Free Markets, Free People
Greg Mankiw produces a story from 2003 which makes a statement Barney Frank made during a recent debate with Sean Bielat an absolute lie.
During the debate, Bielat, the Republican challenger for Frank’s seat, said this:
“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,’’
“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.
“I was always against it and it’s the GOP’s fault”.
Two things implied by this statement. First Frank is obviously admitting that “low-income ownership” was a mistake. Secondly, he’s admitting that Fannie and Freddie were integral to the financial problems we’re enduring.
Now, to the record. First the “it’s the GOP’s fault”:
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry….
All opposed? Say "aye":
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.”
But there’s even more evidence than just that. How about a letter to President Bush in 2004 signed by Frank, Pelosi and 74 other Congressional Democrats?
"We urge you to reconsider your Administration’s criticisms of the housing-related government sponsored enterprises (the GSEs) and instead work with Congress to strengthen the mission and oversight of the GSEs. We write as members of the House of Representatives who continually press the GSEs to do more in affordable housing.
We have been concerned that the Administration’s legislative proposal regarding the GSEs would weaken affordable housing performance by the GSEs, by emphasizing only safety and soundness. While the GSEs’ affordable housing mission is not in any way incompatible with their safety and soundness, an exclusive focus on safety and soundness is likely to come, in practice, at the expense of affordable housing.
We also ask you to support our efforts to push the GSEs to do more affordable housing. Specifically, join us in advocating for more innovative loan products and programs for people who desire to buy manufactured housing, similar products to preserve as affordable and rehabilitate aging affordable housing, and more meaningful GSE affordable housing goals from HUD."
But, you know, Frank has always been a critic of low-income housing and it’s the GOP who prevented reform.
Again, a lie designed to influence and placate the low-information voter who will, unfortunately, accept it at face value.
Another in a long line of reasons to give Frank the opportunity to apply for unemployment benefits.
If you live in Frank’s district, this is the only reason you need to vote for Sean Bielat, his GOP opponent. I.e. Frank is about to remake Fannie Mae and Freddie Mac in his own image. That after the two institutions that he fought so hard to support with your tax dollars and attempted to keep Congressional oversight to a minimum, tanked and almost took the economy with them.
The Washington Post has a mostly sympathetic piece (poor Barney, he only wanted to use your money to help the poor put a roof over their heads) which, if you read carefully between the lines, at least hints at most of the story. And the rest of the story ends with us pumping $160 billion and counting into the two institutions after the government took them over.
Back when it all started, Frank identified cash cows in the two institutions which would allow him to fulfill his personal agenda:
Fannie and Freddie were in the business of buying and guaranteeing mortgage loans from private lenders, which in turn could take the money and make even more loans to prospective homebuyers or developers looking to build apartment buildings.
Democrats, led by one of Frank’s closest allies, Rep. Henry B. Gonzalez (D-Tex.), wanted to require the two companies to spend a specific percentage of their funds on affordable housing. Under the proposed legislation, the companies were to buy home loans made to lower- and middle-class people and loans going to fund development of affordable rental housing.
This represented a rich new vein of money.
But even as Democrats were looking to expand Fannie and Freddie’s mission, a small group of Republicans, led by Rep. Jim Leach of Iowa, urged the government to pay more attention to the dangers posed by the firms.
Let’s see – “rich vein of money” or oversight and caution? “Rich vein of money” of course. So Leach’s warning were pushed aside:
The companies had been growing ever larger. Yet compared with their rivals in the banking industry, they were putting aside relatively little capital to cover potential losses. Leach proposed a tough new regulator that would restrain Fannie and Freddie.
Nah. So onward we went, huge sums of money flowing out the door, very little oversight, with a political agenda driving the bus instead of financial sanity. That was in 1992. In 2003, the warnings were still coming and getting louder:
By late 2003, the firms had taken on more than $4 trillion in debt, rivaling that of the entire federal government. Yet Frank, who had by then become the top Democrat on the influential House Financial Services Committee, still wasn’t focused on the risks. He had his sights set on what else they could do to promote for affordable housing, particularly low-cost rental housing.
