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| Barney Frank's fingerprints are all over the financial fiasco |
| 2008-09-29 |
| 'THE PRIVATE SECTOR got us into this mess. The government has to get us out of it." That's Barney Frank's story, and he's sticking to it. As the Massachusetts Democrat has explained it in recent days, the current financial crisis is the spawn of the free market run amok, with the political class guilty only of failing to rein the capitalists in. The Wall Street meltdown was caused by "bad decisions that were made by people in the private sector," Frank said; the country is in dire straits today "thanks to a conservative philosophy that says the market knows best." And that philosophy goes "back to Ronald Reagan, when at his inauguration he said, 'Government is not the answer to our problems; government is the problem.' " In fact, that isn't what Reagan said. His actual words were: "In this present crisis, government is not the solution to our problem; government is the problem." Were he president today, he would be saying much the same thing. Because while the mortgage crisis convulsing Wall Street has its share of private-sector culprits they weren't the ones who "got us into this mess." Barney Frank's talking points notwithstanding, mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else. The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites. The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued. All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit. As long as housing prices kept rising, the illusion that all this was good public policy could be sustained. But it didn't take a financial whiz to recognize that a day of reckoning would come. "What does it mean when Boston banks start making many more loans to minorities?" I asked in this space in 1995. "Most likely, that they are knowingly approving risky loans in order to get the feds and the activists off their backs . . . When the coming wave of foreclosures rolls through the inner city, which of today's self-congratulating bankers, politicians, and regulators plans to take the credit?" Frank doesn't. But his fingerprints are all over this fiasco. Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing. Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess." Well, give the congressman points for gall. Wall Street and private lenders have plenty to answer for, but it was Washington and the political class that derailed this train. If Frank is looking for a culprit to blame, he'll find one suspect in the nearest mirror. |
| Posted by:GolfBravoUSMC |
| #21 I hope McCain can lay out his case for being President. He said he was going to put off the debate and went to Washington. He went to New York first to show up at a photo op session with Bill Clinton where they lavished praise all over each other. All I can figure is that the Clinton's aren't too enamored with the Democratic Party's Presidential choice. Can't have two messiahs in the party can we? I think McCain was trying to bring in the undecided Democratics and the Hilliary followers. He seemed to be trying to communicate that he really could reach across the aisle and get things done. He needs to hammer Obama in the upcoming debates. It would be good if Palin could put Biden down for the count. Obama and Biden are going to keep up the mantra that McCain was part of failed policies of Bush. They will continue to try to link McCain/Palin to Bush. Congress is going home. They will continue to dither around hoping things will get worse in the economy--after all they are the party of doom, gloom, despair and quagmire. They will try to railroad through the Freddie Krueger bailout plan at that time. Fox cable news is all over this but the other stations are the "Usual Suspects" and are reporting some celebrity crap or bashing Bush and the trunks. |
| Posted by: JohnQC 2008-09-29 21:07 |
| #20 This whole thing reminds me of the end of the CAINE MUTINY. After Queeg's (BUSH) trial the lawyer gives the officers (DEMS) the riot act because there disloyalty again and again more or less pushed Queeg into some of his questionable decisions. A little support early on and things might have been different. That's not to say Queeg is innocent or anything, but that nobody is and everyone remembers that Queeg was nuts and not the officers culpability. |
| Posted by: rjschwarz 2008-09-29 21:00 |
