Barney Frank rejects the idea that he’s the reason you owe much more on your house than it’s worth.
Peter Gorenstein, TechTicker: Who’s to blame for the subprime housing bubble? A popular answer – especially on the right side of the aisle – is Massachusetts Democrat, Barney Frank.
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.
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