I have a low opinion of politicians. Nevertheless, sometimes a politician says something so gallingly untrue, even I can’t believe it. Today is one of those days. I feel like I am in Bizarro world just for typing the next sentence. Rep. Barney Frank (D-MA) says that Republicans are responsible for the failure to reform Fannie and Freddie:
“Low-income home ownership has been a mistake, and I have been a consistent critic of it,’’ said Frank, 70. Republicans, he said, were principally responsible for failing to reform Fannie Mae and Freddie Mac, the mortgage giants the government seized in September 2008.
For those who don’t know Frank well enough to see how absurd this is, here’s a reminder of what Frank said when Republicans tried to reform Fannie and Freddie. (All emphasis mine.)
”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.”
Oh yeah, that really sounds like he’s fighting to reform Fannie and Freddie, and is fighting against low-income home ownership.
The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios.
Best of all, September 25, 2003:
I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.
Yes, let’s roll the dice. It’s only the taxpayers’ money at stake!
And let’s not forget when Frank accepted Fannie and Freddie’s own opinion on whether they needed to be reformed, on September 5, 2003:
Rep. Frank: Let me ask [George] Gould and [Franklin] Raines on behalf of Freddie Mac and Fannie Mae, do you feel that over the past years you have been substantially under-regulated?
Mr. Raines: No, sir.
Mr. Frank: Mr. Gould?
Mr. Gould: No, sir. . . .
Mr. Frank: OK. Then I am not entirely sure why we are here.
(Via Greg Mankiw.)