Patterico's Pontifications

3/19/2009

Barney Frank cannot hide his Fannie role

Filed under: General — Karl @ 9:23 am



[Posted by Karl]

Rep. Barney Frank (D-MA) has a piece at the HuffPo, attempting to place all of the blame for the current economic downturn on Republicans and pretend he had nothing to do with it, including the implosion of Fannie Mae and Freddie Mac.  Frank writes, “we have tools to aid memory — pencil and paper, word processing, transcripts, newspapers, and the Congressional record.”  Indeed we do, but Frank fails to specifically cite to or quote any of them.  There are reasons for that.

In the real world, Frank opposed increased oversight of Fannie and Freddie as far back as 1992.

Frank then skips over most of the Clinton Administration, particularly the series of decisions by HUD Secretary Andrew Cuomo between 1997 and 2001 that helped plunge Fannie and Freddie into the subprime markets without meaningful oversight.  Perhaps Frank is hoping everyone will forget that Frank’s boyfriend at the time was Fannie’s assistant director for product initiatives.  Some might question whether that was a conflict of interest, though Frank — who once fixed tickets for another boyfriend on probation for drug possession and for possession of child pornography — apparently saw no potential conflict.

Frank is proud that he voted against the Gramm-Leach-Bliley Act, “which overturned a Depression-era law preventing commercial banks from acting like investment banks.” Frank again omits that this law had broad bipartisan support in Congress, as well as the Clinton Administration (with help from Larry Summers, now one of Pres. Obama’s top economic advisors).  Frank may also be hoping  readers do not know that economists from Tyler Cowen to Brad DeLong agree that the diversification did considerably more good than harm, as it allowed sounder commercial banks to help bail out the troubled investment banks.

In 2003, when the Bush administration proposed creating a new agency to assume supervise Fannie and Freddie, Frank’s response was that Fannie and Freddie “are not facing any kind of financial crisis… The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Frank nevertheless touts his efforts during this period with Rep. Mike Oxley (R-OH) on a bill to increase regulation of Fannie and Freddie, blaming House Republicans and the Bush Administration for its demise.  Sam Dealey dealt with this bill — and its fate — last year:

A month after warmly receiving [Bush Treasury Secretary] Snow’s proposal, House Finance Chairman Mike Oxley unveiled a bill. It lacked two key components, however. First, the new regulator of the sibs would not be Treasury itself but a newly created “independent unit” within Treasury. That’s the same arrangement that already existed—the sibs were presently under an “independent unit” that time and again proved incapable of detecting Fannie and Freddie shenanigans. Second, the bill would grant the Housing department oversight—largely toothless because it lacked the authority to contain the investment risks the sibs were taking. Faced with stiff opposition from the White House, the Ohio Republican pulled his bill the night before the committee’s final vote.

In 2005, Oxley (with Frank) tried again. The legislation was stronger than before, but again failed to provide a regulator with the authority to curtail the kinds of assets Fannie and Freddie could hold. Indeed, the bill even expanded Fannie and Freddie’s abilities to purchase mortgages. Financially responsible people saw the writing on the wall and threw their support behind a tougher Senate bill [which died in the face of opposition from Senate Democrats –K].

Regardless, Oxley’s bill passed the House and Frank now leaves the impression that he supported it…

In fact, praises for bipartisanship notwithstanding, Frank voted against the 2005 bill. As the chairman tells it, this is because “the Republican majority inserted language at the last moment that would prohibit religious organizations from participating” in providing low-income housing financing. “It is only because of this ridiculous action by archconservative Republicans that I cast my vote ‘no.’ ”

That’s a pretty loosey-goosey rendering of what went down. The provision Frank references was his pet project, which would designate 5 percent of the sibs’ after-tax profits for grants to outside organizations to promote low-income housing. As Frank says, the grants could have gone to religious groups like the Catholic and Lutheran churches (it’s good to see Frank now fully supports Bush’s faith-based initiative, by the way) but also to decidedly secular and politically active organizations like the Child Welfare League of America and Volunteers of America.

Many in Congress opposed Frank’s baby because it was a step backward in reform.

Supporting toothless alternatives is one of the oldest tricks in the Congressional book.  Frank’s true attitude during this period was shown in 2004, when Fannie’s regulator leveled serious charges amounting to fraud against Fannie and its executives.  Frank commented, “I don’t see anything in this report that raises safety and soundness problems.”

