Who Would Finance Mortgages If Fannie, Freddie Disbanded?

CNBC ^ | July 02, 2010 | CNBC

[CutePuppy]

Big changes are in store for the banking system should Fannie Mae and Freddie Mac be revamped or eliminated—both of which are being discussed by housing experts and government officials to deal with the distressed real estate market.

As the system works now with the two entities, Fannie and Freddie , banks write the mortgages, but they rarely hold them. The mortgages are sold off into pools, known as mortgage-backed securities (MBS).

Fannie and Freddie guarantee the mortgage payments, so that the MBS buyer, be it the Chinese government or an American pension plan, has the security of the US government behind them. Their only risk is in the interest rate.

“It helps them make deep and liquid, and it expands, dramatically, the pool of capital that’ll come in and will play and support our housing market,” said Peter Fisher, BlackRock’s managing director and co-head of fixed income.

This system worked great for years. In fact, so great that Fannie and Freddie shareholders got rich because the companies borrowed money in the markets with an implied government guarantee.

But without the guarantees, experts say, there would be no securitization, no capital from the rest of the world for long-term fixed rate mortgages and banks would have to hold on to them.

“We’ve been through another crisis, the S&L (Savings and Loan), where banks indeed held long-term mortgages on their books," said Susan Wachter, professor of real estate and finance at the University of Pennsylvania’s Wharton School. "That’s a recipe for disaster.”

.....

To avert problems and allow private firms to re-enter the $10 trillion mortgage market, DeMarco called for a transition phase in which a new infrastructure for the home financing system is put in place.

[CutePuppy]

Earlier this year, Treasury Secretary Tim Geithner laid out a general outline for how the Obama Administration would reform Freddie and Fannie, including insuring that shareholders don't reap gains while the public pays for the losses.

"While the form of the housing finance system will change, government has a key role to play in shaping the future of the nation's housing finance system," said Geithner.

In other words, their version of "reform" means that they want to keep the basic system, just rename it... These people are so bass-ackwards!

Even after the total disaster of market-distorting government entities like Fannie, Freddie, FHA, HUD, and government policies like CRA and the "ownership society," they still want more government involvement ("key role") in the mortgage financing business... Never mind that without government backing ("implicit" or explicit) the lenders and/or investors in the mortgage industry would do due diligence and pay attention to the asset values and the ability to pay, because they would lay their own money on the line instead of just collecting origination fees and/or reselling mortgages to the government!

Gotta love the "experts". Why wouldn't liquidity and securitization happen in a properly functioning, economics-based, not corrupted government-distorted market? It does in most normal public markets.

[Sacajaweau]

It wouldn’t surprise if Obama tries to change the system and we RENT from the government.

[CutePuppy]

Related article : The Future of Fannie Mae and Freddie Mac - CNBC, 2010 July 01

A housing sector without Fannie Mae and Freddie Mac is a possibility, Edward J. DeMarco, director of Federal Housing Finance Agency (FHFA), told CNBC Thursday.

Demarco said another future scenario might involve Fannie and Freddie remaining in business, but without dependence on the federal government.

But, he cautioned, success could happen only if an infrastructure is in place that allows private firms to re-enter what is a $10 trillion mortgage market.

Either scenario is possible, said DeMarco, but both “need appropriate transition. Our housing market is still quite fragile.”

“We cannot flip that switch tomorrow and expect to turn it over to the private sector, because the plumbing is not there,” he said.

To date, taxpayers have been are on the hook for some $145 billion in losses connected to the troubled housing market. The Congressional Budget Office estimates that figure could balloon to $400 billion, and some experts have even put a $1 trillion price tag on those taxpayer-responsible costs. .....

"Re-enter" means he acknowledges that there is almost no private market in mortgage industry today; FNM/FRE/FHA own or guarantee 9 out of 10 mortgages in the U.S. "Go slow" approach to unwind and phase out Fannie/Freddie makes sense, but who would need or want TBTF behemoths Fannie and Freddie without their government's guarantee? This monster was created (and later split to provide the façade of "competition" between Fannie Mae and Freddie Mac) by the government as part of the FDR's New Deal. CRA evolutions and related lawsuits simply made it into an "offer banks couldn't refuse".

[UCANSEE2]

“Who Would Finance Mortgages If Fannie, Freddie Disbanded?,”

The same people who finance it now.

[driftdiver]

“The same people who finance it now.”

