Did Frank have a conflict of interest at Fannie Mae?
posted at 8:30 pm on October 3, 2008 by Ed Morrissey
Now that Congress has passed the bailout emergency liquidity bill, we can expect that both Democrats and Republicans will attempt to define the catastrophic failures of Fannie Mae and Freddie Mac quickly and energetically. Democrats such as Barack Obama and Nancy Pelosi have already started calling it a failure of “deregulation” and greed, while Republicans have attacked Democrats like Chris Dodd and Barney Frank for blocking action to tighten regulatory control over the two giant lenders. Bill Sammon at Fox News reports on one potential argument for a conflict of interest that may have Frank on the defensive:
Unqualified home buyers were not the only ones who benefitted from Massachusetts Rep. Barney Frank’s efforts to deregulate Fannie Mae throughout the 1990s.
So did Frank’s partner, a Fannie Mae executive at the forefront of the agency’s push to relax lending restrictions.
Now that Fannie Mae is at the epicenter of a financial meltdown that threatens the U.S. economy, some are raising new questions about Frank’s relationship with Herb Moses, who was Fannie’s assistant director for product initiatives. Moses worked at the government-sponsored enterprise from 1991 to 1998, while Frank was on the House Banking Committee, which had jurisdiction over Fannie. …
The two lived together in a Washington home until they broke up in 1998, a few months after Moses ended his seven-year tenure at Fannie Mae, where he was the assistant director of product initiatives. According to National Mortgage News, Moses “helped develop many of Fannie Mae’s affordable housing and home improvement lending programs.”
Critics say such programs led to the mortgage meltdown that prompted last month’s government takeover of Fannie Mae and its financial cousin, Freddie Mac. The giant firms are blamed for spreading bad mortgages throughout the private financial sector.
The big question here would be what Moses did as “assistant director for product initiatives”. “Product” in Fannie Mae parlance would be securities created by the lender that were sold to investors. While that position would not approve the purchase of bad loans, the creation of “product initiatives” would create pressure to purchase more and more loans to generate more and more sales of the securities. An assistant director would certainly have significant influence on the direction of Fannie Mae in this regard — especially one with a partner in Congress on the Financial Services Committee.
For that reason, regardless of Moses’ actual efforts in creating the bad paper, the relationship provided a serious conflict of interest for Frank. Frank was supposed to oversee the actions of Fannie Mae as a government-sponsored entity. If he had a partner, spouse, or family member in position to be affected by Frank’s decisions, then Frank should have recused himself from that committee. His failure to do so represents a breach of public trust regardless of Fannie Mae’s failure.
It does put an interesting light on Frank’s resistance to regulators regarding Fannie Mae, but doesn’t necessarily explain the collapse, at least not directly. Most of that happened after Frank ended his relationship with Moses, though, as did most of the damage from Fannie’s overvalued securities, which have poisoned the entire investment industry. This may not have much bearing on the actual failures, but it shows the lack of ethics among those whom the public trusted to safeguard our interests.
Blowback
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Responsibility for a mess like this resides in three places.
1. The financial institutions and managers who went along with the flow thus taking the easy road to quick riches and eventual damage to the economy.
2. The elected and appointed government functionaries that formulated and enforced the destructive policies that caused the crisis, and those who meekly stood by and allowed them to continue with only token resistance.
3.WE THE PEOPLE who, through either political ignorance, apathy or utter stupidity, elected these slugs and kept them in office.
Ok, rant off let’s get back to bashing Barney. That’s more fun.
Oldnuke on October 3, 2008 at 9:50 PM
The problem was it took him too long to get to that step (WH meeting). By that point, McCain had already stuck out his neck and said he was going back to DC and the dems had already said he wasn’t needed. Also, by then Paulson had already been negotiating with the dems on the bailout package with little or no involvement by Republicans. And, reportedly, Paulson’s office sent talking point notes to Obama in advance of the meeting, which then was not really run by the President. You don’t call a meeting of contentious parties when you’re the boss without having a plan on how to control the meeting. Bush doesn’t seem to have coordinated with McCain at all.
After that, Bush gave an ineffective speech on national television which apparently didn’t sway enough voters or politicians to produce a successful vote… adding fuel to the fire that McCain and the Republicans were obstructionists.
