In the Arena

Barney Frank for Senate?

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I’ve known Barney for more than 40 years and he’s been a terrific public servant, with one exception: his non-oversight of FNMA (Fannie-Mae) as House Banking Committee chair. That should eliminate him from consideration as even a temporary Senator.

Barney is smart and clever, and very funny. He has fought the good fight on issue after issue. But he went AWOL when it came to Fannie-Mae and Freddie-Mac, the two semi-sorta-but-really-not-non-governmental mortgage banks whose cheesy practices led to the raft of ridiculous and crooked mortgage lending that, in turn, led to the Wall Street speculation that led, in turn, to the Great Recession.

Frank’s initial rationale was a good one: home ownership is a good thing. As many Americans should own homes as is economically reasonable–but not every American. As Gretchen Morgensen and Joshua Rosner write in Reckless Endangerment, Fanny and Freddie began pushing the limits in the late 1990s, backing sub-prime mortgages, mortgages without downpayments, mortgages without any research at all into whether individuals could reasonably pay for the houses that they were trying to buy. Its executives pulled massive salaries and bonuses–and made massive campaign contributions.

Both Barney and Chris Dodd, his Senate counterpart, enjoyed the largesse and looked the other way–and worse. Frank secured a job at Fannie-Mae for his partner. Dodd received a sweetheart loan from the mega-sleazy Angelo Mozilo, the scoundrel in charge of Countrywide Mortgages. Neither of them took the massive Fannie and Freddie housing abuses seriously enough to investigate. Even if we want to be kind, that kind of negligence argues against any further Congressional service for Frank–not even the temporary appointment to the Senate to replace John Kerry until a special election can be held. Indeed, the Dodd-Frank era of federal oversight–including the actions of new ranking Democratic member of the House Financial Services Committee, Maxine Waters– should be the subject of a Congressional inquiry.

Democrats have a special responsibility to rigorously police the government programs they favor. In the midst of a long and thoughtful career as a politician, Barney Frank sadly neglected this duty–and helped caused an economic calamity that wiped out the life savings of millions of people he claimed to represent. He shouldn’t be rewarded for that with a Senate seat; quite the opposite, he needs to find a way to make amends.

57 comments
Sparky15
Sparky15

Whoa, Joe! Thanks for being "Frank". You hit it exactly on the head; much of the debacle with Fanny/Freddie was because of the criminal negligence of Dodd and Frank.

It's a shame -- I was once a Chris Dodd fan,  but having worked in the mortgage banking business, I knew that their personal finances didn't pass the smell test. The moral hazard built into some of the more esoteric offerings resulting from their policies -- above par loans, seconds on amenities and furnishings, financed closing costs, "shopped" appraisals, interest only -- meant that  a good number of the loans started out underwater or never had any real owner equity to keep the borrower honest in the first place.

Locally, we had examples of how bad things could get. One was a borrower with a $34,000 annual income who was qualified for a loan on a $300,000 house.  The case ended with the borrower losing the home, murdering his family, then killing himself. But, hey -- somewhere along the line, someone made money. Who could have predicted things would end this way? Another local impact was the forced merger of one of the largest banks in the nation with another, and the loss of thousands of jobs from our city's economy to San Francisco's.


tiredofbarney
tiredofbarney

How about barney frank for "voted completely out of office"?  There's a campaign I'd donate to!

tiredofjoe
tiredofjoe

Here's Joe Klein, totally bashing the wrong entities and people in the mortgage lending meltdown, cravenly trying to position himself for some scintilla of neutrality for his next attempted bestseller on same subject.  Pathetic.  If you want to be a novelist, go for it; but stop pretending to be a journalist, or vice versa.

tok713
tok713

So liberals attack fellow liberals when one of their own is criticized (mildly at that). Glad to know you don't save all your vitriol for those who pay taxes and love their country. Congratulations! It's that type of politics that has kept you in power and assure the cessation of greatness in this nation. Now...post your hateful comments.

TimB.
TimB.

Here, here! Nice to see someone placing the blame for the collapse where it belongs: with the House and Senate, but especially Democrats that threatened the banking industry into making irresponsible loans. These same "representatives of the people" have spent the last few years excoriating the banks for doing exactly what was demanded of them so that the population in general would not turn those truly responsible out of office.