At a hearing called by Republicans, who controlled the committee, Frank made clear that he was reluctant to tighten oversight because it could limit the ability of Fannie and Freddie to help people get a roof over their heads.
The companies, he urged colleagues, "are two of the very important tools that we have" and had to do what "the market in and of itself will not do. "They were "not endangering the fiscal health of this country," he continued.
But, of course, they were and did endanger the fiscal health of the country. Denial was his only weapon and he used it constantly – because his personal political agenda was apparently worth the risk – at least to him. He even said once he wanted to “roll the dice” a little more, perfectly willing to risk the fiscal future of the country to push his political agenda.
And you all know the rest of the story.
Fannie and Freddie proceeded to load up on securities backed by risky mortgages, such as subprime loans and no-document loans. The firms asserted that they were aggressively fulfilling their affordable housing mission, and some risky mortgages were indeed going to borrowers who couldn’t otherwise afford a home.
But many of the loans were going to people who could have afforded traditional mortgages, and the companies were bulking up on the risky loans purely in pursuit of even larger profits.
When the housing market crashed, the unprecedented surge in mortgage defaults blew a hole in the firms’ finances.
The Democrats and Frank want to deny this part of the story or pretend it is an insignificant part of it or that what happened to Freddie and Fannie were a result of Wall Street’s shenanigans.
Not really. The prime buyer and bundler of the sub-prime mortgages were those two institutions. And, as the article notes, Freddie and Fannie believed they were “aggressively fulfilling their affordable housing mission” as legislatively enabled by Barney Frank and Congress.
And what has he managed to get for his effort?
For all his efforts, Frank readily acknowledges that there are more people needing decent housing than there were when he started in Congress. And with millions of others losing their homes to foreclosure, Frank asks to be judged by how much worse things would have been without him.
"In the political world, you get measured on the ultimate results," he said. "I think we’ve prevented things from getting as bad as they otherwise might have been."
Really? Have you looked around you Mr. Frank? This ranks right up there with the unmeasurable “saved jobs” nonsense pushed by the administration in the midst of 9.6% unemployment. And now Frank is going to get another chance to shape the housing market’s future?
Time to put him into retirement before he can again try to do what he did last time. Another reality of the “political world” is you should only get one chance and if you screw it up as badly as Frank did, you should join the ranks of the unemployed.
The very same people who spent us into fiscal insolvency have now decided that the way to recover budget savings in the coming years is to radically reduce the military and its effectiveness by reducing military spending dramatically. Certainly there are savings to be had within the military-industrial complex. But not like this.
Rep. Barney Frank’s Sustainable Defense Task Force claims to have found almost a trillion dollars that can be “saved” over 9 years by taking a meat axe to the services. Highlights, or lowlights if you prefer, of the 56 page document include:
-Reduction of the Navy from 12 planned aircraft carriers to 8 and 7 air wings.
-Reduction of the ballistic missile submarine force from the planned 14 to 6.
-Reduction of the nuclear attack submarines being built by half leaving 40 by 2020.
-4 active guided missile submarines cut.
-Freeze destroyer construction and cancel the DDG-1000 destroyer program.
-Reduce total fleet size from 287 combat ships to 230.
-Retire 6 Air Force fighter wings.
-Build 301 fewer F-35 fighters.
-Configure all nuclear strike bombers so they can only drop conventional munitions.
-Cancel additional C-17s and new refueling tanker project.
-Eliminate or curtail research on directed energy beam research and other advanced missile and space warfare defense projects.
-Slash the Army from 562,400 active duty personnel to 360,000 and eliminate approximately 5 brigade combat teams.
-Cut the Marine Corps by 30%, from 202,000 to 145,000.
-Cancel V-22 Osprey program and Expeditionary Fighting Vehicle.
-“Reset the calculation of military compensation and reform the provision of military health care” – which essentially means a reduction in pay and benefits of about $120 billion for the troops and their families.
Additionally the report unilaterally suggests the reduction of our Minuteman III nuclear deterrent missile fleet from 500 to 160 – something not required by the new START treaty.