Who is that? It sure isn’t the small banks.

[doc1019]

Who Would Finance Mortgages If Fannie, Freddie Disbanded?

The same folks that financed mortgages before Fannie and Freddie.

[Candor7]

Disband Fannie Freddie, they are the ones who created the housing bubble and ruined our economy.

Replace it bhy creatinng a new agency, put it under direct administration at the Federal Treasury, and keep politicians away from it.

[dalereed]

banks would finace mortgages as long as you put down 20% and your payments, including insurance and taxes, don’t exceed 30% of your net income.

That was the criteria when I bought my home before Fannie and Freddie and financing a home wasn’t any problem!

Fannie and Freddie should never have been created!!!!

[NVDave]

Well, that’s the reason why Fannie exists - no one would. The mortgage market collapsed in the Depression, so the government created Fannie Mae to bundle and package mortgages so that investors had a fairly regular “product” in the securities they were buying.

Without Fannie in the 30’s, the mortgage market collapsed from simple risk aversion. Like now, there were high rates of default. Sure, the banks foreclosed faster then than they do now - they had sheriff’s sales and all that - but in some areas of the country (eg, the Dust Bowl), properties went for a dime on a dollar. The losses to the lenders were horrible.

So they quit writing mortgages.

Enter Uncle Sugar, who sets up Fannie. Fannie would take some of the mortgage paper off your local banks’ hands and package them for sale into a secondary market. This worked pretty well until LBJ no longer wanted Fannie’s liabilities on Uncle Sugar’s balance sheet during the spending spree of the Vietnam War + “The Great Society.”

So Congress decided to make Fannie “private.” Well, because Fannie was so large, they would be a monopoly in the private market - so Congress felt sad about this and decided to create a younger brother to compete with Fannie: younger brother Freddie.

We could conceivably go back to a secondary market without Fannie or Freddie, but there would need to be some manner of mortgage insurance - because that is what the market expects. Someone would also have to define what a “conforming” or “standard” mortgage is, because the market doesn’t want to deal with a zillion bespoke packagings of residential mortgage debt.

The latter part could be set in law or regulation. The insurance part, however... there is no company with an asset sheet large enough to take on the job of backstopping trillions of dollars of RMBS.

[NVDave]

Well, that’s the reason why Fannie exists - no one would. The mortgage market collapsed in the Depression, so the government created Fannie Mae to bundle and package mortgages so that investors had a fairly regular “product” in the securities they were buying.

Without Fannie in the 30’s, the mortgage market collapsed from simple risk aversion. Like now, there were high rates of default. Sure, the banks foreclosed faster then than they do now - they had sheriff’s sales and all that - but in some areas of the country (eg, the Dust Bowl), properties went for a dime on a dollar. The losses to the lenders were horrible.

So they quit writing mortgages.

Enter Uncle Sugar, who sets up Fannie. Fannie would take some of the mortgage paper off your local banks’ hands and package them for sale into a secondary market. This worked pretty well until LBJ no longer wanted Fannie’s liabilities on Uncle Sugar’s balance sheet during the spending spree of the Vietnam War + “The Great Society.”

So Congress decided to make Fannie “private.” Well, because Fannie was so large, they would be a monopoly in the private market - so Congress felt sad about this and decided to create a younger brother to compete with Fannie: younger brother Freddie.

We could conceivably go back to a secondary market without Fannie or Freddie, but there would need to be some manner of mortgage insurance - because that is what the market expects. Someone would also have to define what a “conforming” or “standard” mortgage is, because the market doesn’t want to deal with a zillion bespoke packagings of residential mortgage debt.

The latter part could be set in law or regulation. The insurance part, however... there is no company with an asset sheet large enough to take on the job of backstopping trillions of dollars of RMBS.

[CutePuppy]

“Who Would Finance Mortgages If Fannie, Freddie Disbanded?,” ..... The same people who finance it now.

Not quite. Right now it's taxpayers, because of the "government nature" of the beasts Fannie and Freddie...

Without them, it would be banks and private sector investors, if government doesn't demand guaranteed losses (CRA) for the sake of increased "home ownership" in certain "communities".

Why Canada's Housing Market Didn't Crash - CNBC, 2010 June 30

They saw a housing boom, they saw a recession, and yet the Canadian housing market is still cooking with gas.

Why?

Fundamental differences in Canadian banking, borrowing and home buying.