I just think that at this point Bush should have had a firmer hand in the process — Paulson works for him, right? — and should have coordinated his actions to maximize political benefit to his party. It’s true that Bush was not partisan (and was “sane” as you say), but he was ineffective in terms of producing a good compromise bill without collateral damage to McCain and the House Republicans.
I think McCain behaved the best of the lot in terms of really trying to come up with a compromise, but he was in an awkward position because everything he did was interpreted as a campaign ploy. Bush should have called the meeting sooner and made sure McCain and the Republican leaders were prepped.
Don’t get me wrong — I think Bush did a lot of good while he was in office in keeping the country from being attacked again — but in domestic issues, he’s been floundering, imho, and he didn’t help his party last week.
Y-not on October 3, 2008 at 9:51 PM
I figured that much. I was hoping you’d say “STOP.”
ManlyRash on October 3, 2008 at 9:52 PM
You are correct, of course. I was speaking in a losse, metaphorical sense.
“A republic, madam, if you can keep it,” was Dr. Franklin’s response.
I guess we can’t. I’m only sorry that I’m alive to see it unravel.
ManlyRash on October 3, 2008 at 9:54 PM
From the O’Reilly Report: Thibboleth.
BuckeyeSam on October 3, 2008 at 9:55 PM
You’re giving up too easily. “Never give up! Never surrender!” Not my quote Tim Allen’s from some movie.
Oldnuke on October 3, 2008 at 9:57 PM
beaver pic…
Oldnuke on Oct 3,2008 at 9:30PM.
Oldnuke: Outstanding snapshot of a very fine looking beaver!
And,its in its natural (‘grotto’) surroundings!!:)
canopfor on October 3, 2008 at 9:57 PM
Those aren’t marbles in his mouth.
ManlyRash on October 3, 2008 at 9:58 PM
The Boston Herald and Howie Carr just got their October Surprise!
Little Boomer on October 3, 2008 at 9:58 PM
Y-not:
I think we have to remember that Bush is in the last months of his last term and Congress is in the hands of the other party. That is who he had to negotiate with. He could not demand that the Democratic leadership include Republicans.
I am not saying his speech was great, but I don’t think there was anyway to give a great speech under the circumstances. I think his primary concern was to make people think it was serious without prompting a crash in the markets in the process.
As for McCain and Obama, I remember that McCain had announced that he would return to DC and Obama was just sort of ignoring the whole thing and then Bush sent for everyone to come to the White House for a meeting. I am not sure about coordinating with McCain. I had gotten the impression that McCain did not want to be considered a lacky or a surrogate of Bush’s. I thought he was trying to set himself apart.
I was just struck by the suddenness and the seriousness of it all. However, the press is always so hysterical and dramatic anymore, I am never sure if my perceptions of these things are really accurate.
Terrye on October 3, 2008 at 9:59 PM
LOL. Galaxy Quest. Funny movie.
It’s not a question of giving up, Nuke. It’s a question of knowing where to draw the line. Like Clint Eastwood once said: “A man’s gotta know his limitations.”
ManlyRash on October 3, 2008 at 9:59 PM
Picture:1000 WORDS
SouthernGent on October 3, 2008 at 10:00 PM
Somebody needs to take Barneys
gavel away,so he can’t do any
more harm!!
canopfor on October 3, 2008 at 10:00 PM
They are. Thing is, you tend to be more level-headed, optimistic and judicious in your analysis than many of us here – myself included.
ManlyRash on October 3, 2008 at 10:02 PM
SouthernGent at 9:50 PM-
Barney lost his marbles long ago.
There’s something else going on around his Poligrip.
Think Trojan Horse.
profitsbeard on October 3, 2008 at 10:03 PM
Picture:1000 WORDS
SouthernGent on Oct 3,2008 at 10:OOPM.
SouthernGent: In the picture,I wish the Elephant would
push that Jack#ss into the fire,a hem,haha!!:)
canopfor on October 3, 2008 at 10:03 PM
ManlyRash:
I see what you mean.
To be honest, the country is so polarized at this point that I do not know what it will take to give people the feeling we are on the right track as the polls like to say.
I know more and more people who just tune it all out. They go about their lives and unless something bad happens that forces them to pay attention to all this stuff, they just want to be left alone.