Frank blasts former Pres. Bush for demanding that Fannie and Freddie increase the percentage of subprime loans they purchased, “supposedly because of his belief in an ‘ownership society.'” He ignores that — however ill-advised — this was a continuation of the aforementioned Clinton Administration policies and that Bush at least pushed the independent oversight of Fannie and Freddie that Frank opposed.

Frank also blames the Fed — and cheap money both here and abroad helped cause the housing bubble.  However, Frank ignores that the Boston Fed (yes, in Frank’s virtual backyard) was among those pushing lower lending standards across the board in order to make more minority loans — which Frank has championed for years.  Moreover, former Fed Chairman Alan Greenspan repeatedly warned Frank and his friends that Fannie and Freddie carried systemic risks requiring legislative action, above and beyond tighter regulation of these government sponsored enterprises. Frank turned a deaf ear to these alarms.

Frank ultimately concedes “that the present financial crisis has many fathers.”  Frank can dance, but he cannot hide from the fact that he was one of them.  Is Frank being intentionally dishonest, or is he merely as clueless as he claimed to be about the prostitution ring run out of his apartment?  Neither possibility seems very comforting, particularly as Frank’s plan to “fix” Fannie and Freddie is mostly to give them more capital.

–Karl

64 Responses to “Barney Frank cannot hide his Fannie role”

  1. There’s more than enough blame to go around. The Republicans had control of legislative and executive branches for six years W’s first six years in office. If the Republicans had seen a problem, they could have acted to change it. Either they didn’t see a problem or did, but chose not to change it.

    Brent Logan (d9c0ae)

  2. There were Republicans who did try to change it — that was the point of the 2005 Senate bill that Dodd and other Dems killed by signaling it was a partisan issue and would be subject to filibuster (it cleared committee, but on a party-line vote). That’s not to say that other Republicans don’t deserve blame. But Frank’s account is a partisan and personal whitewash job.

    Karl (f07e38)

  3. Sure he can hide it. As long as the MSM continues to ignore it. Between Franks and Dodd, I am not sure who I dislike more.

    Can you imagine if Franks was a Republican?

    JD (bd9896)

  4. Thank you, Karl, for bringing out the prevarications that mark the political life or Cong. Frank.
    He, and Sen. Dodd, are the “Mutt & Jeff” of the enablers in DC that not just allowed, but encouraged, this debacle to develope. Their obfuscations, prevarications, and out-right LIES, show Main-Street denizens what is truly wrong in the DC Swamp!
    It is time to drain the swamp, and start to make shoes and handbags.

    AD - RtR/OS (0aa9c4)

  5. “or” = “of”

    AD - RtR/OS (0aa9c4)

  6. This is the funniest title I’ve seen on this site in a long time.

    Joe (bec298)

  7. Accountability? That’s for the little people.

    Chris (a24890)

  8. Bawwwney Fwank really thinks we’re all stupid.

    Techie (9c008e)

  9. Thanks Joe, I was worried it was just me :-)

    Love the title.

    ShelbyC (8546d8)

  10. and for possession of child pornography

    With the public outcry with regard to child pornography and Barney Frank trying to get his male lover out of those charges.
    I can’t help but wonder where Barney would be now if there was an (R) after his name.

    Liberals are the biggest hypocrites I have ever seen.

    ML (14488c)

  11. If the Republicans had seen a problem, they could have acted to change it. Either they didn’t see a problem or did, but chose not to change it.

    Comment by Brent Logan

    You might try reading the post before posting your seminar comment.

    Both sides deserve blame, Bush for allowing Greenspan to keep money too loose for too long, and the Democrats for the CRA and the other early roots of this bubble.

    Now, Democrats are botching the recovery but they will probably pay next year if Steele can recruit sme good candidates.

    MIke K (8df289)

  12. And I do not want to see Frank’s Fannie roll.

    SarahW (fdd722)

  13. And I do not want to see Frank’s Fannie roll.

    SarahW (fdd722)

  14. There simply are individuals that if they simply blew away …..

    Jimminy'cricket (637168)

  15. Hey Barney’s fanny has been hanging out in a lot of places where the majority of folks wouldn’t want to go.

    Mike Myers (674050)

  16. do i even need to go to the HuffoPo to read the comments that follow Frank’s screed?

    mike d (b28b9d)

  17. And I do not want to see Frank’s Fannie roll.

    I just vomited a little.

