BARNEY FRANK'S POWER: WITH HELP FROM FELLOW DEMOCRATS HE CAUSED THE WORLD FINANCIAL CRISIS
We have detailed on several occasions that the present worldwide financial crisis can be traced to Democratic housing policies encouraging and then requiring banks to make mortgage loans to people who really couldn't afford them. Present in the early stages of the drive to force banks to make such loans was Barack Obama, then a schooled community organizer training ACORN operatives in Chicago how to intimidate banks and bankers into making loans they shouldn't. That was back in 1991. Obama-supporting ACORN was among the organizations that pressed the Clinton Administration to toughen up the penalties on banks that "weren't making enough" subprime loans. (ACORN worked for Obama in his first run for Illinois Senate in 1996.)
Understandably, banks didn't want to make loans that had a strong chance of going bad. They wanted to get rid of them. So ACORN spent tens of thousands of dollars lobbying Fannie Mae and Freddie Mac to buy up subprime loans and sell them around the world as U.S. government securities. Also pressing Fannie and Freddie was Barney Frank, Democrat of Massachusetts, and the top Democrat in the House of Representatives on financial matters. Subprime loans rocketed from 2% of total mortgage loans in 2002 to 30% in 2006. Internal reports at Fannie warned that Fannie was getting in too deep with these risky loans, but top brass ignored the warning as Congressional Democrats led by Frank and Democratic Senator Dodd of Connecticut urged them to buy up more.
The demand for housing mushroomed with all the mortgage loan availability. In 2003 President Bush called Congress to rein in Fannie and Freddie, but Democrats led by Frank said everything was fine and no new regulation was needed. Senate Repubicans pushed legisation in 2004, 2005 and 2006, but again Democrats led by Barney Frank said all was peachy keen and no new regulation was needed. All told, Frank and fellow Democrats blocked reform efforts in 2003, 2004, 2005 and 2006. (In 2005 and 2006 Obama was in the U.S. Senate supporting Democratic efforts to block Fannie/Freddie reform. Obama in just two years became the number two recipient of Fannie/Freddie campaign contributions of all time. They must have known he was present at the creation of the subprime mortgage loan boom that resulted in many millions of bonuses for Fannie/Freddie top officials as business skyrocketed.)
The sorry tale is detailed in, among other places on this site, here. The housing bubble collapsed, subprime mortgage loan defaults exploded and rippled through Fannie and Freddie securities around the world. Financial panic ensued, all triggered by the subprime mortgage mirage dissolving.
Yesterday Rush Limbaugh reported that Barney Frank had appeared on MSNBC to discuss the financial crisis and how it all started. In many interviews, Frank had shamelessly blamed it all on Wall Street greed. Now Frank gave Joe Scarborough a different view. Limbaugh's transcript follows:
RUSH: Barney Frank. I want to go to yesterday's audio sound bite roster. Actually, we have stuff from today and yesterday. Yesterday he was on with Chris Cuomo on Good Morning America, and I'll tell you, Barney is getting more and more contentious with his buddies. I mean, the people in the Drive-By Media are Barney's buddies, and he's getting contentious with them, often for no reason (which means he's defensive). But first from MSNBC today, Joe Scarborough's morning show. Scarborough said, "How do we stop the next big bust on Wall Street? We had the '87 crash. We had the Asian crash. We had the dotcom crash and the telecom crash, and now we got the housing bubble crash." I'll tell you the next crash. I just said, folks. We are insane. It was just two months ago that we learned that massive debt that can't be repaid causes bubbles to burst big time. And now we've got trillion-plus dollar or trillion-dollar deficits, promised by Obama, for years. So that's the next one to bust, and Scarborough is asking Barney Frank, "How do we figure out what the hell we're doing on Wall Street?"
FRANK: It's not deregulation. That was not the problem. It was the failure to adopt new regulation for a new phenomenon, the securitization. The biggest part of this problem was subprime loans: money lent to people to make them homeowners who couldn't afford the loans, who should not have been considered to be, in many cases, capable financially of homeowning. Now... Eh... You've gotta recognize reality. We have begun to adopt legislation to prevent that. We can stop the last problem from recurring. Nobody can know what the next problem will be.
RUSH: This is... (laughing) He created the problem! This... Folks, this is more than chutzpah. He created the problem. This is a sound bite that gets you out of your chair. I don't believe I just heard this. He created it. His definition of "affordable housing" was to make sure that people who couldn't pay the loans back got the loans, the mortgages. He forced Fannie Mae, Freddie Mac to do this. ACORN was involved, Obama's group. This was a Democrat Party operation through and through! Instead of answering questions from Joe Scarborough, Barney Frank ought to be answering them as a witness before some other congressional committee. So now we have begun to adopt legislation to prevent this? (laughing) All you can do is laugh. I know some of you people are put out with me because I'm laughing at this, but what are we going to do? You can't go through your life angry all the time like the liberals do, but this...
Trillions of dollars have been lost as a result. Most 401(k)s and other savings have been decimated. Retirements are being postponed. Housing values have shriveled. People have lost their homes. And who was responsible? Know-it-all do-good Democrats who ignored the realities of economics.