In the wake of the Fannie Mae and Freddie Mac debacle, I took to task Rep. Barney Frank (D-Mass.), the chairman of the Financial Services Committee, for his fanciful memory of efforts to reform the housing-mortgage giants. I felt that Frank's recent remarks wrongly assessed blame and aggrandized, if not contradicted, his own response when red flags were raised about the siblings' financial health several years ago.
Frank took exception to my characterizations and asked to be allowed to respond. Here is my original post, and below is Frank's rebuttal:
Sam Dealey's recent blog post, "Barney Frank's Fannie and Freddie Muddle", on September 10, 2008, stretches the truth beyond recognition to attack me. While I will use the remainder of this blog post to refute, and therefore tell the truth, of my involvement with the regulatory oversight of Fannie Mae and Freddie Mac, I am very curious as to why Mr. Dealey did not reach out to me to find out the truth. I assume for some Washington, DC, based editorial writers it is easier to make assumptions—however wrong—and make accusations based on those wrong assumptions rather than to make a simple phone call.
Mr. Dealey points to comments made by former Treasury Secretary John Snow as evidence that reform of the Government Sponsored Enterprises of Fannie Mae and Freddie Mac were "called" for by the Bush Administration as the basis for the attack against me, but please note he does not list GSE reform as an accomplishment of Mr. Snow's tenure at Treasury or the first seven years of the Administration—that did not happen until the eighth year of the Bush term when a bill that I authored was enacted into law. The President and Mr. Snow failed to deliver—even when their party was in charge of both houses of Congress.
Dealey then cites comments I made in 2003 that the GSEs are not in trouble as evidence that I did not support reform. Wrong. I supported reform then, I support reform now and I delivered. Dealey also fails to report that the Bush Administration did not support the reform efforts of Republican former House Financial Services Committee Chairman Mike Oxley, who recently told the Financial Times that the White House gave him "the one-finger salute" for his efforts to bring about GSE reform.
I also supported—with major opposition from the Bush Administration and their conservative Congressional allies—a tough federal law against predatory lending, and I urged then-Federal Reserve Chairman Alan Greenspan to write regulations based on the Home Owners Equity Protection Act passed by a Democratic Congress in 1994. Those regulations would have outlawed many of the irresponsible lending practices that fueled the housing bubble and now threaten the entire economy. His successor, Ben Bernanke, issued these regulations last July after seeing the economically disastrous impact of an unregulated market. If we had a predatory lending law and had Greenspan acted on authority he was given, we might have avoided the subprime crisis entirely. The Democratic majority also delivered, with the help of our Committee's Ranking Member, Rep. Spencer Bachus (R-AL), on a mortgage reform and anti-predatory lending law in 2007.
In addition, the author points to the fact that I voted against GSE reform in 2005, but does not tell readers why. The Republican majority inserted language at the last minute that would prohibit religious organizations from participating. The Catholic and Lutheran churches, and many others, sponsor some of the best not- for-profit housing development organizations in the country. It is only because of this ridiculous action by arch-conservative Republicans that I cast my vote "no". It was not because I was opposed to tougher regulations and oversight of Fannie Mae and Freddie Mac.
The House Financial Services Committee, which I chair, moved aggressively after we took over as the majority party in January, 2007, and passed GSE Reform in March of 2007. We worked cooperatively with Treasury Secretary Hank Paulson to strengthen the bill and the full house voted for GSE reform in early May 2007. I also proposed to Secretary Paulson that we include GSE reform in the stimulus package passed by Congress in January 2008, but he declined, citing problems with the White House with this approach. Now, thanks to the efforts of the Democratic majority, and thanks to the work of former-Chairman Mike Oxley, President Bush can finally count GSE reform as an accomplishment.
A simple phone call to my office would have helped Mr. Dealey get his facts straight.