Thursday, March 11, 2010

Barney Frank Seeks Mortgage Write-Downs of $442 Billion from Four Banks Includes Frank Friendly BOA

With Housing still in shambles, despite bailouts and a variety of failed programs, Rep. Barney Frank is going back to the banks, hat in hand so to speak, for more. According to the Financial Times, Frank had sent an email to the heads of Chase, Citi, Wells Fargo and Band of America, to “save housing”. FT includes an excerpt from the email:

“The four organizations you lead are major participants in the second-lien market. Failure to modify these debts has become a major and unnecessary obstacle to thousands of Americans being able to stay in their homes. I urge you in the strongest possible terms to take immediate steps to write down these second mortgages and allow principal reduction modifications of the underlying first liens to take place. If there are legal obstacles to your doing so, we will work with you to remove them.”

In essence, Frank is asking the banks to write down the second liens, which, in the world of mortgages, requires first reducing the principle on the original mortgage. The second-lien request is a “first step” in the process.
One understands that Frank, who has had his hands in the nations finances, specifically issues of housing and mortgages, along with now retiring Senator Chris Dodd (D-CT), have a good relationship with the banks, especially those that are now considered “owned” by the “State”.

Chief among them is Bank of America and its Massachusetts based CFO, Brian Monihan, who had supported Dodd’s failed bid for the presidency (list of contributions here ). In addition, Monihan is now actively supporting Barney Frank’s re-election campaign, as reported by business week.

Frank’s promise in his email to the four executives to “remove any legal obstacles” in order to move his latest scheme forward, is the type of “business as usual”, which is primarily to blame for the current economic situation.

Recall Frank’s relationship with Mortgage Giants, Freddie and Fannie, going as far back as 2003 when Frank insisted that:

'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.'
At the time, Franklin D. Raines was the Chief Executive Officer, one with which Frank had a personal relationship.
Frank helped (or was responsible) for the destruction of the two biggest mortgage lenders in the nation, and now, he’s asking the largest banks (see TARP and beholden) to go along with another one of his fiscally unsound programs. With Bank of American CFO supporting Frank’s camping, red flags should be flying up all over the 4th district as well as the nation.

There are several Republicans running against Frank in the 4th, as well as a Democrat, and a list of “other” party affiliate contenders. The frontrunner in the 4th District race is a populist, who is strong on term limits, anti-tax and fiscal responsibility. Earl Sholley A source inside the campaign noted that Sholley is running his campaign debt free. In addition, although he may not be the perfect candidate in the eyes of the State GOP, (or the Boston Heralds, Howie Carr, who also dismissed Scott Brown’s candidacy), Sholley has less “baggage” than the current occupant of the Congressional Seat.

This bears repeating; he ran against Frank in 2008 for the first time, entered late and was able to garner a percentage of the vote that would have to have included all or most of the Republican’s in the district as well as Independents and perhaps a Democrat or two. He’s got an interesting take on the issues, and worth a listen – Broadcasts from his weekly radio show are available here at “Ask Earl”

To find additional information as to who is running in the 4th district, (FEC Filings) go here

Note: This does not include all candidates running in the 4th, but those who have filed with the FEC.

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