News and Politics | October 07, 2008 | 25 comments

Barney Frank's Bankrupt Ideas

source: http://www.ibdeditorials.com/IBDArticles.aspx?id=308185654524278

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vincius
Financial Rescue: Democrats created the mortgage crisis by forcing banks to give loans to people who couldn't afford them. Now Obama and Biden want bankruptcy judges to bail out the same deadbeat homeowners. And once again, Barney Frank is helping.

It's been said that history is a lie agreed upon. Democrats are trying to rewrite history by blaming the Bush administration for the current crisis and claiming that the rescue bill is necessary to save the economy from Republican mismanagement.

Last Thursday on Fox News, when Bill O'Reilly tried to suggest that both parties might share the blame, House Finance Committee Chairman Frank, in a not atypical meltdown, disowned any responsibility for his lack of oversight over the last two years and his complicity before that.

Frank also claimed: "The fact is, it was 1994 that we passed a bill to tell the Fed to stop the subprime lending. We tried to get them to do it." In other words, those rascally Republicans did it all when they took control of Congress that November.

The legislation he spoke of was the Homeowners Equity Protection Act. It was supposed to empower the Federal Reserve to set the rules on mortgages. Problem was, the Clinton administration had its own ideas of what the rules should be.

The Community Reinvestment Act, first passed in 1977 under Jimmy Carter, was intended to increase minority homeownership. It grew out of charges that banks were "redlining" entire inner-city neighborhoods as bad credit risks. Banks now were forced to perform outreach to these areas.


Creditworthiness and due diligence no longer mattered. As a 1999 New York Times editorial observed: "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Bill Clinton administration to expand mortgage loans among low- and moderate-income people and felt pressure to maintain its phenomenal growth in profits."


On Sept. 11, 2003, the Bush administration proposed to Congress a new agency under the Treasury Department to assume supervision of Fannie and Freddie. The new agency would have had the authority to set capital-reserve requirements, veto new lines of business and determine whether the two quasi-government lenders were adequately managing the risk of their ballooning portfolios.

In the vice presidential debate, Sen. Joe Biden said that "what we should be doing now — and Barack Obama and I support it — we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you're paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal you owe."

To get this bill passed, Obama made a lot of phone calls — particularly to members of the Congressional Black Caucus, including caucus chief Rep. James Clyburn — assuring this would happen.

Those paying their mortgages on time don't get that break.

Rep. Elijah Cummings said Obama told him that, if elected president, he would direct a Treasury Department official to work with homeowners in foreclosure to restructure their loans. Cummings said Obama also told him he'd seek changes in bankruptcy laws allowing judges to reduce what borrowers owe on their home loans.

It describes somebody called a "Federal property manager" who "holds, owns or controls mortgages, mortgage-backed securities, and other assets secured by residential real estate."

Not only is Uncle Sam now the world's largest landlord. He can also arbitrarily set the value of property and the amount owed on it at will, thus distorting the free market.

The vast majority of homeowners who pay their mortgages on time get the shaft. They're the ones who'll take up the others' slack.

Why? And why is the Community Reinvestment Act still law?
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25 comments // Barney Frank's Bankrupt Ideas

  • mobclasic1
    • 0
      mobclasic1  

    • " The team also represented Equip for Equality, a group that promotes the rights of the disabled, and four individuals."

      Since it was part of hopefully a larger statement, maby im missing somthing. The disabled, fine. "And four individuals" what is that statement paraphrasing? Four (groups, like 4 specific people, individule's who like what we like) of individuals?

      *I hope this reads loud and clear*

      The government SHOULD NOT fund advertising to voting BECAUSE, advertising is catered to specific demographics.

    • 3 years ago
  • Reverend_Papa_Bear
    • 0
      Reverend_Papa_Bear  

    • Barney Frank is NOT President. He wasn't in 2004 when Fannie & Freddie started showing problems and JC Watts was hawking buying homes using GSE's in an infomercial.

      George BU$H WAS President! It was up to HIM to regulate these GSE's and police them for improprieties! NOT Barney Frank!

      Government 101:

      Congress APPROPIATES FUNDS & LEGISLATES ACTION THROUGH LAW!

      The President EXECUTES those LAWS, and DISTRIBUTES those FUNDS!

      If you WANT Barney Frank to accept responsibilty for this then MAKE HIM PRESIDENT! This was a GOP problem that was thrown at the Democrats doorstep like some ugly child the REPUBLICANS did NOT want to deal with!