JoeCogan
JoeCogan

Umm, I don't understand the reasoning here, Joe Klein. Wouldn't Barney Frank be in a much better position to make amends as a Senator than as a private citizen?

notLostInSpace
notLostInSpace

OMG Joe, you are so hung up on your inquest ideas for Frank, Dodd, etal.  Probably Bengazi too.  You would find some of us more receptive if you were a little more inclusive of the mistakes made by Republicans.....WMD....Valerie Plame....Heck of a job Brownie......Ken Starr spending $50 million on a vendetta... Tom Delay.....Mark Foley.....Cheney's energy "task" force.    I'm for fair investigations, not witch hunts meant to embarass the other side.  Of course, never gonna happen, Washington can't even agree how to put butter on bread. 

notLostInSpace
notLostInSpace

Where was JK when the housing bubble and ensuing crisis happened?  I don't know where he was, don't know where I was, probably refinancing my house :)   This argument is irrelevant.  If we decide someone is not qualified because he screwed up, then no one will be eligible (show me a perfect politician!).  BF is not only the right guy, he is the perfect guy (Massachusetts liberal, no future plans, no job to quit, and knows all the players, the rules, and the issues).  One final thought, are we better off with someone we know or an unknown?  If we stick with the simple idea that the man is there to represent the state and the party then who could be better?

sacredh
sacredh

Barney was negligent in his oversight, but he has done much good on other issues. One strike does not mean he's out. If we looked closely at every member of congress, we'd find many reasons to exclude them all from serving.

smorkingapple
smorkingapple

This article is one big bag of fail. Klein obviously has no idea how securitization works or how Fannie/Freddie played into that. Frank deserves plenty of criticism for his oversight as the real estate debacle occurred but given that he was part of the minority party at a time Wall St was humming and no one cared about rocketing home prices, does anyone think he could have turned into Eliot Spitzer and taken on Wall St? Get real... 

jmac
jmac

Wow.  Fanny and Freddie were playing around with derivatives?  They were bundling toxic loans and selling them secretly under the table to each other?  Why don't I just tune in to Fox?  Or listen to Limbaugh?  We wonder why we repeated the late 20's and early thirties, then we come on Swampland and read Christopher Matthews saying Congress is going to be tough on Dimon and we read Klein and - now we know.  Repeat, rinse, repeat - and weep.   

grape_crush
grape_crush

> the raft of ridiculous and crooked mortgage lending that, in turn, led to the Wall Street speculation

Got that reversed, Joe. Fannie and Freddie were playing catchup with the commercial banks, not leading the way.

> Neither of them took the massive Fannie and Freddie housing abuses seriously enough to investigate.

Fannie and Freddie were not the heavy players in the subprime market, Joe. Neither were the Dems in the majority in the mid 00's, leaving Frank in a poor spot to be calling for an investigation. 

Yes, Frank was lobbied hard by Fannie and Freddie. That part isn't good. But the housing crash would have happened even if Fannie and Freddie had no subprime positions at all.

Joe really needs to work on his punditry when it comes to domestic issues. He's showing little expertise on these subjects or just doesn't have the time to learn the relevant facts.

Ivy_B
Ivy_B

Thanks Paul and Shepherd, as soon as I read the bit on the front page about this I knew I would have to wade in and say, "But wait, that's not quite all there is to it" and you two did such a good job, I can go read my novel for a while!

jmac
jmac

@tiredofjoe He knows not the meaning of "de minimis" or he's just a greedy Gus.   Hmm.   Possibly both.   

jmac
jmac

@sacredh Hagel is pure as driven snow.  Just ask Klein.  

Sparky15
Sparky15

@TimB. "Threatened" is the right word. CRA was used to threaten banks into making loans where they never should have.

JohnLubeck
JohnLubeck

@TimB. TimB. - Your inane and ludicrous comments have nothing to do with fact, common sense or logic.  You are a true Republican.  If Joe Klein has his facts correct, then remove Barney Frank.  Chris Dodd has already paid a price.  But take your absurdities and leave the country so that the rest of us can use factual information to make decisions. 

bobell
bobell

@TimB. Thank you for regurgitating the Fox News talking points.  Too bad you didn't follow Pnnto's link first.

mrbomb13
mrbomb13

@JoeCogan 

Joe Klein's reasoning is that Frank exercised lax oversight while he worked on Capital Hill in the past.  Given that prior laziness, Klein believes that Frank should not be allowed back in the Senate.

tiredofbarney
tiredofbarney

@notLostInSpace each and every reason you cite is an excellent reason (and AMPLE reason) to send barney frank home.  This isn't about him screwing up, it's about him INTENTIONALLY hosing the housing market and bullying the lenders into loaning money to people who had no business borrowing as much as they did.  Maybe there was some irresponsibility on the part of the banks, but if an adult (read: person in charge) offers a kid an unlimited supply of candy and the kid eats until he pukes, was it the kid's fault or the adult's?  What if the adult *encourages* the kid to eat more candy, even when the kid's clearly had enough?  No, frank didn't have the best interests of the nation, the market, the lenders, or the borrowers in mind his whole career; he should be put out to pasture ASAP.

