If you had to pick one lawmaker to blame for the subprime mortgage bubble and subsequent collapse, that person would have to be House Financial Services Committee chairman Barney Frank (D-Massachusetts) who is probably more culpable for the state of the economy right now even than Sen. Chris Dodd (D-Connecticut).
Frank has long pimped the disastrous Community Reinvestment Act and been a loyal friend of Fannie Mae and Freddie Mac. Even as the economy went south last year, Frank stood by the CRA and the two government sponsored enterprises (GSEs). The CRA mandated irresponsible mortgage lending and then Fannie and Freddie, under intense pressure from Frank and a chorus of lawmakers in Congress, bought up those doomed mortgages, bundled them together, and found suckers around the world to buy their mortgage junk bonds. (Note: They’re actually called Mortgage Backed Securities or MBSs but perhaps we should call them Mortgage Junk Bonds or MJBs.)
As Doug Bandow puts it:
[A]fter wasting billions in taxpayer dollars to inflate and thus wreck the housing market, Rep. Barney Frank, the “go-to” guy when it comes to fixing the financial system, wants to waste more taxpayer dollars to inflate and thus wreck the housing market.
That about sums it up.
Frank, who is intelligent enough to understand how the economy works, refuses to acknowledge that he played any role in the financial crisis and his prescription for what ails America is more poison.
Meanwhile, as Frank plots the final destruction of American capitalism, Warren Buffett defies the pundits and the Obama administration by saying there is no economic recovery underway.
This has been blindingly obviously to honest observers for some time but sometimes someone like Buffett has to say the emperor has no clothes before people start paying attention.