      So do not GIVE Barney Frank MORE power than he actually has being in Congress.

      vinicus, I do like the job you have done on this even though I may not agree with it. I will still vote you up on it because, it was thought out well!

    • 3 years ago
  • jscott
    • 0
      jscott  

    • To Walesjames, you wrote:
      "And Barack Obama trained ACORN employees that helped push mortgages on people who couldn't afford them. That is a fact as well. "

      Here's the facts:

      "In 1995, Mr. Obama was on a team of lawyers that represented Acorn in a lawsuit to compel Illinois to comply with federal laws intended to enhance access to the polls. The team also represented Equip for Equality, a group that promotes the rights of the disabled, and four individuals."

      "In fact, the (United States) Justice Department was on the same side as Acorn in the lawsuit, as were other organizations, including the League of Women Voters. Those plaintiffs won the case."

      http://www.nytimes.com/2008/10/11/us/politics/11acorn.html?ref=politics

      If you decide to be against Obama, that's your choice but don't spread fake facts.

      And really folks the banks made money allowing people who couldn't afford mortgages to make the stupid mistake of taking out mortgages. Nobody forced the banks, they were happy to do it because they expected to make money on interest or by selling the credit if the buyers defaulted. The banks oversold to too many who couldn't pay, and that plus other elements overwhelmed the banks as a result overwhelmed all the rest.

      banks were motivated by profit, not political ideology. don't get it twisted.

    • 3 years ago
  • walesjames
  • Pheisty
    • 0
      Pheisty  

    • Whoa whoa WHOA...Now YOU just wait a minute...

      "HUH? Nobody twisted anyone's arm, especially not Congress on the banks. "

      Seriously? I started researching this a long time ago, and there was PLENTY of arm-twisting (or should I say 'quid pro quo') going on in Congress. Take a look at how much money was going into the campaigns of Dodd, Obama, Clinton and Kerry. That will tell you how much 'arm twisting' was going on.

      That's without even getting into ACORN and their lawsuits and threats of lawsuits against banks for not loaning money to low-income people.

      We should just ignore the fact that Bill Clinton expanded the Community Reinvestment Act, making it a quota system for banks, forcing them to make risky loans to unworthy borrowers.

      Let's look past the fact that banks, leery of carrying the liability of these forced loans, sold them off to Freddie and Fannie who were more than happy to take them so that they could dole out astronomical bonuses to themselves, not worrying about failing because they knew all along that they'd get bailed out.

      And let's just forget that Barney Frank was gettin' it on with one of the top guys at Fannie Mae (Frank Moses...look it up).

      Unbelievable. Check your facts before you spout off about something that you obviously have no knowledge of.

    • 3 years ago
  • Liberal_Extinction
    • 0
      Liberal_Extinction  

    • You know what makes me sick about all this bullshit? Deregulation is all well and good and is a true sign of a free society, but the greedy fat kids that ABUSE the deregulation and take unnecessary risks should be allowed to fall flat on their faces when they over extend themselves. 2 groups of people should be out in the cold right now, the banks that approved loans for people who couldn't afford them and idiots that signed mortgages they couldn't afford, F all of them.

      I bought a home in the last year and while we could have afforded/ qualified for a substantially larger and more lavish house we decided not to. We purchased a home that was equal to our annual income. In taking the responsible intelligent approach MY property is now devalued thanks to the greedy pukes at the bank and the dumbasses that had to one up their friends by moving into the largest house they possibly could. What will these idiots learn from this? Nothing of substance whatsoever, the only thing they will take away from this that the government will come to their rescue for being a collosal f#(k up while the responsible people in society suffer for their idiocy. No one should ever be turned down for a loan based on their race, creed, or color but to do a complete 180 and insist that they get to buy beyond their means because of their race, creed, or color is just as assinine. Before any of you liberal pukes start vomitting about racism because of my comment go emo cut your wrists, I know that these liberal policies aren't the ONLY reason we're in this situation but it IS a HUGE contributing factor.