    Seething is how I would describe my mood about Franks and Dodd. Both men deserve to be disbarred (assuming they are lawyers), impeached and then investigated.

    Yesterday when Franks demanded the names of AIG workers who HAD BROKEN NO LAW I was more than angry, and a good bit afraid. Today Congress passed what I can only hope will be an overturned and unconstitutional law.

    Vivian Louise (eeeb3a)

  18. If the Republicans had seen a problem, they could have acted to change it. Either they didn’t see a problem or did, but chose not to change it.

    Before you post your next talking points, please at least make a semblance of research – even Bill Clinton was out on the campaign trail during the last election, telling anyone who’d listen that both he and McCain tried many times to rein in the excesses of Fannie/Freddy, all to no avail. To paraphrase JD, Raines repeatedly intimated during a congressional hearing that anyone opposing their new and expanded credit “definitions” were de facto racists.

    Dmac (49b16c)

  19. I’m not sure Frank knew Fannie was in the loan business. He probably thought it did something else.

    ricky (6a441f)

  20. […] He can run but he can’t hide. Patterico documents just how complicit Rep. Barney Frank (D-MA) was in the Fannie Mae/Freddie Mac debacle and, in fact, in the whole subprime […]

    Thursday’s child . . . | And Still I Persist (13e666)

  21. I have to be honest: I have no idea whether Barney Frank was, or was not, a force working for, or against regulatory reform in the financial sector from 1999 to 2008 or so. Karl has a few nuggets here that could reasonably lead one to wonder. Was Frank’s 2005 bill a “step backward” in regulation? Haven’t read it. Don’t know who to trust.

    But I do know one piece of horsepuckey when I see it:

    Frank may also be hoping readers do not know that economists from Tyler Cowen to Brad DeLong agree that the diversification did considerably more good than harm, as it allowed sounder commercial banks to help bail out the troubled investment banks.

    The link to Tyler Cowen is from September 2008. Things look rather a lot different right now, and I doubt Tyler would still own this opinion. But even if he did, he’s a libertarian (meaning fringe).

    From Tyler’s very piece:

    Here is a good critique of GLB, on the grounds that it may extend “too big to fail” to too many institutions. That may yet happen but not so far.

    Hmmmm. Anyone not think that too many institutions have NOT gotten too big to fail? Only people who seriously think we could have let AIG, BoA, Citigroup – followed by every other large bank, investment brokerage, and insurer in America, from the fallout – go under without experiencing something like the borderline collapse of civilization.

    You can’t pin this all on Glass-Steagall, but it’s the single biggest piece on the whole board. Yeah, Larry Summers liked it at the time. The rotten thinking encompassed large parts of the Democratic Party, but it encompassed ALL of the Republican Party. Did any Republicans NOT vote for Glass-Steagall? Like, even one?

    The entire rest of this piece is about Fannie Mae and Freddie Mac. No matter how many times you push on this string, it ain’t moving. This is not a subprime mortgage crisis. This is a housing prices in general reached 300% of historical ratios, and the finance sector leveraged it at hundreds-to-one crisis. Subprime is a tiny piece of that, and Fannie/Freddie is a small piece of subprime.

    No one in government caused this crisis, but the Bush Administation did everything they could to put people in the SEC, HUD, and Treasury who did everything they could to protect the financial industry from any regulation whatsoever. Barney Frank’s right about the big picture – Republicans were the majority for this decade, and they did exactly jack diddly.

    I’m looking forward to you letting the Obama Administration off the hook for failing to pass legislation fixing the financial crisis, Karl, merely because Senate Republicans filibuster it.

    glasnost (ce73a0)

  22. Shorter glasnost – LALALALALALALALALLALALALALALLA I can’t hear you.

    JD (6323ee)

  23. I have to be honest: I have no idea whether Barney Frank was, or was not, a force working for, or against regulatory reform in the financial sector from 1999 to 2008 or so

    You would have done well to just stop right there.

    JD (6323ee)

  24. Even Slick Willie stated the democrats in congress, including Blank Frank blocked every attempt to control Fannie and Freddie.