I spent the day in Toronto a few weeks ago and was really interested to see how a few miles can span such a huge difference in collective attitude.

Lloyd Atkinson is an economist and also an empty nester, who just sold his large family home in Toronto and downsized to a condo overlooking the city. He sold his home in one day.

"In the U.S., the whole idea of owning a home, there is almost a national obsession," Atkinson says. He knows because he's an American citizen as well. But he also knows that the banking system in Canada does not allow for the type of irresponsible buying and borrowing that we saw in the U.S. at the height of the recent housing boom (2004-2006).

For one, there are just six big Canadian banks that own the bulk of the mortgage market, and they don't securitize and sell off loans at nearly the rate U.S. lenders do. They hold nearly three quarters of their loans on the books, and 80 percent of Canadian loans carry mortgage insurance.

Canadian banks also had and have no such thing as the Alt-A, or low-doc, no doc loans that fueled bad borrowing and consequent defaults. At the height of the Canadian housing boom barely 5 percent of loans were considered "subprime," while a full third of U.S. loans were either subprime or Alt-A.

"Nobody stopped a Canadian bank from lending in the subprime market, they chose not to," says CIBC's Benjamin Tal. "It was not the government, it was not monetary policy; there were no regulations whatsoever regarding how much you can lend in the subprime market. Canadian bankers decided not to do so, because it was too risky."

Finally, the biggest difference is that if a Canadian borrower goes into foreclosure, the bank can and will come after that borrower's assets until the balance is repaid.

There is no easy way to walk away.

These are full recourse loans.

Canada certainly sees ups and downs in its housing market, and all you need do is look at the downtown Toronto skyline to wonder if there isn't perhaps a Miami-like condo boom going on right now. But experts say the booms and busts are far more measured there. The condo buildings going up are all presold, and there is not nearly the speculative condo investment there that we saw in Miami.

"There is an element of conservatism that runs right through the Canadian housing industry, from the banking, financing element, to the homebuilders and even in the resale of homes," says Phil Soper, CEO of Brookfield Real Estate Services - Royal LePage. "The innovation has safety valves."

This cover of Toronto Life Magazine this month shouts, "$1.05 Million" with the subheading, "We're in a bubble. Now what?"

Bubble it may be, and the air is coming out a bit now, but every one of the realtors, economists, and homeowners I interviewed said no way, no way would the Canadian housing market crash as the U.S. market did. Benjamin Tal put it best: "This was not a made in Canada, this was a made in the U.S. recession, and in many ways Canada was a second hand smoker here."

In other words, no Government-Sponsored Enterprises that will buy and remove the risk from you and dump it on the taxpayer, as long as you follow their rules.

[mulligan]

Honest and qualified people.

[givemELL]

Perhaps they have a global entity in mind to superceed the Fed and all US and other nation-state central banking systems. Hedge funds have the capability, paralleling the efforts of nation-state banks and financial institutions to continue securitization of anything and everything from Carbon trading securitized instruments to mortgages and participate in a new global entity. The SDRs of the IMF, advocated by Russia and China are not enough.

After nationalization comes.....globalilzation, unless bigger war ensues, and a fierce fight ensues to determine the ONE winner, who will take all. Of course, we know Phyrric victories are possible, and socialism favors both victories and ties (as in soccer, the perfect socialist game).

[Pan_Yan]

Replace it bhy creatinng a new agency, put it under direct administration at the Federal Treasury, and keep politicians away from it.

Trying to keep the politicians away from a federal agency is like throwing a steak into a pen of starving hyenas and asking them to guard it. And I don't think a lack of government agencies is our problem. Quite the opposite.

[CutePuppy]

Replace it by creating a new agency, put it under direct administration at the Federal Treasury, and keep politicians away from it.

There is already FHA, which is in similar business, only it is not "private" or "public-private," the way FNM/FRE were masqueraded.

And once a government agency exists, especially of this huge and important piece of the economy, you could not keep politicians away from it, or making the rules governing it (CRA etc.).

Think of how many politicians want to "audit" the ostensibly independent Federal Reserve and grab the power and get their claws into the monetary policy... These are the same people who vote on 2000+ pages of legislation they didn't read and then say "You have to vote it into law to find out what's in it"!

See the previous post on Canadian mortgage industry.

[whitedog57]

Susan Wachter at Wharton is an affirmative hire. Her husband is the Provost of UPenn. She is one of the stupidest and most political people on the planet. She was Asst Secretary of HUD under Cuomo in charge of Policy, Development and Research (PDR).

