Barney Frank Challenges GOP's 'Too Big to Fail' Arguments
Former Rep. Barney Frank appears before the House Financial Services Committee at a hearing on "Assessing the Impact of the Dodd-Frank Act Four Years Later" on July 23. On Wednesday, Barney Frank came back to the committee he used to lead to defend the financial overhaul law he helped create.
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#1 Jul 24, 2014
I remember this well. Food for thought:
In August 2003, Barney Frank (D-MA) ranking Democrat on the House Financial Services Committee and the person who generaled the Democrat strategy with regard to GSE regulation argued strongly to make it easier for people/speculators to get new house construction loans while putting less money up as collateral. In a mid-August letter to Fannie Mae, Mr. Frank urged Fannie to withdraw the underwriting guidelines that the Bush Administration had successfully gotten Fannie to strengthen (raising the principal/collateral commitment from 3% to 10%). He wrote, the Bush-inspired changes could make manufactured housing too expensive for many Americans. Mr. Frank was successful; Fannie announced in February 2004, it would lower the capital requirement from 10% to 5% the move became effective December 1, 2004, two weeks before the SEC released a scathing report on Fannies improper accounting. Easy money on new house constructions turned out to be one of the prime causes of the housing overexpansion that helped define the bubble.
The House Financial Services Committee began debate on September 11, 2003 and held multiple hearings over the next several weeks. In supporting the bills, Republicans focused on GSEs potential impact on the broader financial system. Democrats focused solely on the mortgage lending targets, stating there was no risk to the broader financial system because the federal government would bail out the GSEs if necessary.
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