    Funny thing the liberals won’t admit (at least one on here) the economy boomed for six years under GWB and the Republican controlled congress. A simple search will find a stock market at over 14,900 and unemployment at 4.5%. A little study will show the democrats promised in 2006 to change the direction of the country if elected. You did, they did. Today the stock market is half what it was and unemployment is double. Go pat a democrat on the back, several times, with a sharp knife if you lost (since Nov 06) everything you worked for.

    Scrapiron (4e0dda)

  25. By the way, I was born in this country 68 years ago and have paid income taxes since 1959, never missed a year, never drawn a dime in unemployment or welfare. I also ditched the stocks and bonds in 2006 and went to gold and silver. Still living quite well. I knew what the democrats would do. Anyone remember Dimmy Carter and his whiz kids with masters degrees but not one lick of common sense to the point of being really stupid? I do and avoided the same with O’Dumbo and his whiz kids with masters degrees and even more stupid than Dimmy’s whiz kids + half of them are outright criminals. Maybe even O’Dumbo if he was deeply involved in insider trading while holding public office. Something/someone should have to explain the increase from a worth of $800K to over $8 million in two years of service (max $400 K income) in the senate. Holder will have to ask permission of O’Dumbo to arrest him. BWAHAHAHAHAHA

    Scrapiron (4e0dda)

  26. Barney Frank cannot hide his fanny hole?!!!

    That is just not right!

    Oh wait, you said fanny role.

    Nevermind.

    Joe (dcebbd)

  27. What was your intent on that comment?

    Joe (dcebbd)

  28. I have to be honest: I have no idea whether Barney Frank

    Aaaaaannnnnnd he’s immediately beclowned himself. Nice job, you admitted your widespread ignorance on the entire subject matter, thereby negating your idiotic and wholly unsubstantiated rant.

    Dmac (49b16c)

  29. How many years was it that Fannie Mae could not produce financial statements earlier this decade because they were so screwed up? At the same time Bush and the Republican were calling for stricter oversight. Frank and Dodd were saying they couldn’t see any problems and leading the filibuster against change. Let’s see, accounting fraud and inability to produce financial statements? Would that suggest things might be a touch out of control and in need of adult supervision?

    Who’s joint does Barney think we are smoking here?

    daleyrocks (5d22c0)

  30. “I have to be honest: I have no idea whether Barney Frank”

    But I’ll comment on something I don’t know about anyway!!!!!!

    Suh-weeeet!

    Thanks glasnost!

    daleyrocks (5d22c0)

  31. I see that the Left-wing talking-points are still pushing Glass-Steagall (thanks glasnost – we would never realize the importance of that legislation if you didn’t constantly bring it up); the only thing though, is if G-S caused our meltdown here in the good old USofA, what caused it in Europe and other areas who never had a G-S restriction on the banking sector? How did they ever survive so long?

    AD - RtR/OS (0aa9c4)

  32. I’m a regular working guy and I can tell you that 2 of the 4 people that I work with never heard of Fannie May, the Bailout, the Stimulus, or any of the other latest American atrocities. This is the young Obama crowd who’s greatest interest in life is deciding what type of tattoo to get and where. Their greatest contribution to American society: finding a great sale on jeans at the mall. We’re fighting a totally self-absorbed group of Americans that vote for who is the most popular, or who looks the best, and believe that anyone with an (R) behind his name is evil. They care nothing of facts, truth, or common sense. Nice job bringing up the kids, dad and mom. This is scary watching America die like this. Not from a depression, or war, or terrorist attack, just from a self-absorbed ignorance and laziness by those who voted for this nonsense.

    DaveinPhoenix (9b506a)


  33. House Financial Services Committee hearing, Sept. 10, 2003:

    Rep. Barney Frank (D., Mass.): I worry, frankly, that there’s a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios.


    House Financial Services Committee hearing, Sept. 25, 2003:

    Rep. Frank: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.

    . . .

    This weeks circus watching Obama,Geithner,and Dodd spin,point fingers,and lie about their roles in the AIG fiasco is liberal text book 101 in feigning outrage to cover your own responsibilities and failures.

    Democrats are as responsible if not more for this financial crises than anyone.