Maybe it is all too much. TV, cable, internet, the campaigns that never end, the partisan bickering…
Terrye on October 3, 2008 at 10:04 PM
Why thank you, I was rather taken by it too. Here’s the full article I snagged it from. Interesting read.
Oldnuke on October 3, 2008 at 10:04 PM
I hear he’s frequenting the Little Italy section of Boston. Perhaps it’s an Italian Stallion.
ManlyRash on October 3, 2008 at 10:04 PM
ManlyRash:
I am blushing.
Terrye on October 3, 2008 at 10:05 PM
The key word is “polarized.” We are more sharpley divided than ever before in history.
Think, my dear…where will this division eventually lead if it progresses and worsens?
ManlyRash on October 3, 2008 at 10:07 PM
Why thank-you
Oldnuke on Oct 3,2008 at 10:04PM.
Oldnuke: I linked to that site!
That article looks good,yet titalating and
perplexing,
“Beavers v Backhoes”,oh my,that must be a good
read,a hem!!!haha:):)
canopfor on October 3, 2008 at 10:10 PM
Mission accomplished. Understand, madam, that I enjoy persiflage. You have been most accommodating…and for that I thank you.
ManlyRash on October 3, 2008 at 10:11 PM
Get a room! :P
lorien1973 on October 3, 2008 at 10:11 PM
Sly.
profitsbeard on October 3, 2008 at 10:12 PM
fox saturday 8pm a special on the economic meltdown.
lorien1973 on October 3, 2008 at 10:13 PM
ManlyRAsh:
I do not know where it will lead. That is one reason I don’t want Obama to win. Some people think he can unite the country, please. The only reason he got the nomination is because the country is divided. He is a symbol of that division. And whatever malice that has been directed at Republicans and Bush will just go right back at the Democrats and Obama.
A sort of boomerang.
I think McCain is more capable of governing under these circumstances. I keep hoping that it is a sort of passing thing.
I do think the media feeds on the malice however. It is a sort of symbiotic relationship.
Terrye on October 3, 2008 at 10:13 PM
Only if you join us. It’ll be a Waitress Special…
ManlyRash on October 3, 2008 at 10:15 PM
ManlyRash:
You are welcome. Good night.
Terrye on October 3, 2008 at 10:15 PM
You just answered your own question, Terrye.
Parasitic might be more accurate.
ManlyRash on October 3, 2008 at 10:16 PM
Good night.
ManlyRash on October 3, 2008 at 10:17 PM
@ Terrye on October 3, 2008 at 9:23 PM
Yes, I know all that. It doesnt matter. McCain should THROW him under the bus BIG TIME, if he wants to become president. Blame the democrats for their part, which is pretty much everything, and blame Bush for not having the courage to come straight to the American people with what was going wrong. And then PROMISE the American people that a McCain presidency will be transparent and that he will be accountable to the people. You know, his entire theme for his campaign? Government on the side of the people? You can defend Bush all you want, but defending Bush = Obama as president. Its that simple. Throwing Bush to the lions = a CHANCE that McCain could be president.
muyoso on October 3, 2008 at 10:22 PM
Thx for posting that. My thoughts exactly.
Y-not on October 3, 2008 at 10:24 PM
Hypocrites like Frank are all for gay marriage, but do not want to recognize that a gay relationship can create a conflict of interest.
slp on October 3, 2008 at 10:31 PM
Sweet. If YOU join us, it’ll be a Combo Platter.
ManlyRash on October 3, 2008 at 10:32 PM
So Barney was “in bed”–literally–with Fannie Mae.
jgapinoy on October 3, 2008 at 10:35 PM
Bow chika wow wow!
lorien1973 on October 3, 2008 at 10:35 PM
Will the next economic depression be bipartisan? I sure hope so!
electric-rascal on October 3, 2008 at 10:38 PM
:
There’s laws against that in certain fly-over states.
Fuquay Steve on October 3, 2008 at 10:38 PM
Heh…sex is always better when it’s dirty, sinful and illegal.
ManlyRash on October 3, 2008 at 10:44 PM
I find it a little disconcerting that a thread about Barney Frank & his Fannie Mae lover could ignite such sexual tension.
