Frank and Paulson image Politico
Barney Frank, (D-MA) the House Committee on Financial Services is apparently responsible for using his influence to prop up yet another failed institution with taxpayers dollars. Frank, who is up for reelection in 2010, is best known for his association and support of Fannie Mae and Freddie Mac, the federal lending giants, who were, in a greater part, responsible for the current financial crisis.
In 2003, several Congressional Representatives and Senators were concerned about the stability of those two institutions, and had called for a review, Frank, who was, at the time merely the ranking Democrat on the Finance Committee, appeared to feel all was well with the lenders: see excerpt here from the New York Times Business Section:
Freddie Mac, whose accounting is under investigation by the Securities and Exchange Commission and a United States attorney in Virginia, issued a statement calling the administration plan a ''responsible proposal.''
The stocks of Freddie Mac and Fannie Mae fell while the prices of their bonds generally rose. Shares of Freddie Mac fell $2.04, or 3.7 percent, to $53.40, while Fannie Mae was down $1.62, or 2.4 percent, to $66.74. The price of a Fannie Mae bond due in March 2013 rose to 97.337 from 96.525.Its yield fell to 4.726 percent from 4.835 percent on Tuesday.
Fannie Mae, which was previously known as the Federal National Mortgage Association, and Freddie Mac, which was the Federal Home Loan Mortgage Corporation, have been criticized by rivals for exerting too much influence over their regulators.
''The regulator has not only been outmanned, it has been outlobbied,'' said Representative Richard H. Baker, the Louisiana Republican who has proposed legislation similar to the administration proposal and who leads a subcommittee that oversees the companies. ''Being underfunded does not explain how a glowing report of Freddie's operations was released only hours before the managerial upheaval that followed. This is not world-class regulatory work.''
Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
One should also note that Frank recently received a reelection bid endorsement from Bank of America president, Chief Executive Officer Brian Moynihan. In a recent article from the Financial Times, Frank had asked four banks (Bank of America included) to modify their lending practices and write down second tier mortgages, in other words, take a loss, “in order to save U.S. Housing. This was in March of 2010.
With his hands in every nook and cranny of the financial industry, Frank is now facing some scrutiny over a direct intervention with then Treasury Secretary Paulson, to save a failed bank in his district. Although one might argue that the Congressman was doing his job by taking care of an industry specific to the 4th Congressional District, emails and documents obtained under the Freedom of Information Act by the watchdog group Judicial Watchsuggests otherwise.
First, the bank did not meet criteria to be included in the program, it was under an Cease and Desist order: (From www.fdic.gov/bank/individual/enforcemnet/2008-10-09)
OneUnited Bank, Boston, Massachusetts ("Bank") and its institution-affiliated parties, as that term is defined in section 3(u) of the Federal Deposit Insurance Act (“Act”), 12 U.S.C. § 1813(u), and its successors and assignees having been advised of its right to a Notice of Charges and of Hearing detailing the unsafe or unsound banking practices and violations of law alleged to have been committed by the Bank and of its right to a hearing on such alleged charges under section 8(b)(1) of the Act, and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT") with counsel for the Federal Deposit Insurance Corporation ("FDIC") and the Commonwealth of Massachusetts
The FDIC and the Division considered the matter and determined that it had reason to believe that the Bank had engaged in unsafe or unsound banking practices and violations of law. The FDIC and the Division, therefore, accepted the CONSENT AGREEMENT and issued the following:
ORDER TO CEASE AND DESIST
Apparently, Barney Frank brought pressure to bear on the Treasury in order to allow OneUnited to receive Tarp Funds. Frank, not alone in this endeavor was joined by Congressional Representative Maxine Waters (D-CA), whose husband was affiliated with that institution. Both Frank and Senator John Kerry (D-MA) were mentioned in documents obtained by Judicial Watch.
Accountability and elementary accounting practices appear to have gone missing from the Chairman of the Committee that oversees Banking and Finance for the nation. That said, what one can expect to come out of this particular brouhaha is yet another “Charlie Rangel” – by that, individuals who have committed dubious acts, even scandalous acts, who have managed to hold onto their Committee Chairs and seats, by virtue of the insanity that pervades in the Capital. It took decades before Rangel was held somewhat accountable, therefore, one can expect Frank to continue to skate, with the help of Pelosi and Company – unless and until Frank is no longer eligible to sit on a Committee that has, perhaps the greatest impact on our economy. The only way to permanently ensure that Frank can no longer be an influence is to effectively remove him from office via the ballot box. To allow him to remain in office, only puts his Chairmanship on hold – (assuming the Congress changes political power hands in 2010), he would still be sitting on that Committee.
The power of the ballot must be brought to bear in order to permanently remove Frank from the vicinity of the House Committee on Financial Services by the 4th District voters themselves, electing an alternative to Frank. A new radio commercial from the Sholley for Congress Campaign hits the nail on the head (see YouTube video below). It is imperative that the citizens of the 4th Congressional District get to know Mr. Frank and his impact on the nation – to learn more about voting in Massachusetts visit the Massachusetts Secretary of State’s website on Elections.