    Their rants of the Bush administration not attempting to do anything is not backed up by the facts.
    Besides McCains attempt in 2005 to regulate Fannie/Freddie that was blocked by the democrats,
    Bush tried no less than 17 times to force this issue:


    Just the Facts: The Administration’s Unheeded Warnings About the Systemic Risk Posed by the GSEs

    http://www.whitehouse.gov/news/releases/2008/09/print/20080919-15.html

    For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted. Unfortunately, these warnings went unheeded, as the President’s repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.

    democrats bragged and bragged about how successful they were in the 90’s.
    A large part of that success is due to what they blame Bush for:


    Obama’s Clinton Problem
    Deregulation made the prosperity of the 1990s possible. Just ask Bill Clinton.

    John Berlau | November 21, 2008

    http://reason.com/news/show/130222.html

    Bill Clinton signed nearly every deregulatory measure that John McCain backed—the same measures that are now being blamed (wrongly) for helping cause the current crisis. What’s more, Clinton administration officials have credited these policies for contributing to the ‘90s economic boom—the very “shared prosperity” that Obama says he wants to go back to.

    Late in Clinton’s tenure, the White House put forth a document celebrating “Historic Economic Growth” during the administration and pointing to the policy accomplishments it deemed responsible for this growth. Among the achievements on Clinton’s list were “Modernizing for the New Economy through Technology and Consensus Deregulation.” That’s right, a Clinton White House document credited part of the administration’s success to that now dreaded d-word, deregulation.

    I see that the Left-wing talking-points are still pushing Glass-Steagall
    Comment by AD – RtR/OS — 3/19/2009 @ 6:29 pm

    This is just more rewriting of history that liberals like to do to distract from their responsibilities in this mess:

    Take Gramm-Leach-Bliley, the 1999 law Clinton signed repealing the Depression-era Glass-Steagall Act, which had strictly separated traditional commercial banking from investment banking. Obama’s supporters, claiming that getting rid of Glass-Steagall led to the credit blowup, have seized on the first name on the law, that of former Sen. Gramm, to bash it as a piece of Republican deregulation. Never mind that the Senate passed the legislation by a vote of 90-8, with many Democrats voting for the final bill, including Obama running mate Joe Biden.

    It is hilarious to watch democrats complain about
    Republicans being “obstructionist” with their overwhelming democratic majorities but Bush was supposed to shove through all types of legislation
    without ever having the majorities democrats enjoy now.

    Barney Frank is one of the main players that allowed this sub-prime mess to wreck this economy.
    That’s why liberals have to Micheal Moore up this issue so they can continue to repeat the same lies over and over and over again to get as many suckers to accept it as truth that they can.

    Baxter Greene (8035ae)


  34. “Mythmaking is in full swing as the Bush administration prepares to leave town. Among the more prominent is the assertion that the housing meltdown resulted from unbridled capitalism under a president opposed to all regulation. . . . Rather than a failure of capitalism, the housing meltdown shows what’s likely to happen when government grants special privileges to favored private entities that facilitate bad actors and lousy practices.”

    Don’t believe your lying eyes:

    Shocking Video Unearthed Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis

    http://www.youtube.com/watch?v=_MGT_cSi7Rs&NR=1

    Timeline shows Bush, McCain warning Dems of financial and housing crisis; meltdown

    http://www.youtube.com/watch?v=cMnSp4qEXNM

    Nothing to see here,this is just a distraction.

    Baxter Greene (8035ae)

  35. Here is a great timeline that flies in the face of
    the “it’s Bush’s fault” mantra:

    Guest essay: Fannie and Freddie mess? Blame the Democrats

    By JOHN H. PILLA
    http://www.publicopiniononline.com/ci_11631591

    C

    apitalism worked well until the government began to limit free markets by forcing the Government Sponsored Enterprises called Fannie Mae and Freddie Mac to make loans to those not worthy of receiving home mortgages (subprime mortgages).
    The markets did fine until these actions were undertaken by Democratic administrations.
    Here is a list of key events:

    Many of our elected officials on both sides of the aisle played a part in this mess,but for the democrats to continue to blame Bush and shuck and jive away their responsibilities sure doesn’t come across as being transparent and accountable like the “Hope and Change” we are always hearing about.