Disturb the Universe on October 3, 2008 at 10:47 PM
The most ethical congress evah!
csdeven on October 3, 2008 at 10:48 PM
Conservatives accept it as a fact of life…liberals obsess over it.
ManlyRash on October 3, 2008 at 10:52 PM
Yeaaaaaah, baybeeee….San Fran Nan!
ManlyRash on October 3, 2008 at 10:53 PM
I see where the “loopholes” in deregulation came from….
Static21 on October 3, 2008 at 10:55 PM
Hey, that’s a good campaign commercial:
lorien1973 on October 3, 2008 at 10:55 PM
Huckabee…Guitar
Clenis…..Sax
Palin……Flute
Barney Frank….Bearded Oboe.
csdeven on October 3, 2008 at 10:59 PM
*bowing in submission*
I am not worthy….
ManlyRash on October 3, 2008 at 11:02 PM
Yeah, I figured Barney for a submissive dungeon dweller too.
MarkABinVA on October 3, 2008 at 11:03 PM
Ahh…Poor Herb.
Disturb the Universe on October 3, 2008 at 11:06 PM
You’re looking for ethical conduct from a person who was caught with a gay brothel being run out of his basement???
This is precisely why character is important when selecting our public officials.
I figure the only way this reprobate keeps getting elected is that his neighbors don’t want him home: they’re really exiling him to Washington.
landlines on October 3, 2008 at 11:07 PM
Ms. Fwanks, you poor bastard; Queer, fat, and stupid, is no way to go through life, Bawney. I pity your proctologist.
FiveWays on October 3, 2008 at 11:11 PM
She figured everything was still OK since we hadn’t shouted Palomino yet.
Buford on October 3, 2008 at 11:13 PM
This is only despicable when the Republicans call him out on it. As long as we act like gentlemen at a massacre of our own people then there’s no hope.
Mojave Mark on October 3, 2008 at 11:16 PM
Friday nite palate dirtier…I needed that. Thanks.
ManlyRash on October 3, 2008 at 11:21 PM
And THAT, in a nutshell, is Mac’s strategy.
ManlyRash on October 3, 2008 at 11:22 PM
FiveWays on October 3, 2008 at 11:51 PM
It’s Barney Frank. If you look up “immoral pervert” in the dictionary, him and his crap-colored mini-Hitlerstache will be the picture. I pray it is only crap-colored, given what Barney spends his time doing.
BKennedy on October 3, 2008 at 11:53 PM
I, for one, would just like to hear Barney Frank say “Sufferin’ Succotash!”
Just once…
anuts on October 4, 2008 at 12:05 AM
I’m not sure exactly how this Buzz Up! thing works but Angelina Jolie is #7 in the top stories list with 4 votes and this story didn’t appear in the top 10. The new McCain ad shows up though.
Mr_Magoo on October 4, 2008 at 12:10 AM
That made me laugh. I needed that after a long, tough week. Thanks!
Mr_Magoo on October 4, 2008 at 12:11 AM
Thanks for that link. I have been on the outside of that joke for quite some time.
RushBaby on October 4, 2008 at 12:14 AM
Topsecrtk9………….. by the time I got to:
……….. I had already wanted to throw up and spit nails, then I realized that this was written six years ago.
The realization of the damage, corruption, and political power grabbing that has gone on since then made me just stand up………… quietly walk to my son’s room and stand over his bed with tears in my eyes…….
If we don’t hold these people accountable, then this precious gem called the United States of America truly no longer exists, and thinking of the millions that have died to “protect” our “freedom and rule of law” all have died for nothing……….
I am so frustrated and pissed off right now that no one, NO ONE in elected office will stand up and tell the truth to the American people so we can vote these whores out of power and try to fix this.
Look at what we have become……………… enjoy the new season of American Idol people, if you don’t rise up for this, you will not rise up for anything, and your children’s future ends today with the vote.
Seven Percent Solution on October 4, 2008 at 12:17 AM
……… that’s one.
………… anyone else want to join us?
Seven Percent Solution on October 4, 2008 at 12:23 AM
Hard to believe – but it must be indicative of something – perhaps of how far we’ve fallen, perhaps how difficult it is to deal with this whole catastrophe, but here we are at post x-thousand on Barney Frank, and the revelation that he was literally sleeping with someone he was supposed to be regulating, and no one has yet brought up the earlier scandal that nearly did and probably should have ended his career!
