Skip to comments.No worries for Dodd and Frank
Posted on 12/08/2011 12:09:13 PM PST by Graybeard58
"Barney Frank: I've destroyed the economy, my work here is done." Washington Times headline, Nov. 29
It was quite a confluence of news last week when in the span of hours came Rep. Frank's retirement announcement, a report on declining housing prices and home-ownership rates, and a poll belaboring the obvious about Americans' fears about the housing and stock markets.
With his fellow Democrat, former Sen. Chris Dodd of Connecticut, Rep. Frank, D-Mass., shoulders much of the blame for today's economic catastrophe and the fiscal crises plaguing governments at all levels. They spent years pushing policies that ultimately required lenders, under the threat of government retribution and political demagoguery, to write mortgages, for borrowers with little or no down payment and no hope of repaying.
To backstop trillions in reckless borrowing, Rep. Frank and then-Sen. Dodd helped establish Fannie Mae and Freddie Mac as the No. 1 buyer of worthless mortgages and then blocked any number of attempts to reform those government-sponsored enterprises to keep them from failing.
All the while, they combined to rake many tens of thousands in campaign contributions from Fannie and Freddie, according to the Center for Responsive Politics.
After the housing bubble exploded, Fannie and Freddie careened inexorably toward insolvency, but Rep. Frank and then-Sen. Dodd denied anything was wrong. "I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under," Rep. Frank famously said in July 2008; within months, Fannie and Freddie were in government receivership, where they remain today, buying more bad loans and hemorrhaging huge sums, including a combined $14 billion in the last quarter alone.
With prices continuing their decline, the housing market is not expected to hit bottom anytime soon. The Mortgage Bankers Association and government data-keepers say 22 percent of mortgages more than 10 million are under water by an average of 30 percent; an estimated 1 in 200 home mortgages have been foreclosed, and a quarter-million homes enter foreclosure every quarter; and foreclosures now take an average of 21 months to process. The bottom's arrival will be delayed further the longer the government persists in preventing free-market forces from re-establishing supply and demand equilibrium.
As it is, Standard and Poor's reports prices are down to levels not seen since the start of 2003, and projects America's home-ownership rate is headed down from the artificial peak of 70 percent in 2005 to 62 percent by 2015. That would bring it to 1960 levels, but that's only a point or two below the historic average set and sustained by the free market, before Rep. Frank and then-Sen. Dodd fatefully decided they were powerful enough to repeal the laws of economics through coercive legislation and regulation.
Against this backdrop, is it any wonder half of the respondents in last week's Rasmussen Reports poll expect it will take more than three years for housing prices to recover, a view that matches their most pessimistic assessment in three years, and half continue to believe "another 1930s-like Depression is possible" soon?
But Good Ol' Barney and Chris aren't the least bit concerned. Rep. Frank is likely to make millions in retirement as a consultant and author. Mr. Dodd has landed a seven-figure gig lobbying for Hollywood. Both will benefit from lifetime government pensions and fringe benefits most private-sector stiffs only can dream about.
No, their work is done. They have wrecked the economy, along with the credit ratings and home-ownership dreams of millions of individuals and families. But they got theirs, and that's all that matters.
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