As anyone can tell, this goes far beyond an attempt to “save” money. If all of these recommendations were accepted and passed into law, the US military would be virtually gutted, filleted and left to dry in the sun. It would essentially become a home defense force incapable of projecting the power necessary to protect the vital national interests or respond to treaty obligations of the United States. And it would leave the field wide open for super-power wannabes to make their moves.
In reality, the Frank report is the written form of an unrealistic but consistent liberal dream they’ve held close to their hearts for decades. While constantly mouthing the platitudes of supporting our military and the troops, they hold no real love for the institution or its role in our society. The real desire of the left and some Democrats is to reduce the military to a much smaller state, abandon our leadership role in the world and instead focus their efforts and our money on making the US a liberal utopia.
At this time there couldn’t be more misguided policy available even if we were to try and purposely think of one. Should the provisions of this study be put into practice, the US would go from being a protector of the free world to prey.
Few will disagree that Scott Brown’s solid victory last night was meant to send an important message to Washington. Sure, there will be some whistling past the graveyard, but for the most part the political punditry and policy-makers will understand that something needs to change, and fast. Like dog whistles and Irish brogues, however, not everyone will hear the same thing.
It will not escape those who are truly paying attention that the Senate health care bill currently residing in the House was a huge catalyst behind Brown’s come-from-nowhere win. Brown’s potential cloture-busting vote looms large in a debate where Washington elites have tuned out those whom they mean to rule. It looms so large, and its power to lure slightly more than half the registered voters to the polls on a snowy day for a special election with nothing else on the ballot sends such a strong statement, that even Barney Frank seemed to get the message:
I have two reactions to the election in Massachusetts. One, I am disappointed. Two, I feel strongly that the Democratic majority in Congress must respect the process and make no effort to bypass the electoral results. If Martha Coakley had won, I believe we could have worked out a reasonable compromise between the House and Senate health care bills. But since Scott Brown has won and the Republicans now have 41 votes in the Senate, that approach is no longer appropriate. I am hopeful that some Republican Senators will be willing to discuss a revised version of health care reform because I do not think that the country would be well-served by the health care status quo. But our respect for democratic procedures must rule out any effort to pass a health care bill as if the Massachusetts election had not happened. Going forward, I hope there will be a serious effort to change the Senate rule which means that 59 votes are not enough to pass major legislation, but those are the rules by which the health care bill was considered, and it would be wrong to change them in the middle of the process.
Virginia Senator Jim Webb said much the same thing last night:
In many ways the campaign in Massachusetts became a referendum not only on health care reform but also on the openness and integrity of our government process. It is vital that we restore the respect of the American people in our system of government and in our leaders. To that end, I believe it would only be fair and prudent that we suspend further votes on health care legislation until Senator-elect Brown is seated.
Yet, somehow, even while recognizing that Democrats playing a legislative game of keepaway with the bill before the House (that was drafted behind closed doors, it should be noted) will only serve to undermine public confidence in the law (and Congress), progressives like Jane Hamsher still think that’s what’s called for now:
In the wake of Martha Coakley’s defeat, both Representative Barney Frank and Senator Jim Webb have said that jamming a health care bill through before Scott Brown can be seated is not the right thing to do.
They’re right. Health care legislation would be viewed — with some justification — as illegitimate.
But many on the Hill tonight are saying that the Massachusetts defeat also means that health care reform is dead, fearful that what happened to Martha Coakley will happen to them, too, in 2010.
That’s about as feasible as Wile E. Coyote trying to turn around and run back across the bridge that is crumbling behind him. There’s only one way to go.
The non-budgetary “fixes” like banning the exclusion of those with pre-existing conditions have already passed the Senate. A public option — or an expansion of Medicare — can be added through reconciliation, which takes 51 votes. The Republicans certainly had no fear of using reconciliation when George Bush was in office. And the Democrats are going to need to do so in order to make good on their promise to fix the excise tax to benefit of the middle class, which will cost roughly $60 billion. But their options for doing that are limited by the process itself: they can pay for it by the savings from a government program like a public option or an expansion of Medicare. Or, they can piss everyone off and raise taxes.
