President Bush, John Sununu, Barney Frank, and the Mortgage Meltdown

 Here is an editorial that appeared in the New Hampshire Union Leader today, in it’s entirety:

Jeanne Shaheen is going around the state saying that the crisis on Wall Street is a “function of the Bush-Sununu policy.”

Oh, really?

The primary cause of the crisis was bad home loans. The primary forces behind the home mortgage collapse were Fannie Mae and Freddie Mac, the government-sponsored behemoths that took on far too much debt in bad loans and, by dramatically increasing their purchases of securities backed by high-risk loans, encouraged the lowering of lending standards at other institutions.

In 2003, President Bush proposed a new regulatory agency within the Treasury Department to oversee Fannie and Freddie. Here is how The New York Times described the proposal:

“The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago ….

“The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.”

Note the phrase, “the authority, which now rests with Congress.” President Bush had to propose a new regulatory agency because Congress was not doing its job in overseeing Fannie and Freddie. For his part, Sen. John Sununu not only supported that reform, but twice introduced his own legislation proposing similar increases in federal oversight of Fannie and Freddie.

But here is what Rep. Barney Frank, D-Mass., ranking Democrat on the House Financial Services Committee, said of Bush’s proposal back then: “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Even Fannie Mae and Freddie Mac supported the Bush proposal! But Frank led the Democrats in opposing every effort at serious reform because they wanted to use Fannie and Freddie to push “affordable housing.” What did they mean by that? They meant giving loans to high-risk people who would not normally qualify for regular bank loans. We can now see what a good idea that was.

Barney Frank is the keynote speaker at the New Hampshire Democratic Party’s Jefferson-Jackson Dinner next month. Jeanne Shaheen will be there warmly embracing one of the people most responsible for the current economic crisis while he, she and everyone else covers their tracks by attacking those who saw disaster looming and tried to stop it.

 Banks were forced to take on high risk loans due to liberal political correctness, (and de-regulation that President Clinton signed into law), President Bush tried in 2003 to overhaul the housing finance committee, and Barney Frank said that there was no problem with Fannie Mae or Freddie Mac. And yet this is supposed to be the failed policies of the Bush administration that led to this crisis.

 Democrats never let facts get in the way of a good argument.