Friday, November 20, 2009

Barney Frank Regulation of Fannie Mae and Freddie Mac

I have been doing some research into the origins of the financial crisis and one of the figures that pops up is Barney Frank. I was already familiar with a line of argument that claimed Barney was a stalwart opponent of regulation of Fannie Mae and Freddie Mac that the GOP wanted to use to reign in the Government Sponsored Enterprise's and that might have helped to avert the financial meltdown. However in doing my research I came across a Barney Frank hagiography done by the New Yorker that claimed just the opposite to be the case.

Here is the relevant passage:

In 2005, while the Democrats were still in the minority, Frank contributed to a bipartisan effort to put his objectives—tighter regulation of Fannie and Freddie and new funds for rental housing—into law. At the time, Fannie and Freddie were regulated by a small agency within the Department of Housing and Urban Development; the bill proposed to create an independent agency to monitor their operations. Frank and Michael Oxley, who was then chairman of the Financial Services Committee, achieved broad bipartisan support for the bill in the committee, and it passed the House. But the Senate never voted on the measure, in part because President Bush was likely to veto it.

So what is the truth?

This is where I think things get interesting.

The argument that he was against stricter regulation of Fannie and Freddie stems from the s.190, the Federal Housing Enterprise Regulatory Reform Act Of 2005. This was a Senate bill sponsored by Chuck Hagel and Co-Sponsored by Libby Dole, John Sunnunu and John McCain, all of which are Republican Senators. From what I understand this bill never made it out of committee because Democrats were in lock step against it and few Republicans opposed it as well so it couldn't move out of committee. It could very well be that the Bill could not get the 60 votes needed for cloture and that is why it died in committee. Also from what I understand the Bush administration was fully in support of s.190.

The Frank/Oxley bill referred to in the New Yorker article is in fact H.R. 1461 The Federal Housing Finance Reform Act of 2005. What I don't know but strongly suspect (and seems to be confirmed by a Google Search) is that this H.R. 1461 was the companion House bill to s.190. Here is the thing, Oxley was only a Co-Sponsor and Frank was not a Co-Sponsor as the New Yorker Article seems to hint. In fact the Sponsor and all Co-Sponsors of H.R. 1461 were in fact Republicans. Barney apparently did vote the bill out of his committee, but when it came up for a vote in the House HE VOTED NAY. Funny that the New Yorker didn't mention that little detail.

Before the New Yorker article peddles the notion of Barney the regulator that I quoted it does talk about a Republican attack on Barney as obstructionist and in which we get this incredible leap into cynicism and lies on Frank and the hagiographers part:

“Before we are able to go forward with new and important changes to the over-all regulatory structure for our financial-services industry, I do believe that it is essential that we better understand just how we got into this problem,” Garrett said. “Now, one of the main parts of the problem was poor regulation in the past, specifically in the area of Fannie and Freddie.” According to Garrett, “our distinguished chairman” had no right “to claim the mantle of being a champion of reform with Fannie and Freddie.” On the contrary, Garrett argued, he and other Republicans had wanted to “raise the capital levels, to reduce the retained portfolios, to lower the conforming loan limits.”

Garrett’s accusations were genteel compared with those made by Bill O’Reilly, a few weeks earlier, when Frank appeared on his show on Fox News. “You blame everybody else! You’re a coward!” O’Reilly bellowed. “In any private concern, you’re out on your butt! But not here in the federal government!” Frank, in turn, berated O’Reilly for his “ranting” and “stupidity.” (The confrontation has been viewed more than a million times on YouTube.)

At the hearing, Frank responded testily to Garrett. “The purpose of this hearing was to be forward-looking,” he began. “And I had hoped we could focus on that. But, after the gentleman from New Jersey’s comments in having decried partisanship, he then practiced it. It does seem to me to be important to set the record clearly before us.” Frank pointed out that when Garrett had attempted to tighten regulations on Fannie and Freddie, Republicans had controlled the House. “Had a Republican majority been in favor of passing that bill, they would have done it,” Frank said. “Now he has claimed that it was we Democrats—myself—who blocked things. The number of occasions on which either Newt Gingrich or Tom DeLay consulted me about the specifics of legislation are far fewer than the gentleman from New Jersey seems to think.

“I will acknowledge that during the twelve years of Republican rule I was unable to stop them from impeaching Bill Clinton,” Frank went on. “I was unable to stop them from interfering in Terri Schiavo’s husband’s affairs. I was unable to stop their irresponsible tax cuts, the war in Iraq, and a Patriot Act that did not include civil liberties.” In other words, Frank insisted, if the Republicans had wanted to try to prevent the mortgage crisis, they would have had plenty of opportunities to do so.

The suggestion in the New Yorker that Bush would have vetoed the Bill H.R. 1461 had it gotten to him is ludicrous. It is however highly likely that s.190 could not get the needed 60 votes in the Senate because of Democratic opposition and that is why it was killed in committee. The notion that the Republicans could have brought it up for a vote without Democratic Party support is a lie and Frank isn't stupid.

