A Face To Go With the Financial Fannie Crisis

Presidents Jimmy Carter and Bill Clinton set the stage back in the '70s and the '90s for today's government-Wall Street credit embarassment. But when President Bush and John McCain wanted to reform Fannie Mae a few years ago to prevent such a crisis, one man stood tall to prevent meaningful reform. That man's name is Rep. Barney Frank of Massachussetts.

The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.

The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

...Time and time again, [Barney] Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.

Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess." Well, give the congressman points for gall. Wall Street and private lenders have plenty to answer for, but it was Washington and the political class that derailed this train. If Frank is looking for a culprit to blame, he'll find one suspect in the nearest mirror. _BostonGlobe

On network after network, Congressman Frank appears to explain how it was the unbridled capitalism of Wall Street that caused the contretemps. So, just at the moment that rescue is needed, who but Barney Frank comes riding over the horizon with all the answers? Who indeed.

Oynklent Green [OTC:OYNK] has taken a very strong interest in Congressman Frank. A very strong interest indeed.