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Barney Frank: Don't Blame Me for the Housing Bubble
Posted Jul 20, 2009 08:00am EDT by Peter Gorenstein in Recession, Banking, HousingWho’s to blame for the subprime housing bubble? A popular answer – especially on the right side of the aisle - is Massachusetts Democrat, Barney Frank.
Why?
The argument, best summed up in an Investor's Business Daily editorial published in March 2009, goes like this: "Starting in the early 1990s," Rep. Barney Frank "(and other Democrats) stood athwart efforts by regulators, Congress and the White House to get the runaway housing market under control." It goes on to say in, "2002, Frank nixed reforms" of Fannie Mae and Freddie Mac and that in 2003, "led by Frank, Democrats stood as a bloc against any changes" that President Bush proposed making to Fannie and Freddie.
Is it true? Frank doesn't think so.
Here are some of the main points the current Chairman of the House Financial Services Committee made to Tech Ticker's Aaron Task during their interview last week on Capitol Hill.
First, and it's a point Frank returned to several times, is he and the Democrats did not have the power to call the shots since they were in the minority during most of the Clinton and Bush years. "Tom Delay was running the House of Representatives. So I take responsibility for what I do but I don't take responsibility for Newt Gingrich and Tom Delay’s policies," he protests. Making a broader point, he says, "if I really had the power to stop the Republicans from doing anything you know what I would have done first? I would have stopped the war in Iraq. I would have stopped the impeachment of Bill Clinton. I would have stopped tax breaks for people making millions of dollars a year."
Continuing along that line, when it comes to the problems at Fannie Mae and Freddie Mac, Frank not only denies it, he shifts the blame to the Bush administration. When it came to a Republican bill to reform Fannie and Freddie, President Bush gave his own party "the one finger salute," he colorfully says.
Second, Democrats not only did not cause the crisis, they were aginst subprime lending all together: "The Bush administration made a big mistake; they were the ones that pushed home ownership for very poor people. Liberals wanted rental housing, we thought that was more appropriate," he claims.
Finally, the real estate crash was not something even the experts saw coming. "No one I know of - except Robert Shiller - saw the drop in conventional housing prices," he says.
Agree with him or not, it still doesn't change our current situation. Foreclosure filings jumped to a record 1.9 million on more than 1.5 million properties in the first six months of the year, RealtyTrac said earlier this month. Perhaps it's time lawmakers like Rep. Frank and his Republican colleagues find a working solution instead of pointing fingers.
691 Comments
John W DeFeo - Monday July 20, 2009 08:17AM EDT
Frank has a few choice quotes in this clip: http://www.youtube.com/watch?v=hxMInSfanqg
Atavist - Monday July 20, 2009 08:19AM EDT
Neither this article nor apparently, Frank, mention that the subprime crisis was a small part of Fannie Mae and Freedie Mac problems. Moreover it is a phenomenon of the mortgage industry and the CMO businesses which induced borrowers to take on absurd levels of risk that came back to bite them.
Pete - Monday July 20, 2009 08:22AM EDT
Barney Frank, Sen. Reid and Speaker Pelosi all need to resign. Reid and Pelosi had control of the Congress since 2006 and did much of nothing.
Gary C - Monday July 20, 2009 08:27AM EDT
this jac-off is a great double talker as is so many in politics. go back to your statements in 2002 03 you max waters , dashle,dodd all said sub primes were working
Mac F - Monday July 20, 2009 08:28AM EDT
No mention of the massive amount of campaign donations from Fannie given to Frank to keep the feds at bay? What kind of interview is this? He was on the take for Fannie in exchange for $$$. He is a criminal and should be prosecuted.
Yahoo! Finance User - Monday July 20, 2009 08:38AM EDT
Hey Barn, don't you ever speak to Ron Paul? I do believe he is on your Financial Services committee!
F'nCat - Monday July 20, 2009 08:48AM EDT
who lies more? 1: A Poker player 2: A politican answer, a Politican that plays Poker with our $$$$$$$
Yahoo! Finance User - Monday July 20, 2009 08:55AM EDT
Frank is an utterly shameless liar. He has told so many lies to so many people on so many issues for so long, he no longer seems capable of even knowing what the truth is. Here is a Youtube video of a Brit Hume report indicating something of the true timeline and belying Frank's rant: http://www.youtube.com/watch?v=cMnSp4qEXNM ... and there are other Youtube videos showing Frank specifically accusing Bush and Republicans of trying to impede home ownership among the poor. Frank is perhaps the most despicable of all US politicians ... a hard distinction to achieve. ... PLEASE Massachusetts, can this guy !!!!!!!!!!!!!
Art - Monday July 20, 2009 08:58AM EDT
Barney is absolutely to blame for the housing bubble and subsequent collapse. He did everything to encourage easy credit for housing purchases and that included all the flippers and other scammers.
Yahoo! Finance User - Monday July 20, 2009 08:58AM EDT
I can't believe there are people out there that continue to elect this guy. Barney and his ilk are destroying this country from the inside out.
Yahoo! Finance User - Monday July 20, 2009 09:05AM EDT
With President Nobama already,.. Stating on a tv. interwiew last week that unemployment would Rise to a mere....19%...19%....I see a lot MORE Foreclosures on the horizon,....
Luke - Monday July 20, 2009 09:08AM EDT
Ask Barney about the repeal of the Glass-Steagal Act.
fortyfootowl - Monday July 20, 2009 09:10AM EDT
If you want to blame the right people you have to blame Alan Greenspan and Phil Gramm, they are the banking lobbies biggest henchmen. No let's blame the guy that tried to help out poor Americans , you idiots are so duped that you won't figure anything out until all of your freedoms are taken from you because you don't know how to think for yourselves.
Yahoo! Finance User - Monday July 20, 2009 09:15AM EDT
Politicians (and Marketing people as well, you may have noticeed), understand all too well that actual reality matters not. All one has to do is say how it was and BINGO, that is how it was. It is truly amazing that the general population actually believe what these people say when it's clearly 95% "hooey"!
Yahoo! Finance User - Monday July 20, 2009 09:18AM EDT
Barney - you never heard of Peter Schiff?? He gave the most detailed and exacting accounts of WHY and HOW the housing market and debt securities market was going to crash just like the dot-coms
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Elmer - Monday July 20, 2009 08:15AM EDT
At minimum Barney Frank and the Democrats were a major contributor through un-intended consequences. Now we have all these other bills that they are pushing through with more un-intended consequences. How bad will the next mess be and who will they blame it on?