Just a follow-on to Dr. Js predictions that the Massachusetts elections are about to get interesting with the announced retirement of Rep. Barney Frank at the end of his term.
The Czar would like to breathe a sigh of relief. Rep. Frank has not been particularly good for the country, and welcomes his retirement with all due (safe) haste. Frank is abrasive, rude, inconsiderate, and definitely in politics to ensnare, rather than to serve.
We are all aware of the Dodd-Frank Act, which over-regulated the banking industry and penalized the only ones who were successful during the financial meltdownand all of whom rightly and promptly passed the costs of those penalties onto us. The net result? Not much change, but billions wasted, and successful community banks that played no role in the meltdown now have less capital and less flexibility to make their own business decisions.
Going back a bit in time, we see that Frank was very much involved in promoting TARP, which helped take more money from you and give them to the unsuccessful banks. Indeed Frank himself made a fair bit of money himself as a result of this.
But let us not overlook that financial meltdown in the first place. It started in the housing marketspecifically, the lenders were handing out ridiculously financed mortgages that could never be repaid. The mortgagees defaulted, and the market blew up. Of course, a serious amount of the those mortgages were financed, ultimately, by Fannie Mae and Freddie Macyour taxpayer-financed lenders of last resort.
Why? Because the organizations could make incredibly risky loans for people, thanks to a Carter-era law that required a certain amount of taxpayer money be used to create mortgages for low-income people, and required banks to provide a certain amount of their money as well to finance risky loans. This law was substantially enforced during the Clinton administration, and many large private lenders simply passed their own riskier loans on to Fannie Mae and Freddie Mac. This compounded the problem, as the government suddenly began to own millions of mortgages headed for default.
Why? Because there were no regulations in place to prevent this government-sponsored and government-created abuse, even though Republicans (and many Democrats) realized the entire structure needed immediate reform to prevent such a calamity.
So why didnt the reforms take place? Because they were active opposed and blocked by the head of the House Financial Services Committee. And as you know, that was Barney Frank.
Why would Frank block such a move? Because Frank was intent on seeing the two financial lending organizations make larger profits by taking on a greater share of the market place. Frank stated repeatedly he wanted to see more government housing, all over the country, and that was his main motivationeven though he failed consistently in this and fewer people can afford subsidized housing today since he got involved.
However, in order to achieve this implausible goal, Freddie Mac and Fannie Mae needed as few restrictions as possible. He wanted the lenders to forward their risky loans onto the taxpayers, because ergo, that was government housing. Freddie Mac and Fannie Mae took some of their profits and donated heavily to Frank in his campaigns. The banks, as you saw above with TARP, were also very grateful to Representative Frank for his involvement.
So let us review. Frank gets involved with government housing as a result of his prominence on the House Financial Services Committee. He helps to promote a culture of wild speculation at Freddie Mac and Fannie Mae, who poured serious money into his campaigns while their executives took large bonuses (including one executive who had a prior personal relationship with Frank). He blocked any attempts to prevent this conflict of interest, even though it was clear the risky mortgages were starting to collapse. When they did collapse, he helped author a massive bailout for the affected lenders, for which he also received serious money for his re-election attempts. Frank subsequently co-authored legislation that would penalize those lenders who did not give him money. Then he retired.
What made Frank so good with government-run housing that he would make strange arrangements like this? Well, it all goes back to his extensive financial and lending experience that he developed as a political science major and legal degree from Harvard. No, wait, it all goes back to his being an aide to the mayor of Boston, who asked him to find jobs for subsidized housing residents to do. No, wait…well actually, he doesnt seem to have any legitimate experience with either. And yet, he made a pile of money off a financial structure that he helped destroy.
No doubt Barney Frank would accuse the Czar of cherry-picking these incidents and taking them all out of context. Except, to the chagrin of Mr. Franks footnote in history, there isnt enough of anything else to talk about.
Enjoy your retirement. You earned it.
Божію Поспѣшествующею Милостію Мы, Дима Грозный Императоръ и Самодержецъ Всероссiйскiй, цѣсарь Московскiй. The Czar was born in the steppes of Russia in 1267, and was cheated out of total control of all Russia upon the death of Boris Mikhailovich, who replaced Alexander Yaroslav Nevsky in 1263. However, in 1283, our Czar was passed over due to a clerical error and the rule of all Russia went to his second cousin Daniil (Даниил Александрович), whom Czar still resents. As a half-hearted apology, the Czar was awarded control over Muscovy, inconveniently located 5,000 miles away just outside Chicago. He now spends his time seething about this and writing about other stuff that bothers him.