    This idea that the Bush administration was against regulations does not hold water either:


    Bush’s Regulatory Kiss-Off
    Obama’s assertions to the contrary, the 43rd president was the biggest regulator since Nixon.

    http://www.reason.com/news/show/130328.html

    The Bush team has spent more taxpayer money on issuing and enforcing regulations than any previous administration in U.S. history. Between fiscal year 2001 and fiscal year 2009, outlays on regulatory activities, adjusted for inflation, increased from $26.4 billion to an estimated $42.7 billion, or 62 percent. By contrast, President Clinton increased real spending on regulatory activities by 31 percent, from $20.1 billion in 1993 to $26.4 billion in 2001.

    Listening to liberals spin and lie about their responsibility in this economic mess is just like listening to them spin and lie about how much they
    yelled and screamed concerning Saddam and his WMD and ties to al-qaeda.

    Nothing but a bunch of sheep spinning and rewriting history to fit their agenda and failed ideology.

    Baxter Greene (8035ae)

  36. Plausible deniability.

    Barney Frank could not be the father of anything.

    Sorry, Pat.

    bob (466a1d)

  37. I see that the Left-wing talking-points are still pushing Glass-Steagall
    Comment by AD – RtR/OS — 3/19/2009 @ 6:29 pm

    AIG had quite a bit of regulation on many levels,look how well that worked out.

    Regulation does not mean very much if politicians in conjunction with executives punch holes in it and finds ways to work around it.

    Kind of like what we are witnessing Geithner, Dodd,and Obama doing concerning these bailouts and taking care of their friends on Wall St.


    Is Deregulation to Blame?
    The new Washington consensus says “yes.” The facts on the ground say something different.

    http://reason.com/news/show/130348.html

    The Glass-Steagall Act of 1933 prohibited investment banks from acting as commercial banks, and vice versa. Signed by Bill Clinton (who continues to defend the legislation), the Gramm-Leach-Bliley Act of 1999 repealed those aspects of the law. Many on the left blame at least part of our current woes on that move. With the repeal, Barack Obama said in a March economic address, “we have deregulated the financial services sector, and we face another crisis.”

    In fact, multiple exemptions to Glass-Steagall had been granted for years before Gramm-Leach-Bliley was signed into law. Most European financial markets, not normally known as more “deregulated” than the U.S., never separated commercial and investment banks in the first place. And there is no correspondence between institutions that benefited from the repeal and those that recently collapsed. Institutions that didn’t take advantage of the Glass-Steagall repeal, such as Lehman Brothers and Bear Stearns, were the ones that failed most spectacularly, in part because they lacked the stability provided by commercial banking deposits.

    Liberals use to always yell about “follow the money”.
    Have not been hearing that concerning Fannie and Freddie.
    Maybe this is the reason:

    The Best Congress Fannie Could Buy
    http://www.classicalvalues.com/archives/2008/09/the_best_congre.html

    This is a long and complicated story about how Obama backers were behind the mortgage industry meltdown. It hast to start some where, so lets start with a well known Chicago name Penny Pritzker. It starts with a bank failure.

    During Obama’s time on the Woods Funds ACORN received grants of $45,000 (2000), $30,000 (2001), $45,000 (2001), $30,000 (2002), and $40,000 (2002) from the Woods Fund. (Obama in the early 1990’s helped train ACORN organizers and later served as counsel in 1995 for ACORN in a “motor voter” registration lawsuit.) And ACORN certainly appreciated whatever assistance Obama afforded the radical organization over the years.

    Now Acorn is involved in the census and has received Hundreds of millions of dollars from Obama in the first 60 days of his Presidency.


    must be a genius to keep all that all in his head. So lets look at another little connection. Which politicians did Freddie Mac and Fannie Mae’s Political Action Committees support? How about a look at the top five.

    1. Dodd, Christopher J D-CT $133,900
    2. Kerry, John D-MA
    $111,000
    3. Obama, Barack D-IL
    $105,849
    4. Clinton, Hillary D-NY
    $75,550
    5. Kanjorski, Paul E D-PA
    $65,500

    But super smart Barney Frank and his useful idiots say none of this matters,it’s the
    EEEEEEEEEEEEEEEEEEvil Bushitler’s fault.

    Baxter Greene (8035ae)

  38. Barney Frank cannot hide his fanny, either.

    That’s racist, I know, sorry.

    Patricia (2183bb)

  39. Karl, you misspelled the last word in the title: that word begins with an “h.”

    The snarky Dana (3e4784)

  40. glasnost,

    Although you confessed ignorance before launching into the usual trolling, I’ll elaborate just a bit on G-L-B to explain why it’s a dumb talking point, even from the perspective of the Left.

