Boston Globe editorial: Frank’s coziness with Fannie doesn’t let Wall St. off hook
May 28, 2011
WHAT SHOULD one make of a politician who declined to vote for or against a pay-hike bill because his companion works for the agency in question — but nonetheless took a call to vouch for that same partner when he was applying for the job in the first place? The facts suggest an ostentatious concern for the appearance of ethics coupled with a shrugging laxness behind the scenes.
The politician is Barney Frank. The job seeker was Herb Moses, the congressman’s long-ago partner. The chain of events took place two decades ago, well before Frank was part of the congressional leadership. But this all matters today because the agency in question was Fannie Mae, which helped fuel a boom in home mortgages while Congress failed to exercise enough oversight.
Frank has acknowledged having been slow to realize the extent of the problems at Fannie Mae, which helped cause the mortgage bubble and also left taxpayers with a still-pending bailout of both Fannie and its mortgage-buying brother, Freddie Mac. The revelation of Frank’s ex-partner’s job application, made in a new book by New York Times columnist Gretchen Morgenson, suggests a certain coziness to the relationship between Frank and Fannie Mae, if not necessarily an exchange of favors.
Frank dug this hole himself, and deserves the scrutiny. But the damage goes beyond his reputation. Republicans have invoked Frank’s advocacy for Fannie Mae and Freddie Mac, both of which purchased massive numbers of home mortgages on the secondary market, thereby freeing up more capital for bank lending, to distract from the private-sector dealmakers who created sketchy mortgage-backed derivative securities. Those toxic assets brought down the insurance giant AIG and forced the taxpayer bailout of financial institutions.
(More here.)
WHAT SHOULD one make of a politician who declined to vote for or against a pay-hike bill because his companion works for the agency in question — but nonetheless took a call to vouch for that same partner when he was applying for the job in the first place? The facts suggest an ostentatious concern for the appearance of ethics coupled with a shrugging laxness behind the scenes.
The politician is Barney Frank. The job seeker was Herb Moses, the congressman’s long-ago partner. The chain of events took place two decades ago, well before Frank was part of the congressional leadership. But this all matters today because the agency in question was Fannie Mae, which helped fuel a boom in home mortgages while Congress failed to exercise enough oversight.
Frank has acknowledged having been slow to realize the extent of the problems at Fannie Mae, which helped cause the mortgage bubble and also left taxpayers with a still-pending bailout of both Fannie and its mortgage-buying brother, Freddie Mac. The revelation of Frank’s ex-partner’s job application, made in a new book by New York Times columnist Gretchen Morgenson, suggests a certain coziness to the relationship between Frank and Fannie Mae, if not necessarily an exchange of favors.
Frank dug this hole himself, and deserves the scrutiny. But the damage goes beyond his reputation. Republicans have invoked Frank’s advocacy for Fannie Mae and Freddie Mac, both of which purchased massive numbers of home mortgages on the secondary market, thereby freeing up more capital for bank lending, to distract from the private-sector dealmakers who created sketchy mortgage-backed derivative securities. Those toxic assets brought down the insurance giant AIG and forced the taxpayer bailout of financial institutions.
(More here.)
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