She is a whore for Fannie and Freddie and knows NOTHING about what she is talking about. A Clintonista.

[whitedog57]

Moderator: please delete the Wachter post. It was unnecessary.

[Wuli]

Canada does not have a Freddie or Fannie and it has a home ownership rate equal or better than the U.S.; about 60%.

It does have a national agency, which offers some things like our FHA and some other things too. But, it also works on a policy principal that assumes home ownership is NOT necessarily the right thing or the best thing for everyone.

Also, Canada’s mortgages

(1) are not so highly securitized as in the U.S.; most mortgages are held to maturity by the lender;

(2) you are never able to walk-away from a mortgage debt (as you can in the U.S.) if you default, it follows you;

(3) mortgage interest is not an income tax deduction.

What one really has to ask is:

how is it that the Canadians can ignore most of the shibboleths of U.S. housing policies, and obtain equal or better home ownership rates, if those shibboleths are so essential to high home ownership rates?

Answer: THEY’RE NOT!!!!!

Then why do we do them?

Politicians buy votes with them; that is their essential purpose and function.

[jazminerose]

Venture capitalists would buy good mortgages that represented low risk & high reward.

But that would require getting the govt completely out of the system on all levels.

In alot of areas, people with low downs wouldn’t be able to buy houses right now because prices are still declining. That’s too bad, but it’s how markets work.

Investors with higher risk tolerance could buy up shakier paper. No problem by me.

As long as taxpayer money isn’t involved.

Fewer people would own homes. We’re discovering that isn’t such a terrible thing.

Buyer would have to learn to save up for a down payment to minimize risk to the investor.

We can’t have a free market & a recovery unless we get the frickin government completely out of the mortgage/housing business.

[CutePuppy]

Another shibboleth to add would be the role of monetary policy and “low” Fed interest rates that are being blamed for the recent bubble and financial crisis. Canada operated in a relatively similar interest rate environment.

http://www.freerepublic.com/focus/news/2546103/posts?page=11#11 - Why Canada’s Housing Market Didn’t Crash

[Candor7]

CMHC, with which I am quite familiar, manages to do its job quite effectively and is overseen by bank regulators. We need the same thing here uin the USA.And the polituicians need to be kept away from it.

[Oceander]

"But without the guarantees, experts say, there would be no securitization, no capital from the rest of the world for long-term fixed rate mortgages and banks would have to hold on to them."

Bull and sh*t. Certainly the various tranches of risk in an MBS would be priced differently - those tranches that had previously benefitted from the taxpayers' involuntary guarantee would bear a higher price - but that would finally mean that those tranches were getting prices properly, according a meeting of the minds of willing buyers and sellers, without the inefficient misallocation of capital and risk caused by government's distortion of the market. However, those securitizations would go on and, in fact, the higher risk premiums would tend to attract more, not fewer, investors.

How can we be so sure? Do we need a Fannie or a Freddie guarantee for securitizations in credit card receivables to work, or securitizations in auto loans, or in leases, or in ....?

No, we don't. Same goes for residential mortgages. The assertion that we do is nothing more than covert political disinformation designed to fool us into thinking that we need to have government actively interfering in the markets for a capitalist free-market to work properly - the truth of the matter is diametrically opposite to that.

[Rational Thought]

Fewer people would own homes. We’re discovering that isn't such a terrible thing.

I disagree. Fewer buyers than sellers, both willing and unwilling, means prices continue to drop. Much of the growth in our past "healthy" economy came from real estate. While that may not seem like the most sound basis, it was the case. There is a simple answer to the problem of Freddie and Fannie; Break them up into numerous smaller parts. Then, each smaller company could be product specific, offering financing to the lowest risks all the way to high risk. In a scenario like this, there would be competition and no misrepresentation of what the product was when packaged and sold on the secondary. This would also make financing available to higher risk buyers, which isn't in itself a bad thing. Investors in a high risk mortgage would realize a much higher return in their investment.

In a perfect world, only excellent borrowers would be able to qualify for a loan. In the real world, that excludes too many potential borrowers. After this current Obama economy, people with great credit and strong incomes are becoming a small minority of the over all population.

[Wuli]

The problem is that the totality of “monetary policy” is more than “interest rates”.