That looks to be where Gerald Nadler and Anthony Weiner are headed tonight. They indicate that “the only way they could sign on to the Senate bill is if it was accompanied immediately, or even preceded by, a separate bill, making a number of major preemptive changes to what they regard as an inferior package,” per Brian Beutler.
It’s called sidecar reconciliation. And the 65 members of the House who have pledged to vote against any bill that does not have a public option should be looking into it seriously tonight.
Got that? Passing a bill that circumvents Brown’s vote will be viewed “with some justification” as illegitimate, so let’s go ahead and do just that! Do these people even listen to themselves? Using the reconciliation process (“sidecar” or otherwise) to shove health care legislation down Americans’ throats simply eschews the very legislative process that Barney Frank and Jim Webb cited as the reason to forgo further action on health care until Brown is seated. Yet, Hamsher and her cohorts advocate for legislative legerdemain anyway. Cognitive dissonance in action.
The reason, of course, is that passing health care legislation is such a fundamental issue for progressives that they have thrown all sense (such as was possessed) to the wind. It has nothing to do with what people want, but instead with what progressives want people to want. Apparently it doesn’t even matter that the rosy economic projections upon which these health care bills are based have little to no basis in reality. I guess, since the ultimate goal is a utopian fantasy, employing imaginary thinking is the only way to get there.
If nothing else, the reaction of progressives to the Massachusetts race reveals how dangerous they are when wielding power. Inconvenient facts are dismissed, and constituents are ignored, because what the progressive lacks in having any grasp of reality is more than made up for by resounding confidence and self-righteousness. Fortunately for us, the electorate does not appear to be willing to indulge their fantasies anymore.
Sometimes the mask slips in the most unlikely places. The little watched Ed Schultz show on MSNBC hosted Ralph Nader and Barney Frank. Frank took heat from Nader for not, in Nader’s opinion, regulating the financial institutions enough. Frank responded by saying:
Democrats are “trying on every front to increase the role of government.”
Tell me again why the GOP shouldn’t be the party of “no”? They should embrace the role.
Politics and special interests now run General Motors – a company which should be making business decisions based on what is best for the company and its future and not what is best for some politician:
Rep Barney Frank (D-Mass.) won a stay of execution on Thursday for a General Motors plant in his district that the automaker had announced it would close.
No other lawmaker has managed to halt the GM ax. As chairman of the House Financial Services Committee Frank oversees the government’s bailout program, known as TARP. Frank’s staff said the lawmaker spokes with GM CEO Fritz Henderson on Wednesday and convinced him to keep the Norton, Mass. plant open for at least 14 months.
Because what happens in about 14 months boys and girls?
The 2010 midterms. And who controls all the bailout programs? Why the guy who was able to change Government Motors mind on the plant in his district.
Of course had some backbench freshman congressman from a red state district made the same request, what do you suppose the answer would have been? It doesn’t get any more blatant than this — but who among our “leaders” has the stones to call him on it?
About the only thing you could hope for in this instance is a bankruptcy judge would say “no dice” and force GM to carry out its original plan, but as stagemanaged as this whole bankruptcy procedure is, I doubt something like that would happen.
Yes, it is spring and that means protest season in France (note the previous attempt in January didn’t turn out too well due to global warming effects). This time, though, it’s not the “youths” doing the protesting. Instead we are treated to union driven protests.
The protests, which drew substantially more people into the streets than a similar outpouring Jan. 29, were depicted by union leaders as part of a sustained campaign to pressure President Nicolas Sarkozy to do more to defend French people against the economic upheaval that has unfurled across the planet since the fall. In particular, they called on him to raise low-end wages and unemployment benefits and to make it harder for business leaders to fire employees when profits sink.
And we complain about our liberals being economic ignoramuses. Per the French mob, the ticket to recovery is to raise wages, raise unemployment benefits and prevent businesses – which most likely pay for those unemployment benefits (not to mention higher wages) – from letting workers go when their profits sink. Wow … economics worthy of Timothy Geithner, Barney Frank and Chris Dodd.
See, the French really deserve our Congress for their legislature. They’d be absolutely perfect together. Simpatico. Nancy Pelosi would be the toast of Paris and Harry Reid – ok, even the French wouldn’t put up with Harry Reid, so let’s not get too carried away. But seriously, have you ever seen a mob and a Congress (or administration for that matter) that thought so much alike?
