If you listen to Rep. Barney Frank (D-MA) defend his role in the meltdown of Fannie Mae and Freddie Mac, he was just as blindsided as the rest of us when the two government sponsored enterprises collapsed, triggering the financial crisis.
Frank has been peddling this fiction ever since the economy collapsed in September 2008. But as the The Boston Globe notes in a new, devastating article published on October 14, not many people are buying Frank’s lies anymore. And Frank knows it. He’s facing a surprisingly tough reelection fight, so he’s on an apology tour through the media to save his seat. (Judicial Watch does not endorse or oppose candidates for public office.)
Here’s an excerpt from the Globe piece (although I highly recommend you read the article in full):
When US Representative Barney Frank spoke in a packed hearing room on Capitol Hill seven years ago, he did not imagine that his words would eventually haunt a reelection bid.
The issue that day in 2003 was whether mortgage backers Fannie Mae and Freddie Mac were fiscally strong. Frank declared with his trademark confidence that they were, accusing critics and regulators of exaggerating threats to Fannie’s and Freddie’s financial integrity. And, the Massachusetts Democrat maintained, “even if there were problems, the federal government doesn’t bail them out.”
Now, it’s clear he was wrong on both points…
Here’s the thing. Frank wasn’t wrong. He was lying.
Frank claims that he “missed” the warning signs with Fannie and Freddie because he was wearing “ideological blinders,” which was just his lame attempt to blame Republicans. But we all know he didn’t miss them. He just chose to ignore them.
Judicial Watch uncovered documents last year proving that members of Congress, including — and perhaps especially — Barney Frank, were well aware that Fannie and Freddie were in deep trouble due to corruption and incompetence and yet they did nothing to stop it.
Remember this statement by Frank during a hearing on September 10, 2003, before the House Committee on Financial Services considering a Bush administration proposal to further regulate Fannie and Freddie?
I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis. We have recently had an accounting problem with Freddie Mac that has led to people being dismissed, as appears to be appropriate. I do not think at this point there is a problem with a threat to the Treasury.
I don’t think there was any question Frank knew then that there was a threat to the Treasury. But let’s say, just for argument’s sake, that you happen to believe Barney Frank honestly “missed” the warning signs in 2003 and 2004. What about 2008?
According to the Globe story:
In July 2008, then-Treasury Secretary Henry Paulson called Frank and told him the government would need to spend “billions of taxpayer dollars to backstop the institutions from catastrophic failure,” according to Paulson’s recent book. Frank, despite that conversation, appeared on national television two days later and said the companies were “fundamentally sound, not in danger of going under.”
Unlike 2003 — when, Frank said, he didn’t realize what was going on — this time, he was deliberately trying to reassure the public, he said.
“It was part of a conscious strategy to say to people, ‘Hey, look, we think we can handle this,’” he said. “It didn’t work.”
Less than two months later, the government seized Fannie and Freddie and the bailout began.
And it hasn’t stopped yet. Just yesterday, we learned that the Obama administration projects losses on the two entities could approach $363 billion. And there is no upper limit to taxpayer losses over the long term.
I find it pathetic and insulting that Barney Frank, the consummate Washington insider, would try to “play dumb” with respect to corruption at Fannie and Freddie. He knew what was happening at Fannie and Freddie. He actively blocked attempts to reform the institutions and then lied, by his own admission, to the American people about the whole sordid affair.
Frank’s unwillingness to hold Fannie and Freddie accountable has nothing to do with wearing “ideological blinders.” It has to do with Frank’s “ethical blinders.”