    G-L-B was trotted out by some on the Left to argue that dereguation was the problem. But what G-L-B did was allow commercial banks (which are highly regulated) to buy up investment banks (less regulated) — or vice versa, either of which results in banks becoming more regulated under the commercial umbrella. Without G-L-B, sounder commercial banks would not have been able to ease the fall of Bear Stearns, Wachovia or Merrill Lynch, and the taxpayers would be worse off.

    Thus, if the lack of regulation of investment banks was part of the problem, G-L-B was part of the solution.

    (That being said, the comments above about foreign regulatory systems are also quite relevant, given the reality of the global marketplace. Tougher regulations in the US would not have meant much, absent similarly tough regimes in the EU and Asian markets.)

    Karl (8966b4)

  41. I think Chuck Grassley is right in his Japanese remark about business, but it also applies to Congress. Dodd and Frank ought to Bow, apologize, then commit seppiku (The correct term).

    PCD (db2059)

  42. Notice that the very first comment ignores the entire content of the post to try to shift blame to the GOP.

    Democrats – never having to admit to any of their actions.

    SPQR (26be8b)

  43. Notice that the very first comment ignores the entire content of the post to try to shift blame to the GOP.

    The funny thing, SPQR, is that had the Republicans shown a little backbone in 2005, Obama might not have been elected.

    Here’s the scenario:

    1. Republicans introduce legislature in 2005 to regulate Fannie and Freddie.

    2. Democrats signal their intent to filibuster the bill.

    (now here’s the divergence from history)

    3. Republicans call the Dems on the issue and push for a cloture vote.

    4. All Dems — including Obama — vote against cloture. Issue dies with filibuster.

    5. Fast forward to 2008, when the mortgage crisis hits. McCain campaign runs ads saying, “Remember in 2005 when I called for more regulation of mortgages? And remember who voted to filibuster regulations?” (show vote roll with Obama’s vote to filibuster).

    It would have made for a very interesting September/October. It’s also a good parable on sticking to your beliefs.

    Steverino (69d941)

  44. Wow. A substantive response. Flattering. Quite the low insult quotient as well.

    But what G-L-B did was allow commercial banks (which are highly regulated) to buy up investment banks (less regulated) — or vice versa, either of which results in banks becoming more regulated under the commercial umbrella. Without G-L-B, sounder commercial banks would not have been able to ease the fall of Bear Stearns, Wachovia or Merrill Lynch, and the taxpayers would be worse off.

    Come on. Pull the other one. We wouldn’t have needed to ease the fall. Bear and Merrill could have just gone bust without also killing BoA and Citigroup, because those instiutions would not have balance sheets full of their securities. Meanwhile, Wachovia wouldn’t have collapsed at all. Every dollar we’ve paid to BoA and Citi is directly traceable to their being allowed to invest in securities. And that’s Glass-Steagall all the way.

    As much as I enjoy the odd civil response, you might actually be better off with ad hominem.

    glasnost (395b7f)

  45. is if G-S caused our meltdown here in the good old USofA, what caused it in Europe and other areas who never had a G-S restriction on the banking sector?

    Dude. Please try a little harder. We repealed a set of regulations that (according to you) have never existed in the EU, and now we have the exact same problem at the same time. This is not an argument against my point. If you think it is, you need to read it aain.

    glasnost (395b7f)

  46. glasnost, pretending not to understand the points made is not a rebuttal.

    SPQR (26be8b)

  47. It will not be deterred.

    JD (3f2bdf)

  48. glasnost has been engaged in this crusade of “proving” that the financial sector crisis is solely the fault of the GOP for quite a long time now. Months? Obsessive compulsive I suppose.

    SPQR (26be8b)

  49. I guess since Sen. Gramm once authored legislation that passed unanimously, we should just blame all Republicans from now until eternity.

    JD (3f2bdf)

  50. If memory serves, wasn’t the relaxing of regulations on derivatives a direct response to an EU directive that significantly relaxed their derivatives market, to stem a likely outpouring of capital to EU banks from ours?

    JD (3f2bdf)

  51. JD, it was the relaxation on the leverage limits from 10:1 to 50:1 that was done to prevent US banks from being disadvantaged to European, if my memory serves.

