At Long Last, Barney Frank Realizes Something’s Wrong

Rep. Barney Frank (D-Mass.), who is chairman of the House Financial Services Committee, didn’t heed warnings by the Bush administration in 2003 when they said that something was amiss at Fannie Mae and Freddie Mac. He proved short-sighted again in 2005 when John McCain and others put forth a bill for stricter lending practices from the two mortgage giants.

Now, however, good ol’ Barney realizes that something’s not quite right, claiming that “the current model is broken.” Indeed, Mr. Frank, that’s what some of your colleagues in Congress and the previous vilified presidential administration were trying to tell you years ago. At that time, of course, Frank was in a relationship with a Fannie Mae executive and claimed that stricter lending practices would have made it difficult for “financially disadvantaged” folks to obtain financing for home purchase. Never mind that in this context “financially disadvantaged” means “most likely to default on mortgage payments.”

In what Frank likely hopes is a “better late than never” move, Frank spoke at a breakfast meeting recently hosted by the Center for American Progress where he asked all the federal housing-related organizations to forward their ideas for restructuring Fannie Mae and Freddie Mac.

There is no word yet on what the likely outcome with be of any restructuring, though some have suggested turning the two mortgage giants into cooperatives that would be owned by mortgage lenders.