An editorial piece in today’s Wall Street Journal levels some blame for the Fannie Mae/Freddie Mac mess at Barney Frank for his resistance against meaningful reform.
Despite progressives’ belief that anything the WSJ writes if false, including today’s date, yesterday’s stock prices, and the weather, it’s worth reading (assuming it is available without subscription.)
I quote a portion of it here just in case …
Mr. Frank contends that he favored “very strong reform” of Fannie Mae and Freddie Mac, even before Democrats took over Congress after the 2006 elections. To adapt a famous phrase, this depends on what the meaning of “reform” is. Mr. Frank did support a bill that he and others on Capitol Hill described as reform. But on the threshold reform issue — limiting the size of the portfolios of mortgage-backed securities (MBS) that the two companies could hold — Mr. Frank was a stalwart opponent.
In fact, Mr. Frank was publicly arguing for an increase in the size of their combined $1.4 trillion portfolios right up to the day they were bailed out. Even now, after he’s been proven wrong about a taxpayer guarantee, he opposes Treasury’s planned reduction in the size of the portfolios starting in 2010, according to a quote attributed to him in this newspaper last week. “Good luck on that,” he reportedly said. Mr. Frank’s spokeswoman hung up the phone when we sought confirmation Tuesday.
The MBS portfolios have long been both the chief source of the systemic risk posed by the two mortgage giants and of the profits that so handsomely enriched shareholders and officers alike for decades. Without the extreme leverage inherent in those portfolios — which the companies borrowed heavily, at taxpayer-subsidized rates, to accumulate — their federal takeover might never have become necessary.
By the way, who are the top 3 leading recipients of political donations from Fannie and Freddie, 1989-2008? In descending order of largess: Chris Dodd $165,400, Barack Obama, $126,349, and John Kerry, $111,000. Considering Barry’s been in the Senate just 4 years, he must be the annual leader in receiving “hush money” from these GSE. Oversight? More like asleep at the switch.
Barney Frank received $42,350 … his hands are dirty too.
Don’t get me wrong, there are plenty of R’s on the list. But D’s lead the pack.