Update: I have just now found out that Bush preferred s. 190 to H.R. 1461 and made this known. Apparently Oxley wasn't happy about this. But the reason why Bush took that position was because s. 190 was quite a bit tougher than H.R. 1461 which had been watered down to gain bi-partisan support in the House. Would Bush have vetoed H.R. 1461 had it come to his desk? That is highly doubtful seeing how Bush signed the Housing and Economic Recovery Act of 2008, which was a Democratic party sponsored intiative that featured the same idea's as H.R. 1461. The problem with Housing and Economic Recovery Act of 2008 is that it was too little and too late as far as reigning in Fannie and Freddie, the damage was done.

Thursday, November 19, 2009

No Matter Where You Go, There Are You

You must go, follow your star
No matter where you go, there you are
No matter where you go, there are you
So don't let go of what you know to be true

This is the chorus from a truly great song, "No Matter Where You Go, There Are You," by Irish Guitarist Luka Bloom. The story is about a Muslim who flees Algeria and ends up settling in Ireland due to the way Irish music moves him. Full lyrics here.

I think the song works because on a deep level it connects with the inner humanity with it's longing for nostalgia, beauty, music, freedom, and liberty. However, with all that said I am conflicted about the last line in the chorus.

So don't let go of what you know to be true

The problem as I see it is that there is no way around the fact that pretty much all of humanity is deceived in one way or another and "what you know to be true" might be anything but true. I hold to convictions that a great many people outright reject as false and vice versa. Are my convictions really truth or am I just another of the many deluded and deceived? I think I am with most people in the fact that I would prefer not to be deluded or deceived. However, we live in a time and a place where it is an open question whether or not truth exists or matters. Who is to really say if knowing what is actually true is better than being deluded and deceived? Maybe whatever floats your boat is as good as your gonna get, so why not just go with that right or wrong.

You must go, follow your star
No matter where you go, there you are
No matter where you go, there are you
So don't let go of what you know to be true

Monday, November 16, 2009

Rush to War

In the song I Am Not At War Luka Bloom sings "This rush to war was wrong" about the Iraq War. I think many who were and are against that war suffer under a delusion that there was a "rush to war" in Iraq. I think the actual history in the run up to the invasion tells a different story.

This from the blog The Dignified Rant:
And two, there was no "rush to war" in Iraq as the argument deployed by the White House asserts. The national debate lasted about a year from after the fall of Kabul to the invasion of Iraq, and included a Congressional debate and declaration of war and long efforts at the UN that got us a resolution reaffirming post-Desert Storm UN resolutions insisting Iraq prove it no longer had WMD or else. We had a long debate on starting that war, and the so-called "rush to war" was quite possibly the most telegraphed war in history.

And another thing.

People might not think about this or like to hear it, but in my mind it was pretty much inexcuseable for the nations of the UN Security Council to back Resolution 1441, but when the time came to put their money where their mouth was they backed out and would not approve a resolution making it clear it was time for Saddam Hussien to go or face war. I think had a resolution like that been approved than the war probably would have been avoided altogether.

Thursday, November 12, 2009

? Didn't write this but wish I did.

I don't agree with the idea of easing up in Afghanistan. This asymmetrical war is not about crushing the enemy and signing a peace treaty. It's about eroding the enemy's support among the populace and his will to fight.

These comments were made by Original MikeS at JustOneMinute Blog

It may seem counter intuitive to many that we should basically engage in a war of attrition with the Taliban; After all isn't that pretty much the Taliban strategy to beat us? War is expensive and blood is certainly not cheap but the same pretty much holds true for both sides relatively speaking (although to be honest blood is a lot cheaper to them than it is to us.) I may be wrong on this, but I do believe a big part of winning the the Iraq war was about attrition through a collapse of insurgent leadership and finance. Although it will be a bit more difficult I think the same basic path to victory can work in Afghanistan provided that this countries leadership commits itself to the task.

Unfortunately I am not sure Obama is up to this.

Here is a bit more from the same JustOneMinute blog comment section:

So - given the character of our leadership I would follow Tom Friedman, focus on transforming Iraq, and let Afghanistan slide.


Your lack of confidence in Obama is totally justified but with the greatest respect what reason is there to think that al Qaeda and the Taliban will stop at Afghanistan with Pakistan and its nukes next door? John Bolton doesn't think they will settle for Afghanistan and I agree with him.

It sucks when your enemy is prepared to fight for a hundred years.

Afghanistan is going to be extremely difficult to pacify but IMHO the choice here is between bad and infinitely worse

I third the notion that the fight in Afghanistan isn't so much about Afghanistan as it is about Pakistan and their nukes at this point. Pressure on the Taliban in Afghanistan is pressure on the Taliban in Pakistan who are waging a war in that country as well. At this point I firmly believe that keeping the Taliban occupied in Afghanistan keeps the most dedicated anti-western Sunni Jihadists focused on defending that Muslim land instead of on doing terrorism in the West or going for WMD's in Pakistan. Thankfully I think a debilitating weakness in the Jihadist worldview is that defending Muslim territory from the infidel seems to take precedence over pretty much everything else. I feel like the Jihadists are suckers for our military hard target and they just screw themselves when they take out their frustrations of not being able to expel the infidel out on fellow Muslims.