And while the Fed has obligations that the Canadian central bank authorities do not have - because the U.S. dollar is a (or “the”) “reserve” currency and the price-delimiter in so much foreign trade - the trade imbalance (trade deficit) is, in part, reflective of a monetary imbalance fueled by the printing of too many dollars (no matter what the reasons, excuses were).

The Canadian economy did not have all those extra dollars seeking their homeland to re-invest in.

They were “extra” dollars because Americans were borrowing and spending and consuming more than they were earning, in the aggregate, but the Fed just printed enough dollars to let them do it anyway.

When the foreigners piled up too many of them, selling the imports Americans bought on debt, they sent them (the dollars) back to the U.S. and, in part, bought securitized mortgage instruments (that had Uncle Sam standing behind them- implied) but got higher interest rates than treasury notes.

But yes, another shibboleth that needs to be torn down is the acceptance of the Fed’s easy-money printing presses and the failure to acknowledge the role of it’s policies in the trade deficit and excessive debt.

The Canadian central bankers cannot use the pretense of their currency being a “world reserve currency” to excuse political abuse of their monetary policy, as our Fed has done (probably for my entire lifetime). That’s a good thing for them, with regard to how monetary policy intersects with interest rates and housing; theirs is more stable.

[NonValueAdded]

George Bailey?

[Ethrane]

Gee...you mean that no one would underwrite mortgages unless they were deemed ‘credit-worthy’ risks?

Really? Whoulda think it?

You don’t ‘shape’ a housing finance system...you let the MARKET work.

[CutePuppy]

Well stated. The dollar’s “reserve currency” status is a double-edged sword - it could be a blessing and a curse... but is something that often is not considered, particularly regarding the “inflation”.

It certainly makes the job of the Fed far more difficult, having to consider, gauge and attempt to balance the worldwide demand of officially and unofficially pegged sovereign currencies, in addition to accommodating domestic demand, organically or artificially (politically) created.

[Intolerant in NJ]

“We’ve been through another crisis, the S&L (Savings and Loan), where banks indeed held long-term mortgages on their books," said Susan Wachter, professor of real estate and finance at the University of Pennsylvania’s Wharton School. "That’s a recipe for disaster.”...no, the recipe for disaster was when the government started messing around with the established laws which had determined the conditions under which many people had taken out their loans and budgeted their savings and other investments - among other things it abolished the passive investment credit for real estate which immediately sucked the value out of many of the mortgages the S&L's had on their books, and many of them went under - if government would stop interfering - excuse me, regulating - people could start making investments in the economy including housing which would be longterm and stable, far from disastrous.....

[CutePuppy]

... if government would stop interfering - excuse me, regulating - people could start making investments in the economy ... based on standard financial and economic parameters, not the ones distorted and created by politicians and bureaucrats, for their own political benefits.

[CutePuppy]

...you let the MARKET work.

Now, that's a scary thought for politicians... and it goes against the chronic Democratic "Don't Do Nothing, Do Something!" and "If It's Not Broken, Break It!" diseases.

[haroldeveryman]

“Nobody stopped a Canadian bank from lending in the subprime market, they chose not to,” says CIBC’s Benjamin Tal. “It was not the government, it was not monetary policy; there were no regulations whatsoever regarding how much you can lend in the subprime market. Canadian bankers decided not to do so, because it was too risky.”

In other words, Canadian banks did not lend in the subprime market because the government allowed them to not lend in the subprime market.

[CutePuppy]

In other words, Canadian banks did not lend in the subprime market because the government allowed them to not lend in the subprime market.

Or didn't have the laws, rules, regulations and lawyers forcing them to make financially unsound loans... About sums it up.

[CutePuppy]

Fewer people would own homes. We’re discovering that isn't such a terrible thing.

It's not such a terrible thing but it may not necessarily be the end result, as the Wuli's post #18, on Canadian housing market and ownership rate, shows. In other words, housing prices might have to find the "natural" ownership rate...

Investors in a high risk mortgage would realize a much higher return in their investment.

Reward would become commensurate with risk, and that is how free markets work, i.e., free from distortion of government's influence and direct or indirect (mandated or incentivized) malinvestment.

[wac3rd]

If Fannie or Freddie “disbanded” and the existing loans were paid off/sold/foreclosed by outside investors, the immediate effect would be a huge drop in home prices. The FHA would be innundated, but they already hae a huge default rate and would hopefully only serve Vets.