Dachman
Dachman

huh? you are lost in space, so by your estimation we shouldn't get rid of anyone because they all make mistakes and at least we know what we have.

If someone screws up and is not getting the job done, fire them!!! They are not flipping burgers they are running our country...no room for error!

Chosun1
Chosun1

Yes, everyone makes mistakes BUT Barney Frank was negligent on the biggest issues facing the committee he chaired and then had the audacity to wag his finger at the very people he was either (1) not watching closely or (2) gettin favors from.  By-the-way, his whole Dodd-Frank re-regulation was basically ghost written by a handful of banks sitting on Wall Street.  Isn't it ironic that the two biggest scoundrels on the Hill involved in creating the mess are the ones with their names on the legislation that is supposed to help clean it up -- putting Barney Frank in the Senate is like putting the fox into your hen house after it just got done ripping up your neighbor's hens.

TyPollard
TyPollard

@sacredh 

If only journalist were held accountable and shunned for malpractice..

Chosun1
Chosun1

Frank had oversight over the GSEs and encouraged them to step on the securitization gas pedal.  More houses!  More homeowners!  More fat checks for Barney's buddies.  More political contributions and favors for Barney.  Good times.

Paul,nnto
Paul,nnto

@Ivy_B Ivy, as is often the case, comments > original post.

Which has been the true value of Swampland over the years. At least for me. 

kbanginmotown
kbanginmotown

@Paul,nnto Thank you for this link Paul. Great article. (Esp. the data on the global housing bubble.)

*sigh* Once again, Joe had neither the time nor financial expertise to figure out who was right and wrong in this situation...

shepherdwong
shepherdwong

@mrbomb13 @JoeCogan Klein also believes that Fannie-Mae was at the heart of the mortgage speculative bubble, which is how he debases his own opinion on any such matters.

notLostInSpace
notLostInSpace

@tiredofbarney @notLostInSpace  "maybe there was some irresponsibility".....yeah, like more than some, ALL.  I was in banking for 20 years; when you make a loan you own it.  Oh, I'm sorry, the whole housing market thing collapsed because some poor black people got loans that they should not have........that is one of the huge lies that the poorly informed love to cling to....those same poor folks with their Cadillacs, food stamps, big TVs.  Convenient that the right wing set wants to leave out the criminality, not yet prosecuted but should be, of why they were sold variable and/or no doc mortgages, or how much money (and criminality again) took place in the marketization, and/or the exploitation with derivatives.   One of the reasons we cannot fix problems is because people now have their own "facts", much of it nonsense promoted by one cause or another (on both sides). 

bobell
bobell

@Dachman I can think of several dozen Tea Partiers in the House who would lead the Exodus.  Would that make you happy?  (It would make me happy.)

kbanginmotown
kbanginmotown

@PaulDirks @grape_crush Our friend, @shepherdwong, found the link to Glenn Greenwald's column at Salon.com in 2007. Money graf:

(GG)The result of all this “(JK)nosing around”: “(JK)I’ve reached no conclusions.” 

(GG) And he then unleashes this:
(JK) I have neither the time nor legal background to figure out who’s right.


(GG) That’s been the point all along (although one doesn’t need “legal background” — just basic reading skills and a molecule of critical thought).

Sadly, Greenwald's links to Joe's column and our Swampland comments are all broken.

(GG) http://www.salon.com/2007/11/26/klein_3/

(Joe's Original Column) http://www.time.com/time/magazine/article/0,9171,1686813,00.html

(Dan Gillmore blasting Klein) http://citmedia.org/blog/2007/11/26/shameful-journalism-by-time-magazines-joe-klein/

grape_crush
grape_crush

Well, yours, maybe. :)

It's a fun line to pull out when Klein posts whatever the Beltway wisdom is at the moment instead of actually doing a little homework.

mrbomb13
mrbomb13

@shepherdwong @mrbomb13 @JoeCogan 

Frank's lax oversight causing the mortgage speculative bubble was precisely my point (I had stated it rather generally).  I also agree with your comment on said debasement.

tiredofbarney
tiredofbarney

@kbanginmotown @bobell @Dachman mccain's a senile old fossil and should be checked into the same retirement home as frank.  Let 'em share a room, for that matter; maybe we could save some money, finally, and recoup some of our losses by having 'em bunk together.

kbanginmotown
kbanginmotown

@bobell @Dachman Senator John McCain was one of the "Keating Five", not that that stopped Joe's man-crush on him... 

sacredh
sacredh

"Fortunately, we all remember"

.

Remember what? I forget.

kbanginmotown
kbanginmotown

@Paul,nnto @kbanginmotown Provided he bases his opinions on, you know, facts (like the ones in your link), and not on the Conventional Wisdom or GOP talking points...