The Campaign Spot

Barney Frank: The Community Reinvestment Act Was a ‘Republican Failure’

In today’s Wall Street Journal:

Asked who was to blame for the 2008 financial crisis and whether any bankers should have been prosecuted, Mrs. Bachmann and former House Speaker Newt Gingrich put the onus on the federal government, with Mr. Gingrich suggesting that former Senate Banking Chairman Chris Dodd and Rep. Barney Frank, former chairman of the House Financial Services Committee, should both be jailed.

“It was the federal government that pushed the subprime loans . . . that pushed the community reinvestment act,” said Mrs. Bachmann, citing what she considered the causes of the housing meltdown.

Mr. Frank released an emailed statement in response: “In fact, Chris Dodd and I were in the minority from 1995 until 2006, so Gingrich is blaming us for Republican failures.”

So panicked is the response from Congressman “I want to roll the dice a little bit more in this situation towards subsidized housing” Frank that he forgets that from May 2001 to the end of 2002, Democrats controlled the Senate and Dodd was the second-ranking Democrat on the committee after chairman Paul Sarbanes.

It is also revealing that Frank believes that Bush-administration assent to policies he supported means that the consequences of those policies are, ipso facto, “Republican failures.” As Peter Wallison lays out on the Journal’s op-ed page, you can blame Wall Street for reckless gambling on mortgage-backed securities all you want, but the risk of the mortgage-backed securities never takes off unless the federal government starts pushing lenders to lower their standards for worthy borrowers. Sure, the big-bank investors never should have gone dancing in the minefield, but the minefield was set up by federal policies that encouraged massive loans to “borrowers with blemished credit, or were loans with no or low down payments, no documentation, or required only interest payments.”

It is rather amazing that with laughably inaccurate defenses like this, Frank is still considered a significant voice in the Democratic party today.

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