Barney Frank admits truth about Fannie

Barney Frank Comes Home to the Facts
By Larry Kudlow
August 21, 2010

Can you teach an old dog new tricks? In politics, the answer is usually no. Most elected officials cling to their ideological biases, despite the real-world facts that disprove their theories time and again. Most have no common sense, and most never acknowledge that they were wrong.

But one huge exception to this rule is Democrat Barney Frank, chairman of the House Financial Services Committee.

For years, Frank was a staunch supporter of Fannie Mae and Freddie Mac, the giant government housing agencies that played such an enormous role in the financial meltdown that thrust the economy into the Great Recession. But in a recent CNBC interview, Frank told me that he was ready to say goodbye to Fannie and Freddie.

"I hope by next year we'll have abolished Fannie and Freddie," he said. Remarkable. And he went on to say that "it was a great mistake to push lower-income people into housing they couldn't afford and couldn't really handle once they had it." He then added, "I had been too sanguine about Fannie and Freddie."

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Grim17 said:

Ever since the mortgage lenders went belly up, the left has denied that the revisions to the CRA made by the Clinton administration were responsible, including Barney Frank. That all changed in a CNBC interview.



RealClearPolitics - Barney Frank Comes Home to the Facts

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Grim17 said:

Ever since the mortgage lenders went belly up, the left has denied that the revisions to the CRA made by the Clinton administration were responsible, including Barney Frank. That all changed in a CNBC interview.



RealClearPolitics - Barney Frank Comes Home to the Facts

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Lord Tammerlain said:

All Hail Barney Frank

Master of the Universe, more powerfull then god himself

Able to overcome the powers of a republican president, a rebuplican congress, a republican senate, the most powerfull financial institutions in the US to force all of them to force banks to give people loans for overpriced houses


I challenge anyone here to tell me the punishment for any financial institution if they did not follow the CRA

Then I have to ask can anyone tell me if Countrywide, Ditech, GMAC, the groups that originated the subprime loans subject to the CRA

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Grim17 said:

All that has been hashed and re-hashed. The time for excuses is over, thanks to Barney Frank finally coming out and telling the truth. Speaking of the truth, why don't you do a little research and you will see that the modifications to the CRA are what started this whole mess.

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obvious Child said:

hey Grim, want to explain to me why it took 12 years for the changes to produce the effect?

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washunut said:

Give the guy credit. Not many politicians are able to admit mistakes.

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Barbbtx said:

He's not getting any credit from me. He just can't deny it any longer.
I've watched him many times interrupt, scream, sputter, deny anytime Freddy or Fannie would come up in Congress. The other side would try to bring up dates when it was known they were in trouble. He'd interupt screaming that that was when HE knew they were in trouble and it was all someone elses fault they didn't stop it. Or that F&F was fine then. Barney, Chris Dodd and Maxine Waters are up to their eyeballs in corruption to do with fannie and freddy. I hope someday all the truth comes out.
Must admit I'm surprised that maybe finally something is going to be done. I had my doubts when the left refused to put F & F into the financial reform bill.
I"m sure Frank, Dodd, and Waters will get off smelling like roses but if F&F is dismantled that will be good for the country.

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Grim17 said:

All that has been hashed and re-hashed. The time for excuses is over, thanks to Barney Frank finally coming out and telling the truth. Speaking of the truth, why don't you do a little research and you will see that the modifications to the CRA are what started this whole mess.

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Grim17 said:

Ever since the mortgage lenders went belly up, the left has denied that the revisions to the CRA made by the Clinton administration were responsible, including Barney Frank. That all changed in a CNBC interview.



RealClearPolitics - Barney Frank Comes Home to the Facts

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reefedjib said:

It amuses me that 2 out of the 3 Senators you mention are in front of the ethics committee.

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Barbbtx said:

I know Waters is up for money she got from stimulus that happened to go to a bank her husband has stock in and used to be on the board. (Conflict of interest)Nothing about Fannie or Freddy that I know of.
Who else? Chris Dodd? I hope so and I hope it has to do with his dealings with Countrywide and F&F. But I hadn't heard about it.

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samsmart said:

Of course it's a bad idea to push mortgages on the poor for housing they can't afford.