It’s like a marriage made in heaven. The Congress and administration could transfer themselves to a country where the economic damage has already been done and the economy is already chronically lethargic, the welfare state is established to include universal health care and the control they seek over industry and business is already in place. They’d be happier (and have much less work to do ruining their economy even further), we’d be happier (trust me, we would), and my guess is the French would just swoon over Obama.
And he’s about right for them – they’ve always believed in style over substance, always thought more of themselves than others have and always had a sense of hubris which never equaled their performance.
It’s freakin’ perfect.
Why didn’t we think of this before?
If you are inclined to accept without question that the bonuses paid to AIG employees deserve unmitigated moral indignation, as Pres. Obama and the Democrats seem to, then shouldn’t that opprobrium cut across the board? Well, I guess some animals are more equal than others:
At least four Fannie Mae executives are slated to receive more than $400,000 in bonuses each this year as a result of the company’s government-approved retention program, The Post’s Zach Goldfarb reports.
The executives include chief operating officer Michael Williams ($611,000), deputy chief financial officer David Hisey ($517,000), and executive vice presidents Thomas Lund ($470,000) and Kenneth Bacon ($470,000).
Each of these executives earned about $200,000 in retention payments last year and salaries ranging from $385,000 to $676,000.
According to the report, such bonuses are doled out depending on how integral the employee is to the companies, as approved by the FHFA:
Fannie Mae, which suffered $59 billion in losses last year, has requested $15 billion in taxpayer assistance, and has said it expects to need plenty more.
All major compensation decisions are authorized by Fannie Mae’s federal regulator, the Federal Housing Finance Agency, which created a retention program when the company was seized last September to hold on to key employees.
Under the program, employees are eligible to receive up to 150 percent of their salary in bonuses this year, but many will receive far less than that, and some might receive zero, depending on how central they are deemed to the company’s task.
Congressman Barney Frank, one of Fannie Mae’s and Freddie Mac’s biggest supporters, and Chairman of the House Financial Services Committee which oversees the institutions, was reached for comment and had this to say about whether paying retention bonuses was really necessary:
That’s nonsensical. It’s clear they made a lot of mistakes and we need to undo what they did. If they really understood what they did in the first place, seriously, they probably wouldn’t have done much of it. Secondly, when you are trying to undo something, it is often not the case that the people who did it are the ones to put in place. People are sometimes committed to not admitting mistakes. … So that argument I think is in fact almost counter, because the argument that you take the people who made the mistake and put them in charge of undoing the mistake goes against the human impulse not to admit a mistake.
Oops! Sorry, about that. The foregoing statement was from Barney Frank, but he was referring to AIG bonuses.
This morning, ThinkProgress sat down with Rep. Barney Frank (D-MA), who chairs the House Financial Services Committee and has called for the firing of AIG executives. When asked to respond to Sorkin’s claim that only AIG employees can navigate the economy out of the mess they created, Frank dismissed it as “nonsensical”
Pigs in the House indeed.
Barney Frank has gotten very full of himself. So full, in fact, that his memory isn’t working as well as it probably should:
House Financial Services Chairman Barney Frank (D-Mass.) is pressing state and federal authorities to seek criminal and civil penalties on financial actors that helped cause the current crisis.
“Rules don’t work if people have no fear of them,” Frank said at a press conference Thursday.
He announced a hearing March 20 with Attorney General Eric Holder, bank regulators and the Securities and Exchange Commission as witnesses to discover what their plans are to prosecute irresponsible and in some cases criminal behaviors.
I wonder if he’d include this guy:
A September report from the Business & Media Institute suggests one possible target for investigation: a senior member of the House Banking Committee. This congressman is “a recipient of more than $40,000 in campaign donations from Fannie since 1989″ and “was once romantically involved with a Fannie Mae executive.” The same congressman “was and remains a stalwart defender of Fannie Mae.”
In case you’re not up to speed, that “senior member” mentioned is House Financial Services Chairman Barney Frank (D-Mass.).