    SPQR (26be8b)

  52. “Meanwhile, Wachovia wouldn’t have collapsed at all. Every dollar we’ve paid to BoA and Citi is directly traceable to their being allowed to invest in securities.”

    glasnost – Are you saying that commercial banks were not allowed to buy mortgage bonds prior to the repeal of Glass-Steagall?

    daleyrocks (5d22c0)

  53. Thank you, SPQR. That is what I was trying to come up with.

    JD (3f2bdf)

  54. Which lefty economist is spewing glasnost’s meme?

    daleyrocks (5d22c0)

  55. Glass-Steagall and it’s repeal is relevant in that it fostered the creation of financial leviathans that are far too big to fail.

    With Glass-Steagal repealed, AIG could get into the securities business. It promptly created a financial products division that boomed, enriching the company, but then collapsed and is today virtually the sole cause of its woe.

    The removal of Glass-Steagal didn’t cause investment banks to jack up their leverage to 30 to 1 and more, the primary cause of the current crisis, along with half a decade of unnaturally low interest rates, so it can’t be blamed for causing the crisis per se.

    Had Glass-Steagal not been repealed, it would have been much easier to let AIG and Citigroup fail, i.e. to let the market work.

    Hax Vobiscum (23258e)

  56. BARNSMELL FREAK he is clearly a real idiot and a all around liberal jerk

    Krazy Kagu (46d4a2)

  57. […] everyone who has a say in the matter seems to have taken money from AIG, from Obama to Congress. Patterico’s Pontifications took a look at the Barney Frank’s efforts last week to convince people that he, as head of […]

    AIG Bonuses, Newspaper Business Struggles, U.S. International Policy | Sunroom Desk (34cbe8)

  58. Arguing about G-S/G-L-B is just a diversionary tactic to take attention from where the train-wreck originated: Fannie/Freddie and CRA!
    The predicate cause resides there, deal with it.

    AD - RtR/OS (39b1d4)

  59. With Glass-Steagal repealed, AIG could get into the securities business.

    I don’t believe Glass-Steagall repeal had anything to do with allowing AIG to insure CDS’s.

    Gerald A (adb85a)

  60. And, with G-S repealed, BofA was allowed to rescue Meryll-Lynch.

    AD - RtR/OS (39b1d4)

  61. “I don’t believe Glass-Steagall repeal had anything to do with allowing AIG to insure CDS’s”

    It certainly did. (Though, AIG enters into CDS contracts, it doesn’t “insure” them.)

    Glass-Steagal prohibited insurance companies from underwriting securities. A credit default swap isn’t insurance, per se, it’s a traded security.

    AIG could have, and did, provide bond insurance without violating Glass-Steagal. But a bond insurance contract is not the same as a credit default swap.

    A bond insurance contract cannot be traded and, more important, is limited to the value of the insured credit. CDS were written for many times the value of underlying credits, creating a rapidly ballooning market worth many times the underlying value of credit, and, therefore, unhedgeable.

    True, repeal of Glass-Steagal allowed BofA to rescue Merrill, but I think you’d agree, AD, that the creation of yet another too-big-to-fail financial institution, while unavoidable in the current crisis, is hardly ideal in terms of the taxpayer’s long-term interest.

    Hax Vobiscum (4012df)

  62. I blame Phil Graham 😉

    JD (16485e)

  63. This was a brilliantly written piece; one of the best I’ve ever read on the events (and politicians) who got us into this mess. This is exactly what I was trying to get the McCain campaign (and other Republican candidates) to emphasize during the election campaign, but they didn’t listen. If you recall, McCain was ahead in the polls until the financial meltdown starting hitting the news. And once again, the Republicans allowed themselves to be put on the defensive, and shoulder the complete blame for the financial crisis, even though the Democrats were equally to blame, and actually laid the foundation for this to happen.

    Craig (806d18)

  64. And, now it comes out (H/T HotAir) that a career regulator at Treasury was responsible for oversight of AIG’s Financial-Products Div and their entrance into the CDS mess; a regulator promoted to head the OTS by the Obama WH, who has now recused himself from that position. Are there any grown-ups in Little Timmie’s shop?

    AD - RtR/OS (0053b8)


Powered by WordPress.

Page loaded in: 0.4438 secs.