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.