Barney Frank gets it, but does Obama?

Can you teach an old dog new tricks? In politics, the answer is usually no. Most elected officials cling to their ideological biases, despite the real-world facts that disprove their theories time and again. Most have no common sense, and most never acknowledge that they are wrong.

But one huge exception to this rule is Democrat Barney Frank, chairman of the House Financial Services Committee.

For years, Frank was a staunch supporter of Fannie Mae and Freddie Mac, the giant government housing agencies that played such an enormous role in the financial meltdown that thrust the economy into the Great Recession. But in a recent CNBC interview, Frank told me that he was ready to say goodbye to Fannie and Freddie.

“I hope by next year we’ll have abolished Fannie and Freddie,” he said. Remarkable. And he went on to say that “it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.” He then added, “I had been too sanguine about Fannie and Freddie.”

When I asked Frank about a long-term phase-out plan that would shrink Fannie and Freddie portfolios and mortgage-purchase limits, and merge the agencies into the Federal Housing Administration (FHA) for a separate low-income program that would get government out of middle-income housing subsidies, he replied: “Larry, that, I think, is exactly what we should be doing.”

Frank also said that any federal housing guarantees should be transparently priced and put on budget. But he added that the private sector must be encouraged to re-enter housing finance just as the government gradually withdraws from it.

Some would say Frank’s mea culpa is politically motivated in advance of an election where bailout nation and big government are public enemies number one and two. Of course, poll after poll shows that the $150 billion Fan-Fred bailout, which the Congressional Budget Office estimates could rise to $400 billion, is detested by voters and taxpayers everywhere.

In fact, these failed government agencies are in such bad shape that they can’t even pay Uncle Sam the dividends owed under the conservatorship deal reached two years ago. That’s right. In order to pay a $1.8 billion dividend on Treasury department stock, Fan and Fred had to borrow $1.5 billion from — you guessed it — the Treasury.

Then there’s this head-scratching detail: In an absolutely outrageous move last Christmas Eve, President Obama signed off on $42 million in bonuses for the top twelve Fannie and Freddie executives, including $6 million apiece for the two CEOs. (Hat tip to attorney Stephen B. Meister.)

  • Callie369

    Larry, I thought you were smarter then this. Barney is simply running for his next term and KNOWS this is a thorn in everyone’s side that he can capitalize on.

  • emem

    $42M to bonus 12 execs? Barney gets it? I don’t believe it for a minute. He’s been in office so long he thinks he can say or do anything. No Mea Culpa for you – Barney. A destroyed housing market, 20%+ under/un employment, your recent raise, 1000’s of bankrupt businesses. Newyorker has it completely right:

    he deserves an arraignment number and a criminal trial.

    Agreed, but Barney is not alone, there’s so many more.

  • riseabove

    If the stock market was as predictable as politians we’d all be rich. Anyone who’s dealt with con artists would have known this newfound contrition by Barney Frank and others was coming, but don’t expect it to last. I guarantee immediately after the November elections they’ll all be singing a different tune.

  • truebearing

    Fannie and Freddie are a crime scene, and Barney Frank wants all of the evidence to disappear. So does Gheitner, and of course, so does Obama.

    The Democrats used Fannie and Freddie as a vehicle for their Progressive agenda, and to line their pockets, and now want to give Fannie and Freddie the Jimmy Hoffa. Time for the compacter and burial in cement.

    Fannie and Freddie should get an autopsy before being declared legally dead, by an army of forensic accountants. I’m sure Barney will be real helpful in the investigation.

  • krjohnson

    On Cavuto Barney Frank said that “This is a situation where given the importance they had come to play in housing, you can’t tear down the old jail until you build a new one.”

    He also spoke about public low interest loans to build apartments and such for lower income people. Mr. Kudlow, this is not a case of a guy seriously changing his mind. This is a man who decided to switch from Coke to Pepsi.

  • http://www.facebook.com/people/Chip-Hanlon/580493515 Chip Hanlon

    Larry’s a friendly industry acqauintance, but I cannot believe how badly he is misreading Barney Frank’s intentions on this one. His beliefs haven’t changed one bit on this. In fact, Frank would like to use this opportunity to expand government’s role in housing– under the clever guise of “abolishing” Fannie and Freddie. I’ll be sure to write more about this early next week in my “1600 Wall Street” blog at http://www.greenfaucet.com.

  • Pingback: Barney Frank (finally) gets it – does Obama? « USA in Exile

  • notyourtypicalnewyorker

    Mr. Kudlow, I respect and have been reading you for years but if all it takes for you to cut this cretin Barney Frank some slack is a couple of well placed sentences on his part in the face of an electoral tsunami this November, I will have to reassess my opinion of you.

    Go to YouTube and watch the myriad video through the years of Barney Frank as he, Chris Dodd and Andrew Cuomo looted the treasury of untold $billions all in the name of leveling the playing field for low-income residents that didn’t have a prayer of paying the mortgage that was given to them… I, and millions of other taxpayers are paying their mortgages RIGHT NOW.

    Barney Frank doesn’t deserve kudos for seeing the light, he deserves an arraignment number and a criminal trial.

    Mr. Kudlow, I think your elitism is showing…Why, yes it is.

    • Reagan Loyalist

      Larry, “notyourtypicalnewyorker” is right.

      As RIA, I have relied on your perspective for 20+ years and deeply regretted that you signed with cNBC; and I now see indications that you are snuggling up to the ruling class. Tipping you hat to BF? Have you been brainwashed by you MSM colleagues?

      Here’s a tip – they will never accept you, so forget about sucking up to Barney Frank, who is an epic criminal and a Cardinal in the ruling class, saying whatever he thinks will get him reelected. Don’t be so naive, sir.