AMAZING, Frank sees Fannie/Freddie Light

[bonnie]

Frank sees Fannie/Freddie Light

Tuesday, August 24, 2010

House Financial Services Chairman Barney Frank finally says Fannie Mae and Freddie Mac must go. Too bad he, and so many other people in power, are so late in conceding the immense damage done, and the continuing perils posed, by those Washington-backed mortgage giants.

Fortunately, though, Rep. Frank's not the only former Fannie and Freddie cheerleader to see the light (see Caroline Baum's column on today's Commentary page).

The uplifting idea behind Fannie and Freddie was to boost home ownership with federally guaranteed housing loans to lower-income Americans who couldn't get them in the private market. The downer reality is that restrictions aimed at minimizing the government's risk were slowly but surely eroded due to ill-advised zeal to maximize Fannie and Freddie mortgage approvals -- even for lousy loan risks.

Predictably, widespread defaults occurred. That "bad paper" contributed significantly to the 2008 housing-market meltdown, which triggered a severe recession with consequences that extend painfully into the ongoing "jobless" recovery.

In 2003, the Bush administration sounded a prescient alarm that Fannie and Freddie were bound for bottom-line trouble and proposed overdue oversight. Rep. Frank, then ranking Democrat on the financial services panel, dismissed that warning, arguing that "the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." He has played repeated variations on that misguided theme through the years.

So it was a welcome, albeit tardy, shift on his part last week when he said on CNBC's "The Kudlow Report": "I hope by next year we'll have abolished Fannie and Freddie."

Rep. Frank explained: "It was a great mistake to push lower-income people into housing they couldn't afford and couldn't really handle once they had it."

He now advocates phasing out Fannie and Freddie's loans and merging them into the Federal Housing Administration.

Some conservatives will be reluctant to give Rep. Frank any credit for this reversal. After all, with taxpayers already stuck with a $150 billion bailout bill for the mortgage behemoths, and experts projecting a potential final tab of $400 billion, he couldn't keep denying the indisputable.

Still, his recognition of Fannie and Freddie's fatal flaws comes better late than never.

So does the spreading realization that giving people mortgages they can't pay is not the path to prosperity.

[phkrause]

It has nothing to do with "light", it has to do with greed, he got all he can out of this and now is letting it die, and guessing the others do also. I would never give him any credit that he's doing the right thing for the right reasons. Can you tell he's not one of my favorite politicians?

I don't have many if any but he's the lowest of all.