WASHINGTON, November 29, 2011 – In a story reported by the Washington Times, Massachusetts Representative Barney Frank—co-author of the cumbersome Dodd-Frank bill and prime mover behind the destruction of Fannie Mae and Freddie Mac—announced yesterday that he won’t be running for re-election to the House in 2012. The reason given: a redrawn district that includes people he’s never before represented.
But Communities columnist Eric Golub begs to differ in his piece headlined “Barney Frank: I’ve destroyed the economy, my work here is done.”
Frank won a surprisingly close election in 2010, retaining his formerly safe seat for the seventeenth consecutive time. But given the outcome of the House election last year plus the likelihood of a new batch of voters not foresworn to return him to Congress in 2012, Frank—who, like many professional pols, sees his glory days behind him now—doesn’t want to live out the rest of his life as a back bencher.
Or worse, actually lose his next election to a Republican. Better to bow out gracefully now, all the better to get in line for a lucrative lobbying job in the financial industry for an undisclosed firm at a later date.
There are often personal factors that play a role when individual House members decide not to seek re-election, but in the aggregate, such decisions indicate one of two things–either the representative fears that he may lose the next election, or he believes that his party is doomed to stay in the minority, which in the House isn’t much fun. The telling statistic is that Frank is the 17th House Democrat to announce he will not seek re-election, compared with six Republicans.
But there may be another reason for Frank’s rather abrupt and unexpected departure. The Republicans have a better-than-even chance of capturing control of both Congress and the White House in 2012. At which point they might just be inclined to try to get to the root of what caused the 2007-2008 debacle that cripples our economy to this day.
And in so doing, they might just discover what has been painfully obvious for well over a decade: namely, that our financial savior, Barney Frank, along with his giveaway, vote-buying policies was actually one of the prime causes of the mortgage collapse and the ensuing Great Recession which, economic pronouncements to the contrary, remains with us still.
In a nutshell, the much-maligned Bush Administration recognized the Fannie-Freddie problem early on. Slowly, relentlessly, from the 1980s on, mostly Democrat-controlled Congresses pushed both quasi-governmental entities to prod banks into ever more liberal loan policies that would allow less and less qualified loan applicants to obtain mortgages and—often for the first time—purchase housing, regardless of whether they were financially able to carry their mortgages.
The problem became acute in the early 2000s as lower and lower down payments and “liar loans”—loans that required little if any substantiating documentation—became the norm. The Bush Administration—along with eventual GOP presidential candidate John McCain—tried to put an end to these practices, but to no avail. Frank, the Democrats, and a substantial number of incredibly stupid Republicans steadfastly opposed legislation geared toward heading off the already-gathering fiscal storm.
This observation from The New Editor, noting NPR’s sycophantic “airbrushing” of Frank’s crude but successful effots to derail any restriction on Fannie’s or Freddie’s ability to use their collective leverage over the mortgage industry to degrade lending standards and provide more money to give away to the Democrats’ “charitable causes”:
“From a September 2003 report by the New York Times’ Stephen Labaton, on a Bush Administration proposal for a new agency charged with the financial oversight of both Fannie Mae and Freddie Mac:
”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.”’
The mortgage implosion started playing out a scant four years after this cynical pronouncement.
Borrowed money is not always as elastic as it sometimes seems. Clearly, something had to give and it did. Our financial system went kaput, beginning at the tail end of 2007 when highflying subprime lender New Century suddenly announced that it had no idea as to whether its already-reported financial figures were even close to reality. That was the tip of the iceberg. Most readers are well aware of what happened next.
Where was Barney Frank throughout this developing storm? As Fox News reports:
“In 2003, he called Fannie and Freddie ‘fundamentally sound financially’ and accused the Bush Administration of trying to “exaggerate a threat of safety… [to] conjure up the possibility of serious financial losses to the Treasury, which I do not see.
“A year later, he said talk of financial problems at Fannie and Freddie were ‘an artificial issue created by the administration…I don’t think we are in any remote danger here.’
“In 2007, as Chairman of the House Financial Services Committee and just as Fannie and Freddie – overleveraged and stuffed to the gills with risky mortgages they’d encouraged and facilitated – were about to go over the cliff, Mr. Frank attacked President George W. Bush’s call for reform as ‘inane.’”
Yet when Fannie and Freddie went belly up in the fall of 2008, Mr. Frank voted for the same Bush Administration reforms that could have averted the bankruptcies of Fannie and Freddie.
Truth is, for decades, both Fannie and Freddie were used at least in part as slush funds to help fund the political campaigns of Democrats, much in the way that mandatory public employee union dues are used to provide the same functionality.
Employing loyal Democrats throughout their upper echelons, both Freddie and Fannie—as quasi-public corporations—“donated” hundreds of millions of dollars to mostly leftist Democrat advocacy groups of the ilk of ACORN to fund get-out-the-vote efforts (and heaven knows what else) often in major American cities. In other words, both organizations, supported in large part by the American taxpayer, were in many ways re-purposed to stir those taxpayer dollars to one political party only.
And in large part, Barney Frank was, for years, the master of these fiscal revels.
Small wonder he’s getting out of Congress now. The new voter excuse aside, perhaps Frank—one of the most obnoxious and abrasive politicians in recent memory—realizes that the enemies he’s made on the other side of the aisle will probably find it irresistible to go after his epic fiscal malfeasance in the next session of Congress.
By bowing out now, perhaps Frank will avoid that fate as Christopher Dodd did by abandoning his senate seat in 2008 to head for a cushy Hollywood sinecure. In so doing, he seems to have neatly avoided more thorough Hill investigations of his sweetheart real estate deal from the ill-fated Countrywide mortgage juggernaut (now part of the unfortunate Bank of America.)
Before Conservatives rejoice in Frank’s departure though, it might be good to recollect the harsh words of an ancient Israeli king whose tax and spend policies were soon to sunder his realm. Ascending the throne on the death of his father, King Solomon, King Roboam quickly put his people’s desire for hope and change to rest by stating: “My father beat you with whips. I will beat you with scorpions.”
The scorpions in this case are materializing in the person of California Representative Maxine Waters. As nasty as Barney Frank, but possessed of considerably less intelligence, Waters and her seniority are poised to make her the next ranking Democrat on the House Financial Services Committee. An unrepentant redistributionist to the core, she’s the last person on earth to be interested in wrapping up her party’s continuing interest in tapping taxpayer cash flows to Fannie and Freddie, the better to help her party and its big business and banking friends on Wall Street.
According to Investors Business Daily, “The liberal and fiery Waters, 73, is unlikely to be a catalyst for change. She is next in seniority behind Frank on the House Financial Services Committee, where he is ranking minority member.
“Assuming she succeeds, Fannie and Freddie will continue to have strong Democratic allies. Waters has long resisted efforts to reform the mortgage finance giants — and brought heartburn to those who have tried.
“‘She can make a lot of noise and in so doing bring a lot of attention to issues,’ said Bert Ely, an adjunct scholar at the free-market Cato Institute and expert on Fannie and Freddie.”
Unfortunately, Waters herself is the subject of a so far rather hushed probe into some shady banking maneuvers during the recent fiscal debacle.
Meanwhile, with Barney Frank now on the way out, the way may soon be been clear to write the final chapter in America’s greatest financial crash since the Great Depression I.
Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of theWashington Times Communities. For Terry’s political and investing insights, visit his WT Communities column, The Prudent Man in Politics.
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