| #19 Think of it this way, if someone is trying to kill you, your bank is on fire, and your home just fell in, what do you do first. FIRST kill the bastard shooting at you SECOND put out the bank fire and THIRD rebuild your home. Do it any other way and you either lose your life, or you get killed, KILL THE BASTARD TRYING TO KILL YOU, all other is a very far second. In other words, first win the war, second fix the financial crisis, and third, "Fix" your home (Get it out of hock) |
| Posted by: Redneck Jim 2008-09-29 19:48 |
| #18 Barack Hussein Roosevelt is about to take office. Whahahhahaaa.... SPOT ON! |
| Posted by: Besoeker 2008-09-29 18:54 |
| #17 And what's more, the donks are being allowed to blame Bush for this mess. He let them sucker him into this position where it's being perceived as all his fault due to the "last eight years of the Republican administration's failed economic policies." Then they point to McCain and tell us he'll do the same as Bush. Well, some of us understand that it's not entirely Republican economic policies. But the donks and the MSM are gonna keep repeating their mantra until everybody believes it is. Bush let them sucker him into this. He's been out maneuvered. If I was really paranoid I'd point out how peculiar it is that all this came to a head just before the election. But what I am saying is that the gloves need to come off now. Blame needs to be assigned in a very loud, clear voice because the trouble we're in now is bigger than Iraq. Bush can't go on TV anymore with a generic, watered down history of this problem. He needs to get detailed and specific about why lending policies were loosened and who warned about it and who tried to reform it and when and why they were not successful. He needs to name names and give them hell in a very public manner. Otherwise it's 1932 and Barack Hussein Roosevelt is about to take office. |
| Posted by: Ebbang Uluque6305 2008-09-29 18:50 |
| #16 Yes, TW, but how do we continue to fund the war when we've just gone $700 billion deeper into debt than we already were? As commander in chief, Bush needed to factor this into the equation. Sigh. Maybe he did and this was the best he could do. |
| Posted by: Ebbang Uluque6305 2008-09-29 18:19 |
| #15 Chided, perhaps, dear Ebbang Uluque6305. ;-) I'm not such an expert that I'm entitled to correct anyone on matters political. I do understand your anger, but the president can only work with the Congress he's given, and this one was definitely not full of statesmen who differed only on approach but not objectives. President Bush and Senator McCain have been trying to fix the subprime loan thingy since 2003 and 2005 respectively, and McCain tried to put through another bill in 2007. Pelosi, Reid & Co. shut down all those efforts. Would you rather Bush had fought for that -- and lost -- or to get funding to continue the war in Iraq? At least Bush finally pushed the war funding through, which may well be why we're able to argue blame for the financial mess now. Horse, water, drink. Lots of assembly required. |
| Posted by: trailing wife 2008-09-29 16:35 |
| #14 No more "reaching across the aisle". Give 'em hell. The other day TW corrected me for being furious at George Bush. Well, I still am. Maybe he was just trying to "work with the Democrats" but he should have been screaming bloody murder...not just about the mortgage meltdown but about everything...the war, the energy crisis, global warming...everything. Everything they say or do has one purpose and one purpose only which is to get Republicans out of the White House and a donk into it. They have absolutely no scruples whatsoever how they do it. The gloves need to come off and they need to come off quick or else we are gonna get a donk in the White House. |
| Posted by: Ebbang Uluque6305 2008-09-29 16:13 |
| #13 Interesting that this opinion piece is in the Boston Globe. Are they really gonna re-elect this toad? I can't frickin' believe it. |
| Posted by: Ebbang Uluque6305 2008-09-29 15:45 |
| #12 WE #10. I was disappointed in that McCain didn't go for the messiah man's jugular in the debates. He had a lot of material he could have used--Bill Ayers, Fannie and Freddie, Franklin Raines, Barney Frank, the campaign kickbacks from Fannie and Freddie, the pressure on banks by Fannie and Freddie to make these worthless loans, the unwillingness of some of the donks to have any regulation in the banking industry, Rezko, re-distributing everyone's wealth, big spender, big government, taxes, no energy bill that makes any sense, wanting to go into Pakistan, etc. He needs to tap into the anger of Americans over this mess created by very liberal unprincipled obstructionists in