What he did not say, has not said and will never say, identifies his role in the government's mandate that money was to be loaned to minority groups, those whose incomes did not support the loan requested, and that annual income was not to be used as a deciding factor in making risky loans to people who could not make the needed payments. He was a member of the Banking Committee, from which a large measure of affirmation emanated, and supported the idea that when qualifications were being measured, unemployment benefits and welfare payments could be counted as earned income.
The roots of this debacle go back to the Carter administration. This is the era when left-winged activists began their accusatory criticism of racism by mortgage lenders. The thrust of this activity was based upon their claim that urban blacks were being denied loans at a higher rate than whites. Was this true? Probably, but truth had little to do with the goal of this stirring of the pot, and the pressure to make loans to those who couldn't afford them grew more intense.
During the Democratic administration of former president Carter, Congress passed the "Community Reinvestment Act," which allowed regulators to first threaten and then punish banks that were not in conformity with the program that was designed to make homes available to people who had been shut out of the American dream.
Fannie and Freddie served as banks' trash cans
Banks, feeling the pressure of fiscal arm-twisting, put their standards in the drawer of doodles and began making bad loans. The two government sanctioned mortgage firms, Fannie Mae and Freddie Mac, soon became the wastebaskets for banks that were all too willing to sell the worthless paper to the government.
Socialistic tenets lead to trouble. Home ownership increased dramatically within the minorities and poor. In this instance, and over a period of years, the Affirmative Action policies trumped sound business practices and the goose that laid the golden eggs kept producing them.
What does all this have to do with Barney the Frank? A lot. His fingerprints are attached to this fiasco, and while he probably has done nothing illegal, it was he who, time after time, declared that Freddie and Fanny were in good shape - doing what they were supposed to do. Former president Clinton is on record as having said that something was amiss in this boondoggle, but Barney dismissed his party leader as being short-sighted. Later, the current president, Bush, suggested that a much tighter rein be applied to these two companies, and his highness, Barney, proclaimed that the two entities were not facing "any kind" of financial crisis.
When the White House warned of risk the second time, Barney chortled that Bush was more concerned about financial safety than about housing. The house has fallen in and the Barney Blarney accuses the private sector for the mess.
Wall Street has plenty to answer for in this quagmire, but it was Washington, and the socialistic devotees that caused this wreck. For Barney to see a prime culprit, he need look no further than his recent televised performance.
Edward Clark is a Danville businessman and community columnist for The Advocate.