Oddly enough, if the GOP wins back a majority in one or more houses in November, and Fannie folded, private banks and investors would fill the void...but there would be no subprime, no doc, no job, no savings, no credit-type loans, they would be underwritten like the old days.

Minorities and Liberals would cry and in 3 years, Barney Fwank would be pressing for loosening of standards, again.

[jazminerose]

Yes. We have it now by way of hard money lenders. Borrowers with terrible credit & unverifiable income have always been able to get mortgages—provided they have 30-40% down & a willingness to pay loan shark rates.

Many if not most of those hard money loans will go south, the lenders have priced that into the loan.

No problem for me—again, your hard earned tax money & mine isn’t goint into it. Let borrower & lender figure out what works for them. I don’t care.

[haroldeveryman]

Exactly. Also note that the two people chosen by the Democrat Congressional majority to head up the “investigation” of the banking crisis, Barney Frank and Chris Dodd, were the two legislators most closely associated with Fannie and Freddie (whose securitization of the subprime mortgage loans created the toxic assets that led to bank insolvency).

This illustrates the fact that in this day and age, at least, the implicit purpose of government appointed “regulators” is to protect vested interests.

[CutePuppy]

Also note that the two people chosen by the Democrat Congressional majority to head up the “investigation” of the banking crisis, Barney Frank and Chris Dodd, were the two legislators most closely associated with Fannie and Freddie...

... and writing FinReg legislation that is pure power grab of financial industry, where Fannie and Freddie are not even mentioned...

The exact equivalent of Jamie Gorelick getting a seat on the 9/11 Commission "investigating" the reasons behind the successful al-Qaeda attack and why different legal, investigative and intelligence departments and agencies had "problems" communicating with each other... while ignoring and hushing up her own directive mandating precisely "The Wall" between them.

[haroldeveryman]

I was watching when John Ashcroft testified before the 9//11 Commission to defend the Justice Department’s role in the War Against Terrorism. They were trying,in the interest of “Internatonal Human Rights”, and against every precedent in US history, to disallow Bush’s use of miltary tribunals to try foreign military combatants. They sat Sandy Gorelich right across from him, making eye contact, trying to make him lose his poise. Instead of trying to sound reasonable”, Ashcroft tore this beeotch a knew one, relating how Ms Gorelich’s “wall” prevented CIA information that could have stopped the enemy from acting from getting to the FBI, who had the authority to get these guys before they hurt someone. Sandy just sat there with this scheiss-eating grin trying to look like she was mocking him. Our intelligence agencies and military did get results after 9-11 succeeded, and disrupted the ability of Al Qaeda’s leadership from moving around and communicating.

[CutePuppy]

Phony Financial Reform - B, 2010 July 03, by Thomas G. Donlan

The huge overhaul bill ignores most big problems and dodges the rest.

There is something in the financial-services bill for almost every interest, but the real winners are the cynics who think Congress can't do anything right. The monster that crawled out of the conference committee on June 25 has about 2,300 pages, and one hostile Republican congressman said it probably has three unintended consequences per page.

It will keep the bureaucrats and lobbyists busy, that's for sure: The Chamber of Commerce counted 355 potential new agency rule-makings, 47 studies and 74 reports required by the bill. The infamous Sarbanes-Oxley law of 2002 -- the previous congressional exercise in futile corporate regulation -- demanded only 16 rule-makings and six studies.

The general intent of the financial-reform bill was impossible. Sponsors wanted to reduce the risk in an inherently risky industry, and they wanted to do it without tightly regulating it or subjecting it to the discipline of a free market.

The big issues will remain untouchable.

What is to be done with Fannie Mae and Freddie Mac, the quasi-government agencies that have become the nation's main source of new home mortgages? There's no answer in this bill. Converting Fannie and Freddie to Feddie hasn't stopped them from losing more tens of billions of dollars on bad loans, and it hasn't brought order and good sense to the housing market. .....

If the bill becomes widely known as Dodd-Frank, then maybe Sen. Christopher Dodd, D., Conn., and Rep. Barney Frank, D., Mass., finally will acquire the reputations they so richly deserve. It happened to former Sen. Paul Sarbanes, D., Md., and former Rep. Michael Oxley, R., Ohio. Their Sarbanes-Oxley "reform" of corporate accounting and other issues has turned out to be an expensive failure, blighting their names for the history books. Dodd and Frank deserve the same, only more so.