Barney Frank Calls For Bigger Losses at Fannie and Freddie

Posted June 26th, 2009 at 12.39pm in Ongoing Priorities.

Barney Frank, Chairman of the House Financial Services Committee has suggested that Fannie Mae and Freddie Mac, the now bankrupt housing finance giants, should relax their lending standards. This suggestion is farcical. One’s immediate reaction after the laughter has subsided might well be, “will we never learn?”

For many years, analysts of diverse stripes warned that Fannie Mae and Freddie Mac, the housing finance giants, were a disaster waiting to happen. But the financing giants also had giant friends in Congress, and so efforts to rein in Fan and Fred were easily thwarted. Among those congressional defenders was Barney Frank. Fannie and Freddie are now explicit wards of the state, financial markets have been put through the wringer, and taxpayers are out many billions of dollars propping them up.

Economists and other analysts might be inclined to conclude from Chairman Frank’s suggestion that, indeed, Washington policymakers are immune to economic education. Many may be immune, but this episode is evidence of something else entirely.

Politicans respond to incentives and opportunities and shy from bad publicity. Chairman Frank has learned. And his lesson will likely prove very expensive to the rest of us. After being dead wrong about Fannie Mae and Freddie Mac over the years, Chairman Frank learned he can get away with being dead wrong and costing the taxpayers billions. He can even keep the Chairmanship of the committee with jurisdiction over his past errors. Chairman Frank has learned that not only can he get away with contributing fundamentally to the greatest financial disaster in modern history, but hardly anyone makes a serious attempt to hold him accountable.

Author: J.D. Foster
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8 Comments

June 26, 2009 Jenny writes:

Barney Frank should be charged with failure to perform his duties as a government official. Is there a movement underway that we can all support?

June 26, 2009 Bill Pursell, Houston, Texas writes:

As a semiretired business owner, I am speachless on reading Chairman Frank’s recommendation. As you well know, Chairman Frank’s reluctance to admit that Freddie and Fannie were in trouble that eventually lead to the collapse of the banking industry. The House of Representative should remove Chairman Frank’s from his current position and have a detailed bipartisan investigation of his leadership of Freddie and Fannie. Of course this will never occur.

Heritage keep up your good reporting to get facts to those of us who think.

June 26, 2009 Ally writes:

Yes there IS a movement underway. It’s called an ‘ELECTION’. If he is continually rewarded [elected] for his total incompetence, he will continue to ’screw’ the tax payers. You don’t have to be from his district to get the truth out about him. The ‘MOVEMENT’ is YOU. Each individual has to step up to the plate and speak out. As long as citizens continue to be intimidated and WAIT for ’someone else’ to speak out for them, the crooks like Frank will continue their destruction without fear of consequences. In this movement [election] there has to be an alternative to Frank. Stand behind that alternative or BE that alternative.

June 26, 2009 Barry writes:

Frank will keep his position, for at the moment in our society,
financial and political incompetence is now considered good Government.

June 26, 2009 » Financial News Update - 06/26/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater writes:

[...] Barney Frank Calls For Bigger Losses at Fannie and Freddie [...]

June 26, 2009 Roger S., MA. writes:

Tom Haines’ interview of Barney on CNBC concerning the issue of shareholder empowerment, especially the last 30 seconds, is very instructive. Haines, representing major media, is really doing what Barney, elected peoples’ representative, should have done, which was to question the wisdom of getting shareholders involved in what amounts to micromanaging the business without the typically necessary detailed knowledge. Barney simply flies off the handle, terminating the interview. All of which shows up the extent to which our government is no longer the peoples’ servant, but has become its ruler. Barney gives the impression, he would be king, and how could Haines be so impertinent as to question him ? LOL !

The issue of Fannie and Freddy is really a no-brainer: Barney would like F&F to become less strict because they now are stricter than FHA and thus unable to compete. Crazy. It shows the folly of getting government involved in what should be a free market. Parts of government start competing with one another, achieving the exact opposite of what would otherwise be lowering costs and prices. Costs rise, as does the level of injustice in society: a 70% remortgage default rate at F&F (despite tightened lending criteria)clearly shows that other taxpayers than the ones defaulting will be paying those bills. For shame !

June 26, 2009 Donna Mariano New York State writes:

INCOMPETENCE is the norm in the White House these days. President Obama hasn’t any Financial experience and is busily making that evident. He would not offer any repraisels to anyone elses incompetence as he doesn’t recognise it as incompence but rather fitting the mold of his agenda of sapping every cent he can from the acheivers and giving it to nonacheivers who always have their hand out for more. Obviously, neither Barney Franks nor Obama understand what the words Bankrupt means when he can so boldly suggest that the financial institutions do more of what brought them to bankrupcy all ready.

June 30, 2009 Barb mn writes:

Fannie, Freddie and Frank.
Dumb, dumber and dumbest.

This guy is deprived of something and unfit for anything government. It’s unbelievable how much stupidity gets paid in the government.

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