Barney Frank decides his 2012 re-election is another entity that’s too big to fail.
The coverage of a politician’s announcement of their retirement, not unlike the coverage of their eventual passing, usually reads as an enduring time-capsule. From their fame to their foibles, a few key sentences will forever define a politician who has left the political limelight.
Retiring 16-term liberal Massachusetts Democrat Barney Frank had plenty of fame (fierce conservative critic; first openly gay member of Congress) and foibles (a prostitution scandal that nearly ended his career), all of which were extensively covered by the press as he announced that due in part to redistricting, he was choosing to forgo another run. Yet to read or listen to the mainstream press’ coverage of Frank’s farewell tour, nary a word was spoken or written about what should be Frank’s infamous, enduring legacy:
‘These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
While the media’s hagiography of Frank dominated the afternoon news cycle (CNN called Frank “a teacher” of Congress), others noted that “Fannie, Freddie Lose A Friend In Frank” as Investors Business Daily‘s headline remarked.
His role as the chairman of the House Financial Services Committee during the Great Recession would have defined Frank’s legacy had he been a Republican. Frank’s determined ability to ignore the housing bubble until it was too late to save Fannie or Freddie or avert the financial crisis played a not-insignificant role. And when Fannie and Freddie finally failed, together they accounted for nearly 12 million subprime and other low quality and risky loans (40% of outstanding loans at the time). Most of the loans existed to meet the affordable housing goals that Frank, and others, argued so passionately to protect at a projected cost to taxpayers of $400 billion. But despite being among those in Washington “at the wheel”, outside of a few more conservative publications, Frank has largely escaped the Joseph Hazelwood-esque blame of running the American economy ashore.
Frank’s defenders can rightly point out that he did not become chairman of the HFSC until after the 2006 elections; implying that the Fannie & Freddie reign of error happened solely due to the previous Republican majority. Such a defense gets the dates and times correct, but little else. The expansion of housing lending authority had roots in the 1990s, not the 2000s and had Frank worked with Republican efforts to constrain Fannie & Freddie, instead of insisting that there were no problems, legislation might have been adopted in the early 2000s that could have lessen (not prevented, as some may argue) the financial crisis.
Frank tried to undo his part in the Fannie & Freddie story, telling Larry Kudlow in a 2010 interview that “it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it” while expressing hopes that Fannie & Freddie would soon occupy the dust-bin of poorly constructed governmental program history. Of course, Frank’s preferred methods of “reform” could easily add another $5 trillion of debt to the country’s maxed-out gold card of credit.