Congress--no gas or long gas lines, the increased cost of everything, few good jobs, etc. He needs to hang these things on BO and his party of obstructionists. He has to show BO is a glib, slippery empty suit not ready for primetime. He needs to show that BO is not an agent of change but just big government Democrat of old. Same old, same old. These debates are tools of the main street media for the most part where they want to be the one's that pick the candidate of their choice--not the best venue for McCain. He'd better be prepared the next two debates or he's in trouble--and so are we. He was, I think, trying to show that he alone can reach across the aisle and get something done. He should have learned after his support of the immigration bill. |
| Posted by: JohnQC 2008-09-29 15:12 |
| #11 Barney Frank makes my skin crawl every time I hear him talk--and whenever he talks you feel like he is lying and deflecting blame for his own monumental stupidity. How this total |
| Posted by: JohnQC 2008-09-29 14:34 |
| #10 F**king idiot McPain, instead of going to DC and wasting time doing nothing, should have been cramming facts about this debacle into his senile head. There was a golden opportunity to directly confront and drive a giant wooden stake thru Hussein over this. He could have taken the whole Dummo machine down. What did he do ? Stumbled and mumbled and lost ground. Why in hell can't we have an actual Republican as a candidate? One who can formulate actual ideas and respond when required. Why are we constantly suffering dead dogs ? Dole, Bushie II, now this poor guy. We ought to be pulling away. We are not. I'm getting really worried. |
| Posted by: Woozle Elmeter 2700 2008-09-29 13:36 |
| #9 I would love to see this thing fail in the House - just to put a hurtin' on Pelosi and Frank. Look, the market is down severely today because they think this thing will not help - not since the people who created the mess are the ones who are blaming everyone but themselves and acting like they are the ones to come to again to save the bacon. Frank, Pelosi, Dodd and Schumer need to summarily investigated by the FBI for the crime of sedition for what they have done. |
| Posted by: Jack is Back! 2008-09-29 13:30 |
| #8 It behooves us to make sure every living voter (the dead ones vote for the Dems) sees the video to know who built the bomb and refused to regulate it before it blew up. |
| Posted by: DK70 the Scantily Clad7177 2008-09-29 12:35 |
| #7 At least we're getting down to the nuts and who caused this. I was shaking my head in disbelief at the b.s. that was going on. "A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense". They did, mission accomplished. |
| Posted by: bigjim-ky 2008-09-29 10:59 |
| #6 I don't know why McCain doesn't go for broke and shine the light on Frank and other vermin that got us into this mess. Name names; show linkages of BO to this financial debacle. As looney as Ron Paul is, he is starting to somehow make sense. We are really in trouble when that occurs. |
| Posted by: JohnQC 2008-09-29 10:54 |
| #5 This video on youtube pretty much sums up the Democrats part in the mess - including Barney Frank, Chris Dodd (receiver of the most contributions from Freddie and Frannie Mac), and Barak Obama (who sued citybank to _FORCE_ them to make subprime mortgages). As well as Bush'es and McCain's attempts to regulate it (blocked by Barney Frank and Chris Dodd). Fred, have Ethel ready with your pills before you watch it. Spread it far and wide. http://www.youtube.com/watch?v=H5tZc8oH--o |
| Posted by: CrazyFool 2008-09-29 10:46 |
| #4 Being a Democrat means never having to say you're sorry. Or accept any blame. |
| Posted by: tu3031 2008-09-29 09:46 |
| #3 Barney Frank's.... "fingerprints?" Not a pleasant image, financial fiasco or not. |
| Posted by: Besoeker 2008-09-29 09:41 |
| #2 Has anyone reported what fraction of the high-risk mortgages went to people with low incomes who could not legitimately afford 'starter' homes and what fraction went to middle class people who could not legitimately afford the McMansions or second (investment) home mortgages they got? One high-end Las Vegas investment McMansion could cost us the same as five or ten ACORN defaults. And at least with the little houses we can still find a rental market for them after foreclosure. |
| Posted by: Glenmore 2008-09-29 08:17 |
| #1 They cook shit like this up all the time and then get up in front of God and everybody and lie about it. Democrats are cockroaches. |
| Posted by: newc 2008-09-29 05:11 |