You’ll forgive me if I don’t bother hiding my sheer joy in hearing the news that Barney Frank isn’t running for re-election and will be leaving Congress. Even as hyper-partisan liberal Democratic Congressmen go, the man has been a calamity for the country. His relentless pursuit of housing policies that we now know were insane had the effect of bringing misery to millions of Americans-and his authorship of the disastrous Dodd-Frank financial “reform” bill will help assure the misery of millions more for years to come. The man is a petty, partisan, small-minded bully. The country will be better off with him and his toxic ideas out of Washington. Good riddance.
Where to begin? First, perhaps no single individual on the planet bears more responsibility for the creation of the housing bubble and its subsequent collapse than Barney Frank does. As the ranking Democrat on the House Financial Services Committee, he had tremendous sway over federal housing policy, both when he was in the majority and the minority. And he used that sway to terribly misguided ends. In the name of expanding affordable housing, for instance, he, more than anyone else, pushed subprime mortgage lending as official government policy–even to the exclusion of basic lending prudence. In particular, he pushed the GSEs to lower the underwriting standards of loans that they would buy or guarantee, then he pushed the GSEs to grow, grow, grow. And what of the ballooning credit risk to the government that resulted from all this? He simply didn’t care about it. “I do not want the same kind of focus on safety and soundness [in the regulation of the GSEs] that we have in the Office of the Comptroller of the Currency and the Office of Thrift Supervision.,” he famously said back in 2003 as the bubble was inflating. “I want to roll the dice a little bit more in this situation towards subsidized housing.”
Roll the dice! With your tax dollars! Billions of them! Worse, Frank was oblivious to the fact that the Fannie and Freddie were hopelessly undercapitalized and posed huge financial risk to the federal government. He was willfully blind. “[Fannie and Freddie] are not facing any kind of financial crisis,” he said in 2003. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” Could he have been more wrong? For someone who was consistently voted by staffers as the brightest member of Congress, his view of the GSEs was pathetically stupid.
The result of Frank’s efforts: millions of borrowers were given loans they couldn’t hope to repay. Collectively, they lost millions of dollars in outsized mortgage payments-and then lost heir homes, to boot. Millions more are still trapped in their in their houses, now worth less than the amounts they borrowed to finance them. Thanks, Barney!
It gets worse. Once the housing bubble that Frank did so much to engineer collapsed, it was Barney Frank who led the push to overhaul the re-regulation of the financial services industry, in the form of the infamous Dodd-Frank bill. No one yet seems to know what’s in all of this monstrosity-it’s 2,300 pages long, remember-but its best-known highlights will all serve to constrict credit creation and slow economic growth generally. The Consumer Finance Protection Bureau, for example, will drive down availability of consumer debt and make it more expensive. The added layers of new regulation Dodd-Frank puts in place will make many community banks economically unviable and drive them out of business. The Volcker Rule will diminish the breadth and depth of the financial markets. The Durbin Amendment is leading to higher service charges on checking accounts as well as higher minimum deposit requirements.
It goes on and on. The likely result of Frank’s atrocity: constricted credit creation and subpar economic growth, which in turn could mean chronically high unemployment for years to come. Thanks again, Barney!
It is wonderful news that soon Barney Frank will no longer be darkening the halls of Congress. Through his over-the-top partisanship and misbegotten ideas, he’s done the country a lot of ill. The sooner he’s gone, the better.
What do you think? Let me know!