    • 3 years ago
  • alicynx
    • 0
      alicynx  
    • Liberal_Extinction:

      Laws are only in place for the people who follow them. Where on earth would you ever get the idea that a company would act against their best interests (profit margins and their bottom line) in order to do the right thing?? It isn't just that people are dumb and signed up for houses they knew they'd never afford - the lending practices themselves were horribly skewed, and people were being assured that these ARMs were the best thiing for them. How can a lender, in good faith, provide a 30 year ARM to a 90 year old woman?? That woman legally could enter into any contract she chose, and a manipulative asshole can con her out of her home with no repercussions. THERE's the rub.
      Second point - not all of us working poor are kept out of a house because of our income. The fucked up credit reporting system is corrupt, we know this. It routinely misreports people's scores, and it costs time and money to get it fixed; yet this is the major impediment many people have to buying their own home. I have a crap score, but I pay $1000 a month in rent, over $1000 in childcare connected to how far out I live, and on top of that I pay my bills on time, have no real outstanding credit (one card with a balance I pay off nearly every month). I can afford a $1200 a month mortgage, but NO ONE will lend to me. Why? Because my stupid FICO score is too low? Why is that? Because no matter how many complaints I put in, they never correct the mistakes. Who can I complain to about this? NO ONE. What's more fucked up - people who are given loans they think they can afford, only to have them rise exponentially all of a sudden; or not having any chance at a loan at all, even though you know how to manage your finances and could easily handle a mortgage? The ENTIRE system is fucked, and that includes liberals, conservatives, and every fucking elitist bastard on the Hill today. There aren't enough fingers to point at everyone responsible for where we are today, but the first finger ought to point to yourself, for voting those greedy fuckers in to begin with. Period.

    • 3 years ago
  • Liberal_Extinction
    • 0
      Liberal_Extinction  
    • Liberal_Extinction:

      I'll bet 10:1 odds that if your FICO score is THAT low that no one will lend a debt free person money that you have some charged off debts or something else adverse affecting your credit. I work with credit every day, day in and day out. The system is NOT perfect by any means but I can comfortably say that 90+% of the time what I see about you on paper is accurate. Of course everyone has excuses why they have a blemish on their bureau and a story of how this person screwed them over so I just said "to hell with 'em, I ain't gonna pay" but you NEVER win in that situation. The credit bureaus are worth their weight in gold because the one thing they don't have is all the emotional baggage and excuses as to why you didn't pay people that loaned you money. It is simply a YES/NO/HOW MANY TIMES YOU'VE PAID LATE representing your payment history to lenders.

    • 3 years ago
  • rockon
  • walesjames
  • walesjames
    • 0
      walesjames  

    • Nobody's hands are clean. Phil Gramm authored the bill that caused much of this. As far as I understand, the repeal of the Glass Steagall Act allowed the mortgage companies to chop up subprime mortgages and sell them to 'everyone.' The specific repealed sections of the Glass Steagall Act that allowed this to happen are:
      Section 20 - prohibited any member bank from affiliating in specific ways with an investment bank;(I'm pretty sure when this was repealed the chopped up mortgages could then be sold from member banks to investment banks)
      Section 32 - prohibited investment bank directors, officers, employees, or principals from serving in those capacities at a commercial member bank of the Federal Reserve System.

      The repeal was signed in 2000 by Bill Clinton, but it was veto-proof as it passed Senate with over 2/3 votes.
      Over 2/3 votes!!! Crazy.

    • 3 years ago
  • rockon
  • mobclasic1
    • 0
      mobclasic1  

    • "HUH? Nobody twisted anyone's arm, especially not Congress on the banks." seriously ....? like wow, way to do your homework. Check first cuz it hurts to read that

    • 3 years ago
  • mobclasic1
    • 0
      mobclasic1  

    • man liberals run a muck on current. Ill help vincius out here. If your playing the blame game your part of the problem. Its been an agenda of Liberals and moderates to get poor people in homes for nearly 2 decades now, because it sounds good and gets votes. I'll through some names out real quick, congress 93-present, Clinton, Bush, etc. Obviously people who got into adjustable sub-prime loans arn't to bright and definitely got swindled. I think we need to buy up the loans that are decreasing your neighbors property values, re-appraise the loans, and adjust the amortized interest to reflect the interest/principal that would have been paid on the actual value of the home. Also its my personal opinion that Barney Frank should just die, saying that things would be good knowing what he did, shame on him for wasting capital that small investors saved for YEARS to acquire. He is scum. Let me say that again, SCUM. Way to be on their payroll you d-bag. Trickle down economics is sound and all who say otherwise haven't taken economics classes, or at least didn't pass! Ill defend If i'm challenged....

    • 3 years ago
  • alicynx
    • 0
      alicynx  
    • mobclasic1:

      Okay, I couldn't get past your third sentence here; let me explain why:
      "If your playing the blame game your part of the problem. Its been an agenda of Liberals and moderates to get poor people in homes for nearly 2 decades now..."

