Barney Frank is incompetent

At least, that’s what he wants us to believe. The Boston Globe reports that Barney Frank, chairman of the House Financial Services Committee, finally admitted that he was late in seeing the developing mortgage crisis and that he was wrong about the financial viability of Fannie Mae and Freddie Mac.

Now, being late to see something is not a sign of incompetence.  However, when even I saw the crisis coming in 2005 and again in 2007 as did many financial pundits and Congressional leaders, you have to wonder how the head of the Financial Services Committee failed to see it or pay heed to warnings.  In 2003, Frank declared Fannie Mae and Freddie Mac to be fiscally strong and also maintained that even if they were to fail, the federal government wouldn’t bail them out.

Frank maintained those positions for the next five years.  Less than three months before those two government sponsored enterprises were declared insolvent, Frank maintained that they were financially sound.

His excuse?  “I was wearing ideological blinders.”  That’s right, he was concerned that Republicans and the Bush administration were going after Freddie and Fannie on ideological grounds, attempting to curtail the lenders’ mission of providing affordable housing.  In other words, he’d have us (his constituents, at any rate) believe that he mistakenly discounted information because it came from a source he didn’t like.  He wants us to infer that, had he obtained information from some other source, he would have seen the problem developing.

I find that exceedingly difficult to believe.  We’re talking about the head of the Financial Services Committee (in 2003, the ranking member of the minority party).  He would have us believe that he didn’t have his own sources of information who were telling him the same things.  If he admitted that, then he’d have to explain why he voted against a bill that would have instituted tighter control of Freddie and Fannie starting in 2004.  A few years later, when Frank became the head of the committee, he helped push through legislation that did institute such controls, but by then it was too late.  The damage was too extensive.

Even in July 2008, Frank insisted that the companies were “fundamentally sound, not in danger of going under.”  A few months later, he was proven wrong.

I’m not trying to lay the blame for the mortgage crisis or the insolvency of Freddie Mac and Fannie Mae solely on Barney Frank.  There’s plenty of blame to go around, starting with the Clinton administration’s insistence on easing lending rules, the Bush administration’s continuation of those rules, and the Republican-controlled Congress’ failure to institute controls in order to prevent a crisis that they all saw coming.

My issue is with Frank trying to hoodwink his constituents into believing that his “ideological blinders” prevented him from seeing the real problem.  The way I see it, there are only two possibilities:

  1. Frank flat didn’t see it coming, in which case he’s incompetent.
  2. He saw it coming, but his ideology holds that affordable housing is more important than silly things like economic viability.  In other words, he insisted on maintaining the programs even though he knew what the eventual outcome would be.

If he’s incompetent, he should go.  If he put his ideology ahead of the best interests of his constituents and the rest of the country, he should go.  Either way, the voters in the Fourth Congressional District of Massachusetts should do themselves and the rest of us a favor by kicking the bum out come election day.