A tsunami – that deadly killer of people and property – struck America’s shores and heartland in 2008. But, unlike the natural disaster, this one was man-made – or mad-made, if you will.
If we were to give tsunamis human names (as we oddly do to hurricanes) we might name last year’s devastating tidal wave Tsunami Christopher Dodd or Tsunami Jimmy Carter or Tsunami Bill Clinton. But it would be more accurate to call it the Tsunami Barney Frank, Capital Hill’s Scott Boras for Fannie Mae and Freddie Mac – government-sponsored enterprises (how’s that for an oxymoron?) which together held nearly $6 trillion in real-estate debt and liabilities that, directly or indirectly, is drowning hard-working Americans.
These four men are the primary culprits for the miserable situation we now find ourselves in, each playing a major part in ensuring that Fan and Fred became the equivalent of a millennial natural force that inundated the marketplace by coercing private lenders into making loans to irresponsible and under-capitalized home-seekers. Fan and Fred then bought or implicitly backed those loans.
Fan’s debt/equity ratio in 2001 was 60 to 1, more than five times that of private lenders – and it got worse, severely over-leveraging Fan, which sailed along fairly well until the inevitable happened: housing prices dropped … and dropped … and dropped. Then the chickens came to their foreclosed home to roost, and all of the above finger-pointed at the opposing party’s lame-duck leader. Neither the well-meaning but hapless George Bush nor the rudderless John McCain had the brains or the temerity to defend himself against the disingenuously clever liberal assault, which included our new president on his campaign trail.
So let’s set the record straight for all of you who are too busy to understand economics and government and who get all of your news from those who understand economics and government even less – that’s the media, for those not paying attention.
You may have noted that none of the aforementioned culprits is a Republican. Contrary to the MSNBC junta, last year’s cataclysmic annihilation of personal savings and businesses cannot rightly be pinned upon Bush. The Bush administration tried many times to reign in Fan and Fred, but Frank & Dodd LLC (as ranking members of House Banking and Financial Services committees) made sure that didn’t happen. I feel sure that the $40,000 that Frank received in direct contributions from Fan had nothing to do with his decision – or Dodd’s sweetheart deals on two home loans that he received from Countrywide Financial. Nope. Nah.
But I digress. Here’s a brief history of crime. The full force of the earthquake that caused the tsunami didn’t occur until 2008, but its temblors began in 1977, with the so-called Community Reinvestment Act (with a name like that, who could resist?), promoted and passed by the Carter administration. The CRA mandated that all FDIC-insured lenders (virtually all of them) meet fuzzy quotas for lending in low-income (non-liberals call them “poor”) and minority neighborhoods.
But the act didn’t have much legislative teeth until Bill Clinton rode into town on his high horse (that’s “Hillary”) bellowing that lenders were still being too careful (that’s “prejudice”). Clinton circumvented a GOP Congress on the issue between 1997 and 2001 via presidential edicts (through his pit bull HUD chief Andrew Cuomo) that virtually forced lenders to offer “affordable” mortgages to poor people and gave the lenders the allure of great profits at seemingly no-risk or low-risk because the government would buy or insure the loans implicitly. If you’re having a difficult time believing me, perhaps you’ll believe the liberal Village Voice, which (in a fit of left-wing rationality) printed a blistering attack on Aug. 5 against Cuomo/Clinton, saying the same thing and stating that the duo’s actions “gave birth to the country’s current crisis.”
In the years leading up to our current madness, lenders made out like bandits (which some of them were) and went along in this government scheme. But then, like a giant ball of manure rolling downhill, the merde got closer to the fan – while everyone made lots of money and held his nose. Two culprits stand out during these end-times.
Since 2001, Dodd and Frank have been the primary political exponents of evasion, flattery and lies that have floated Fan and Fred and greatly accelerated their leveraging. Frank has told The New York Times and other newspapers and network anchors repeatedly for the last 10 years that Fan and Fred were not in trouble and were sound institutions, and if they ever did collapse, he said in 2004, “I think Wall Street will get over it.” He stalled or stopped reform of the two giants nearly each year of the new century.
Indeed, after receiving $1 trillion of our (taxpayers’) cash, Wall Street may “get over it.” The Wall Street Journal has correctly called Frank “Fannie Mae’s patron saint.”
Meanwhile, we are now regaled by Frank’s smirking mien atop his committee chair. You know the look. It’s that of a man who has stolen his neighbor’s savings – and gotten away with it while sipping cognac aboard his yacht on the floodwater that used to be prosperous America.
It’s a mad mad mad world. And Barney Frank is grinning.