Barney’s Big Lie
Sean Bielat came out swinging in a pair of debates this week, blasting the 30-year congressman as “one of the leaders of the economic disaster” and pointing out that as a veteran of the House banking panel, Frank pushed Fannie Mae and Freddie Mac to load up on risky mortgages while fighting proposals to reform them.
IBD Editorial
EXCERPTS:
But Frank’s famously fast tongue is also forked: As Fannie and Freddie took on billions in subprime debt, he insisted they were not facing “any kind of financial crisis,” and urged more affordable lending. “The more people exaggerate these problems, the more pressure there is on these companies (to reform), the less we will see in terms of affordable housing,” Frank said in 2003.
In a hearing held later that year, he seemed to acknowledge the risks. Only, he thought subsidizing low-income, first-time homebuyers was more important: “I do think I want to roll the dice a little bit more in this situation towards subsidizing housing.”
Confronted with the quote by one of the debates’ moderators, Frank explained that he meant subsidized rental housing. Sorry, that dog won’t hunt, either. In 2005, Frank said: “Those of us on our committee will continue to push for homeownership.”
And he didn’t just push for it via Fannie and Freddie, but also through the Community Reinvestment Act, which mandates banks make riskier urban home loans. In fact, he backed President Clinton’s historic changes to the law, which forced banks for the first time to hit numerical targets for affordable mortgages. The tougher rules triggered an explosion in subprime lending.
Bielat is right. If anyone in Congress deserves blame for the subprime crisis, it is his opponent. Let’s hope Massachusetts voters agree. The economy can no longer afford Frank and his costly affordable-lending crusade.
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