Barney Frank's Fannie and Freddie Racism Regarding the Financial Crisis

There's plenty of blame to go around on the financial crisis—but criticism isn't racism.


Rep. Barney Frank, chairman of the House Financial Services Committee, is doing his best to outshine Joe Biden in the silly comments department. As the Associated Press reports:

Frank said Monday that Republican criticism of Democrats over the nation's housing crisis is a veiled attacked on the poor that's racially motivated....

"They get to take things out on poor people," Frank said to a mortgage foreclosure symposium in Boston. "Let's be honest: The fact that some of the poor people are black doesn't hurt them either, from their standpoint. This is an effort, I believe, to appeal to a kind of anger in people."

Frank's comments are in response to widespread criticism of Fannie Mae and Freddie Mac, the two government-backed mortgage-bundling giants that played fast and loose with both risk and their bookkeeping.

Among serious people, there's little doubt that the policies and ultimate collapse of Fannie and Freddie were a leading cause of the current crisis. Indeed, that's why Fed Chairman Ben Bernanke on Tuesday specifically called them out at "cases in point." As he said, "The Federal Reserve had long warned about the systemic risks posed by these companies' large portfolios of mortgages and mortgage-backed securities, as well as the problems arising from the conflict between shareholders' objectives and the government's goals for the two firms."

As Bernanke's comments illustrate, Fannie-Freddie criticism is hardly the special provenance of Republicans. Feckless lawmakers of both parties have a lot to answer for in failing to rein in the siblings. But chief among those lawmakers is Barney Frank, who kicked hardest against prescient reform efforts and pushed hardest in expanding Fannie and Freddie's risk-taking. (See here for more.)

But, suddenly, to criticize his poor judgment amounts to racism?

Frank's argument is as tacky as it gets, and it's yet another measure of what a political buffoon he is. But if Frank insists on finding a racist angle to the catastrophe, he might reflect that it was his own actions that drove poor, black homeowners to financial ruin. And it is the lawmaker's critics who now vow not to let it happen again.