Thursday, September 11, 2008

Barney Frank, Chris Dodd Should be Investigated for Freddie & Fannie's demise

Both of them defended the companies and did nothing for the last 10 years. Lawrence Summers warned about the risk that Fannie & Freddie posed during his tenure as the Treasury Secretary during the Clinton Administration.

The Bush administration warned about them again in 2001 and proposed legislation to reign them them in. Both Dodd and Frank had oversight over the two GSEs but continuously defended them and protected them from being dismantled.

They still defend them even after the markets have voted against their survival.

From the NYT:

A second camp consists of Democratic lawmakers who have long defended the companies against efforts to rein them in, and see them as a way to achieve the goal of providing more affordable housing.

This camp includes prominent lawmakers who lead committees with jurisdiction over Fannie and Freddie, including Senator Christopher J. Dodd, Democrat of Connecticut, and Representative Barney Frank, Democrat of Massachusetts.

“We accepted him at his word that all he needed was the authority and that he wasn’t going to exercise it. Then he used his authority very aggressively,” an angry-sounding Mr. Dodd said in a telephone conference call with reporters. He indicated that he would approach any future commitments by the outgoing administration more skeptically.

Mr. Frank seemed confident that he could stop the effort by the administration to ultimately shrink the companies through its rescue plan over the long term.

Mr. Frank has been a strong supporter of giving agencies like Fannie and Freddie new opportunities to earn profit while forcing them to divert some of that profit to public policy goals aimed at low-income families.

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