. How ironic that they seem to be humble after they’ve gotten their way, and the damage is done.
    Do none of these folks care about the circumstances inwhich they are placing future generations, including their own children and grandchildren?

  4. On the other hand, my understanding is that Frank also led an (unsuccessful) effort in 2010 to extend the same housing policy mandates of the Community Reinvestment Act (which have been forced upon banks) to U.S. non-bank financial companies!

  5. This video clearly shows that George Bush warned Congress starting in 2001, that this economic crisis was Coming, if something was not done. But Congress refused to Listen, along with the arrogant Congressman, Barney Frank. This video says it all. The media reportedly did not want this video on You Tube; it was taken off. This link is of the same video, but is routed through Canada . Everyone in America needs to see this before it is yanked off the Internet again!
    Let’s see how far we can spread it before it’s pulled off the Canadian site.

  6. Barney Frank is a prime example of the New England socialists masquerading as members of the Democrat party. Far from being an intelligent Representative he is an idiot who has personally done more damage to the U.S. economy than Dodd or Schumer.

  7. The Statement that he could have helped if he had worked with the Republicans is a joke. If you recall, it was Bush who proposed in the early 2000s to toughen the requirements on mortgage lending. That is when Barney Frank made his famous speach as part of his effort to defeat the Bush legislation. Remember that: Fannie and Freddie are at no risk of failure, either now or at any point in the future. Anybody who says differently is doing so for purely political purposes. He actually said this at a recorded hearing. Barney Frank fought tooth and nail to prevent anybody from tightening mortgage standards.

    It was well after it was too late that he tried to make it LOOK like he was a supporter of addressing the problems he helped create. Remember, it was Barney Frank who fought for and won the requirement that Fannie Mae underwrite more than 50% of the mortgages to unqualified borrowers! That act alone did more to support the housing crisis than anything else.

    In reality, what it did was say to every mortgage lender, if you want to be able to sell your mortgages – you need to give us one bad one for every good one! Fannie was forced to look for bad mortgages to underwrite and banks were forced to provide 53 bad mortgages out of every 100 that they wanted underwritten (or Fannie wouldn’t talk to them!).

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