Instead, the government should help the poor ensure housing they can afford.

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samsmart said:

Of course it's a bad idea to push mortgages on the poor for housing they can't afford.

Instead, the government should help the poor ensure housing they can afford.

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reefedjib said:

I've confused Dodd with Rangel.

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Barbbtx said:

Thanks
They were getting rich. They didn't care about helping the poor. Banks were forced to give subprime loans. Those poor people are worse off now than they were before the government stepped in "help".
No matter how much we would like it to be, not everyone is going to be able to afford a home. We need to get back to the days when people worked and saved for a down payment and had skin the game. When you put up your own money you're going to choose a house that you know you can make payments on. Instead , now we have a bunch of houses underwater. I can't blame the people who are just walking away.
If we need to work on affordable housing, lets do it. But the government trying to put evryone in their own homes has been a complete disaster for everyone.

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Lord Tammerlain said:

Banks were not forced to give out subprime loans that were destined to fail. The banks did not care if they failed as they securitized them and sold them not caring if they failed or not. Other institutions like Countrywide were not subject to government regulation and yet was one of the largest subprime mortgage originators in the US

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WASHINGTON, Sept. 29— In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans...

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In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

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In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

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Grim17 said:

Ever since the mortgage lenders went belly up, the left has denied that the revisions to the CRA made by the Clinton administration were responsible, including Barney Frank. That all changed in a CNBC interview.



RealClearPolitics - Barney Frank Comes Home to the Facts

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Grim17 said:

One of the reasons is that for 12 years, people like Franklin Raines cooked the books at Fannie Mae, and reported the losses as profits for his own financial gain.

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Grim17 said:

Maybe this article from the New York Times "Fannie Mae Eases Credit To Aid Mortgage Lending" from September, 1999 will help you understand what happened. Here are a few key excerpts:

Are you getting the picture yet? The government, specifically the Clinton Administration, pushed Fannie and Freddie to purchase risky home loans from banks, which allowed banks to accept these loans because they wouldn't be at risk should they default. This rendered the revisions to the CRA irrelevant, but it's those revisions that gave the mandate to the Clinton Administration that led to forcing Fannie and Freddie to take on the bad loans that led us to where we are today.

I'll say it again... The time for excuses is over.

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obvious Child said:

LOL. You are really saying that several big auditor firms failed to catch that kind of massive fraud? Maybe we should move this thread to the conspiracy thread forum. KPMG, PwC and Deloitte all failed in a dozen years to catch that? What's next? Bill Gates planned JFK's assassination?

Come back when you have something more then conspiracy theories.

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Study Finds 'Extensive' Fraud at Fannie Mae
Bonuses Allegedly Drove the Scheme
By Kathleen Day
Washington Post Staff Writer
Wednesday, May 24, 2006

Fannie Mae engaged in "extensive financial fraud" over six years by doctoring earnings so executives could collect hundreds of millions of dollars in bonuses, federal officials said yesterday in a report that portrayed a company determined to play by its own rules.

Regulators at the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight, in announcing a settlement with Fannie Mae that includes $400 million in penalties, provided the most detailed picture yet of what went wrong at the congressionally chartered firm.

They portray the District-based mortgage funding giant -- a linchpin of the nation's housing market -- as governed by a weak board of directors, which failed to install basic internal controls and instead let itself be dominated and left uninformed by chief executive Franklin Raines and Chief Financial Officer J. Timothy Howard, who both were later ousted.

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Morning Bell: The Left’s Crony Capitalism Exposed
Posted July 14th, 2008 at 9:26am

In 2004, after a tip from a whistle blower who was later fired, the Office of Federal Housing Enterprise Oversight (Ofheo) issued a report finding that the government-sponsored entity Fannie Mae had engaged in Enron-like accounting machinations that allowed Fannie to overstate its earnings and underestimate the risk the company faced. The accounting wizardry Fannie engaged in was designed so that Fannie could meet profit targets to maximize bonus payments to company executives like Clinton administration deputy attorney general Jamie Gorelick and Carter administration assistant director for domestic policy Franklin Raines.

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TurtleDude said:

a thread that mentions barney frank and fannies is enough to make me hurl given the images it creates

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