Here’s Barney Frank, now the distinguished Chair of the House Financial Services Committee, quoted in the September 11, 2003 New York Times, following Fannie & Freddie hearings on September 10:
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.
Funny they would utter such comments immediately after hearings on September 10, 2003, at which . . .
The Bush administration . . . recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan. . . a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates. . . .
But, nah, “Fannie Mae and Freddie Mac — [were] not facing any kind of financial crisis.” Nope. They were in perfect condition, they were. Not. And now, thanks to Barney Frank and Co., homes are more affordable than ever — as long as you have the cash to pay for ‘em. Good work, Barney, you genius, you! 
{ 12 comments… read them below or add one }
You will remember that Barney Frank’s is the guy who claimed not to know that a male prostitution ring was operating out of his town house. If he missed that, maybe the corruption at Fannie Mae could escape his attention, too. They had to have approximately equal visibility.
Is anyone asking what it is going to cost the taxpayers to put these houses back in salable condition after their no-investment “owners” have fled the coop? When people do not view a house as their own, they tend to “use it up.” In plain language, they are not investors, they are squatters.
The rest of us will get the bill for that, too.
“The rest of us will get the bill for that, too.” This is true!
I also wonder where all the “squatters” are going to relocate to once the homes they never should have been in are finally foreclosed upon. The apartments they should have been living in are facing foreclosure because those who should be renting them were handed homes along with their welfare checks. (Yep…I know that’s going to get some flack from some of those who lurk on this board.) But, this is a reality….mult-family housing units are facing foreclosure because their tenents are–at the moment–in homes they can’t afford to keep. Imagine how many people will be homeless once they’ve been foreclosed upon themselves, and their former apartment complexes have all closed up due to a lack of renters. Way to go ACORN!
Cosmo, Sage. Have you any facts on how many squatters you are talking about? I mean, real numbers, and not numbers which are the products of someone’s fevered imagination?
Kurt, what happened to the new agency recommended by the Bush Administration? Did the Republican controlled House and Senate pass it?
So Barney Frank was either lying or he was just honestly ill-informed. But where is your condemnation of the Republicans who knew what was going on, but did little to stop it?
Barney Frank ill-informed? No, that would be impossible unless he just didn’t read the reports or listen to anything that was said.
The Republicans did not “control” the Senate in any practical sense of the term so it’s not fair to pretend that they could have done anything without significant help from the Dems. There’s this irritating Senate rule called the filibuster. Maybe you’ve heard of it?
The Repubs repeatedly warned about the crisis and tried to draw attention to the problem. The Dems stifled those warnings. This is a Dem albatross. Own it.
When was the last time Dem Senators staged a filibuster, buster?
And on what issue?
Why filibuster when you can just turn off the lights and cameras and go home?
Doran,
In regards to the squatters, those who don’t take ownership and trash the homes, it is a common problem that landlords face in low income housing. I saw it among my co-workers who illegally (had the manager lie about the number or hours they worked) qualified for free or low-rent housing. As for the number of homes provided through the current “affordable housing” disaster that will need to be refurbished before selling, that’s a number we’ll likely never see. It may be that the tax payers don’t have to refurbish them, but that less of the bailout money will be recovered because the homes will bring less at auction due to the amount of work they will require before being able to inhabit them or turn them.
If you’d like to get a feel for it, get a realtor to take you to view foreclosed properties in an urban area. In the last couple of years, I’ve viewed a number of these homes as we’ve contemplated moving back into the city. Lots of them are trashed…holes in walls, a stench coming from the carpets, laminate pulling off the counter tops, caulking pulling out from around the sinks, flooring peeling back around doorways…things you don’t often see in the homes of those who actually worked for and earned the American dream of home ownership.
As for the multi-family housing crisis, I don’t have much time to spend on research right now, but if you believe it isn’t true take the time to do the research yourself. I was just looking at this issue the other day, after reading an article about “what to do if the apartment complex you live in is foreclosed upon.” My little sister manages several LARGE units in the SF Bay Area, so the topic was of interest to me. I will give you links to the sites that I’ve been able to quickly relocate:
“We were initially surprised to discover that what was bad for (single-family) housing was not good for multifamily housing, either,” said Nick Ingle, director of capital markets at Hendricks & Partners, a Phoenix-based company that specializes in multifamily transactions nationwide.
“There are an estimated 22,000 empty apartments in the Valley (Phoenix), researchers say.”
http://albuquerque.bizjournals.com/phoenix/stories/2008/09/29/focus1.html
I know that the Houston area had been facing something like the 5th consecutive quarter in dropped multi-family housing occupancy rates. You might try researching that one.
As of last week, in just FHA foreclosures (which doesn’t include traditional and other forms of private financing), there were 6 multi-family complexes, for a total of 760 individual home units, currently listed for auction. That list should update tomorrow, although it may not have changed much since last week since the lenders are holding their breath waiting to see what bailouts will be done.
http://www.hud.gov/offices/hsg/mfh/pd/mfplist.cfm
There were a number of other articles I came across last week, but right now I need to get back to my life.
Giving Barney Franks credit for being “honestly ill-informed” about the abuse of Fannie Mae is a bit like giving Joseph Goebbels credit for ignorance about Krystallnacht or Auschwitz. Not a credible claim.
In reply Doran’s question, when did a Democrat last stage a filibuster.
The answer is no more than two years. When Democrats are in control, as they have been the last two years, of course they don’t filibuster; they don’t have to.
But Democrats filibustered a number of Bush appointments to the federal bench as recently as 2006. It has been used by Democrats on too many occasions to note.
From Wikipedia: “On May 23, a group of 14 senators dubbed the Gang of 14 — seven Democrats and seven Republicans — led by John McCain (R-AZ) and Ben Nelson (D-NE) brokered a deal to allow three of Bush’s nominees a vote on the Senate floor while leaving two others subject to a filibuster. The seven Democrats promised not to filibuster Bush’s nominees except under “extraordinary circumstances,” while the seven Republicans promised to oppose the nuclear option unless they thought a nominee was being filibustered that wasn’t under “extraordinary circumstances.” Specifically, the Democrats promised to stop the filibuster on Priscilla Owen, Janice Rogers Brown and William H. Pryor, Jr., who had all been filibustered in the Senate before. In return, the Republicans would stop the effort to ban the filibuster for judicial nominees. “Extraordinary circumstances” was not defined in advance. The term was open for interpretation by each Senator, but the Republicans and Democrats would have had to agree on what it meant if any nominee were to be blocked.
*Senator John Kerry led a failed filibuster against Judge (now Justice) Alito in January 2006, calling Alito’s nomination an “extraordinary circumstance.”*
So in case there is any doubt — the tactic is used by the minority party as a last ditch effort to block the majority. Both parties have always used it. And still do, according to their relative positions in Congress.