© Najlah FeaNNy / Corbis
ily Democrats.That’s where Barney Frank en-tered the scene. As Fox News hasreported, “Although Frank nowblames Republicans for the failureof Fannie and Freddie, he spentyears blocking GOP lawmakersfrom imposing tougher regulationson the mortgage giants.”In 1991, the
re-ported that Frank successfullylobbied Fannie Mae to purchasemortgages on two- and three-family homes—despite defaultrates that were two-to-five timeshigher than single-family homes.Incidentally, that is also the yearthat Frank’s homosexual part-ner, Herb Moses, was hired byFannie Mae. Moses was laterdescribed by
as a “mortgage guru” whodesigned many of Fannie Mae’saffordable housing programs. According to the Business andMedia Institute, Frank and Mo-ses ended their relationship justmonths after Moses left FannieMae in 1998.In 1994, Frank fought off anattempt by his own party to reg-ulate Fannie, as President Clin-ton’s Department of Housingand Urban Development (HUD)sought to rein in the giant lend-er. Last fall, in the midst of themarket freefall, Clinton alludedto this when he said, “I think theresponsibility that the Democratshave may rest more in resistingany efforts by Republicans in theCongress or by me when I waspresident, to put some standardsand tighten up a little on FannieMae and Freddie Mac.”However, just two years later,in 1996, Clinton’s administra-tion reversed course and became acheerleader for Fannie’s profligateways. Economist Russell Robertsof George Mason University de-scribed how that happened. “For1996, the Department of Housingand Urban Development (HUD)gave Fannie and Freddie an ex-plicit target—42 percent of theirmortgage financing had to go toborrowers with income below themedian in their area. The target in-creased to 50 percent in 2000 and52 percent in 2005.”But that was just the beginningof the risk that taxpayers were as-suming. Roberts continues, “For1996, HUD required that 12 per-cent of all mortgage purchases byFannie and Freddie be ‘special af-fordable’ loans, typically to bor-rowers with income less than 60percent of their area’s median in-come. That number was increasedto 20 percent in 2000 and 22 per-cent in 2005. The 2008 goal was tobe 28 percent.”The Clinton administration’spush toward sub-prime loans wasverified by
The New York Times
in1999, which reported that “Fan-nie Mae, the nation’s biggest un-derwriter of home mortgages, hasbeen under increasing pressurefrom the Clinton Administrationto expand mortgage loans amonglow and moderate income people.”The road toward meltdown wasfirmly in place.
sign of the times
T ptng f gn nt nw cntuctd m ndct tt twn m tn 90 d pt du n tmtgg pmnt.
Top Congessionl recipients of Politicl Dontionsfom Fnnie Me nd Feddie Mc, 1989-2008(includes PaC nd employee dontions
)U.s. sen. Chrtpher Ddd, D-Cnn.,$165,400U.s. sen. Barack obaa, D-ill.,$126,349U.s. sen. Jhn Kerry, D-ma.,$111,000
(based on Federal Election Commission datathrough Sept. 2, 2008)