Unqualified home buyers were not the only ones who benefitted from Massachusetts Rep. Barney Frank’s efforts to deregulate Fannie Mae throughout the 1990s.
So did Frank’s partner, a Fannie Mae executive at the forefront of the agency’s push to relax lending restrictions.
Now that Fannie Mae is at the epicenter of a financial meltdown that threatens the U.S. economy, some are raising new questions about Frank's relationship with Herb Moses, who was Fannie’s assistant director for product initiatives. Moses worked at the government-sponsored enterprise from 1991 to 1998, while Frank was on the House Banking Committee, which had jurisdiction over Fannie.
Both Frank and Moses assured the Wall Street Journal in 1992 that they took pains to avoid any conflicts of interest. Critics, however, remain skeptical.
"It’s absolutely a conflict," said Dan Gainor, vice president of the Business & Media Institute. "He was voting on Fannie Mae at a time when he was involved with a Fannie Mae executive. How is that not germane?
It was sure nice of the taxpayers to lubricate ole Barney's relationship with his boy toy.
They passed the big bailout bill today and the taxpayers are now on the hook for the tab from the Democrat meddling with the mortgage market. Are the Donks abashed by their foolishness? Of course not - they are busy trying to claim that it was a free market problem when of course, it was anything but.
*It was Democrats who ordered and commanded Freddie & Fannie to strong-arm banks into making billions of bad loans in the name of “fairness”.
*It was Democrats Franklin Raines, Jim Johnson and Jamie Gorelick who ran these institutions, looted millions from them and now advise Obama on economics.
*It was Democrats who accepted the lion’s share of the campaign cash that Freddie & Fannie spread around town in order to become “too big to fail”.
*It is Democrats who claim the problem stems from a lack of regulation by Republicans–yet they vehemently blocked John McCain’s Regulatory Act in 2005 and taunted administration officials for even saying there was a problem.
*It was Democrat Barney Frank, former whorehouse operator and parking ticket-fixer, who only last week held a cowardly anonymous voice vote to have Freddie & Fannie make even more bad loans.
*It was Democrat Charlie Rangel who pry-barred a $10 million “charitable donation” from the now-broke AIG insurance giant last year as the cost of doing business before his committee. That’s how they do things in banana republics, where, as fate would have it, Charlie keeps his tax-cheat condos.
*It was Democrats who promulgated the mindless Sarbanes-Oxley regulations that made a bad problem much worse.
If your drunken uncle drives into a ditch, do you just pull him out, dust him off, give him a gallon of gas and a gallon of moonshine, hand him back his keys and send him down the highway to get in a head-on with a schoolbus?
The Donks are acting like they just got the keys and some gallon jugs.
Before the Democrats' affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress "mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains."
Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.
Instead of looking at "outdated criteria," such as the mortgage applicant's credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named "Caylee."
Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke -- it's a fact.
When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.
In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded."
Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses.
A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it's gone off.
In Bush's first year in office, the White House chief economist, N. Gregory Mankiw, warned that the government's "implicit subsidy" of Fannie Mae and Freddie Mac, combined with loans to unqualified borrowers, was creating a huge risk for the entire financial system.
Rep. Barney Frank denounced Mankiw, saying he had no "concern about housing." How dare you oppose suicidal loans to people who can't repay them! The New York Times reported that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but these entities still had "important political allies" in the Democrats.
Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats' two most important constituent groups: rich Wall Street bankers and welfare recipients. Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with Democratic congress for political correctness to wreck the financial industry.
That's what comes of letting liberal tinkerers mess with just about anything and there's no excuse for letting them talk their way out of it. If John McCain won't belabor the Democrats for causing this disaster, the little people will have to do it, but Johnny could help his own cause a lot by lighting a few fires.