      Did you just say 'stop blaming each other' and then IN THE NEXT SENTENCE blame liberals and moderates? I don't want to detract from your original statement that liberal views run amok (that's how you spell that word, by the way) here, because they do, but if you want to bolster your own arguments you really ought to make sure you don't directly contradict yourself before the argument even takes off. Just a thought ^_^
      Having said that - please take a minute to release your lips from the cock of Fox News and understand that this isn't about Democrats versus Republicans - this is a class issue, where we, the working class, are getting raped financially by the oligarchy. Point the finger at Barney Frank, by all means, but point the finger also at ALL the other Congressmen because they ALL will make a profit from this collapse. You can point a second finger at McCain rather than Obama because he was involved in the last collapse, of the S&Ls of the 80s. If he'd been a "maverick" back then and told the lobbyists to F off, he'd be in a position to blame - since he "used poor judgement" then, he doesn't deserve the office of the President now.

    • 3 years ago
  • alicynx
    • 0
      alicynx  

    • Woah, wait a minute.
      "Democrats created the mortgage crisis by forcing banks to give loans to people who couldn't afford them. "

      HUH? Nobody twisted anyone's arm, especially not Congress on the banks. The deregulated banks offered bad loans to people - people were stupid enough to sign the paper without understanding the ramifications. NONE of that is the fault of ANY Congressman, R or D. Come on, don't be as gullible as Fox wants you to be, actually read what you're typing.

      "Those paying their mortgages on time don't get that break. "

      If you're paying your mortgage on time, you don't really need assistance in paying your mortgage. The idea is to help people who have been foreclosed on, or are at a very high risk of losing their home. If you've been able to meet your payments, then why do you need to have your interest or principal adjusted? They aren't shouldering anything but their mortgage, that they have managed wisely. Their reward is that they aren't bankrupt, like the people getting the help are. Think this through - should the Fed help people who don't really need it, but want it anyway? Isn't that what the CEOs of the corporations who started this are asking for? What's the difference, aside from the size of the paycheck?

    • 3 years ago
  • alicynx
    • 0
      alicynx  
    • alicynx:

      Oh yeah, and don't put this entire housing crisis on the inner city by saying that the Act forced banks to loan to minorities - not only is that a thinly veiled racist statement, its patently false. Its the homes of the suburbs that cost $400k+ that people are defaulting on, especially in places like Southern California. Its not the color of the skin of the borrower, but the amount borrowed in conjunction with the adjustable rate factor - that was no one's fault but the sketchy loan companies (Countrywide is the best example) and the people who didn't understand what they were getting into. Once again, nobody twisted the arm of the banks into giving out ARMs.

    • 3 years ago
  • phoenixtoo
  • Liberal_Extinction
    • 0
      Liberal_Extinction  
    • alicynx:

      Yea, go ahead kool aid drinkers. No blame left to go around for the idiots that signed a contract without undertsanding it. If you're dumb enough to sign a contract you didn't read it's your own fault.

    • 3 years ago
  • vincius
  • Elevator
  • phoenixtoo
    • 0
      phoenixtoo  

    • Honey, If you think giving the 1% that owns most of the nations wealth a tax cut, and they will throw you a few crumbs and make us any better off,you go ahead. You should be scared, because no matter what government we have ,your poor judgment will not benefit you.If McCain's plans for economy, social security, health care, few and schetchy as they are , don't scare you, wellI'd just be a fool to argue with you (an argument with a fool proves there are two)

    • 3 years ago
  • vincius
    • 0
      vincius  

    • Barney not so frank was on the show by choice.. Fox news is quoted in the article... so your attack is baseless but you knew that..
      Attack messenger or see they did it too is not going to help our country...
      The facts are Barney frank has not accepted responsibility but as you knw and are trying to do blamed others...
      Regarding economy i am scared especially if the community organizer and his buddies get control..

    • 3 years ago
  • phoenixtoo
    • 0
      phoenixtoo  

    • Vinicus it's good to see that you are capable of regurgitating the "information"that Fox news spews and "correctly" forming the opinion they give you. I notice that you do not even bother to investigate the opinions of leading economists,it's much easier to designate someone else to do the tedious work of thinking and you can just swallow it.If you do it quickly you don't even taste the dog crap going down."Heckava job Brownie" Though democrats bear some responsibility, the faults, if you actually go to the effort of doing a little research bear the much greater burden.I fully expected to see a lot of this as McSame has NO plans and the few he does have scare people.

    • 3 years ago
  • clownpuncher
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