Barney Frank: Republicans set the table for this crisis

In identifying causes, Bachmann simply recited party talking points.

By BARNEY FRANK

Last update: September 27, 2008 - 11:47 PM

I wish to take issue with recent assertions made by U.S. Rep. Michele Bachmann in her Sept. 26 commentary that advance conservative talking points about the causes of the current financial crisis ("How we got into this mess ..."). Unfortunately, the facts do not support their claims.

Fannie Mae and Freddie Mac have an important mission that I support -- mainly, providing affordable mortgages for middle-class Americans.

The truth is that the Republicans failed in every year of their 12-year hold on Congress to create a strong, independent regulator to oversee Fannie and Freddie. And despite their rhetoric, the Bush administration also failed to enact strong regulation in the first seven years of its tenure.

In 2005, when Republicans controlled both houses of Congress, only the House was able to pass a reform bill, and recently, Republican former House Financial Services Chairman Mike Oxley told the Financial Times that the Bush administration gave him the "one-finger salute" for his efforts to reform Fannie and Freddie.

Bachmann also incorrectly points to the Community Reinvestment Act as a source of our current problems. CRA, originally passed in 1977, does not require banks or thrifts to make loans that are unsafe or unprofitable. In fact, federal law requires that CRA lending activities must be done consistent with safe and sound banking practices. In reality, most high-cost loans were originated by lenders that did not have a CRA obligation and lacked federal oversight.

In fact, reform of Fannie Mae and Freddie Mac was finally accomplished by the Democratic Congress in May 2007, five months after we took over as the majority party, and once Republican obstruction ended in the Senate, President Bush finally signed a reform bill this year.

Who blocked reform?

Barney Frank, D. Mass., is a member of the U.S. House and is chairman of the House Financial Services Committee.

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