This looks like the second prostitution service run out of Frank’s home – except this time he can’t claim it was happening without his knowledge!
http://en.wikipedia.org/wiki/Barney_Frank#Reprimand
CK MacLeod on October 4, 2008 at 12:26 AM
(it’s enough to make a guy starting feeling all Pat Robertson about us paying for our moral laxity…)
CK MacLeod on October 4, 2008 at 12:27 AM
Pelosi said today, “Under the leadership of our chairman, Barney Frank, as I called him on the floor, a maestro,…”
So do we have to start calling Barney Fwank “The Maestro” now?
Mr_Magoo on October 4, 2008 at 12:31 AM
“Oh Barney, oh Barney…” pause… “oh Maestro”
[Hmm. Commenting on my own comments. Time to shut down.]
Mr_Magoo on October 4, 2008 at 12:37 AM
Please look at this.
CEO to Cabinet Secretary. Hack bureaucrat to Board Member. Media hack to government hack. Centralization is the great evil of our time. Capitalism gets the blame for out-of-control corporate giantism. They use “free markets” when it benefits them and obstruct free markets when it benefits them. Can you see it?
There’s been a merger. Average citizens and small businesses are not Club Members.
Feedie on October 4, 2008 at 12:46 AM
The Repub’s and George Bush with his disgusting “New Tone” allowed the democrats to get away with crimes. What gave Pres. Bush the right to not enforce laws and punish criminals? DD
Darvin Dowdy on October 4, 2008 at 12:48 AM
Bwahahahahahahahhahhahaha!
Bartholomew: The game was created to demonstrate the futility of individual effort. (Rollerball)
Good luck selling that to the broke fella that decides he has to feed his family himself and not rely on the government to give him a chore list. This ‘new direction’ leads straight down hill. Enjoy the top of the mountain while you can. Freemen will be tearing it down just as soon as the socialists are done with their party.
Limerick on October 4, 2008 at 12:56 AM
More people should ask that question. Open borders is another instance of systemic lawlessness. Too many people do not fear the implications. They’re too busy hating anyone with an – (R) after the last name.
Feedie on October 4, 2008 at 1:01 AM
Didn’t know about being a left-wing CEO. Where’s my golden parachute? I have an $18,000,000 bonus coming for 60 seconds of typing.
Feedie on October 4, 2008 at 1:13 AM
Barney is a liar and a thief. Almost all of them are. Vote those bastards out!
sheebe on October 4, 2008 at 1:26 AM
Who was the husband and who was the wife?
I’m thinking Barney was the wife.
It’s time to squirm you bxxxx.
winemkr on October 4, 2008 at 2:27 AM
stop me if you’ve heard this one…..
being a pimp is a lot like working for Fannie Mae….you are in charge of people getting f***ed…..
stand up, stand up Chuck ah I’ve got a million of ‘em you wacky Bosniaks…
sven10077 on October 4, 2008 at 2:35 AM
Texas, Manly….Texas.
sven10077 on October 4, 2008 at 2:39 AM
Fun with anagrams, Barney Frank =s Fanny Barker…..
Ever notice how Jamie Gorelick and Barney Frank’s names keep popping up at every monumental screw-up in DC?
They are Satan’s Forrest and Jenny Gump.
sven10077 on October 4, 2008 at 3:41 AM
fixed.
ajmontana on October 4, 2008 at 6:37 AM
epic article on 2008 written in 2002 by the Washingtonian
my fisking and thoughts on saidsame
sven10077 on October 4, 2008 at 7:22 AM
That picture of him still reminds me of Buddy Hackett.
AubieJon on October 4, 2008 at 7:52 AM
Ha cha cha chaaaa……I got a million of em!
On a more serious observation, one look at Barney Frank and you can tell he is light in the loafers.
csdeven on October 4, 2008 at 8:50 AM
Barney Frank has taken mores balls off his chin than Jorge Posada.
csdeven on October 4, 2008 at 8:52 AM
Barney will be rewarded for this criminal and largest financial calamity since 1929 with a cabinet post in the Obama administration. Mr. Frank will be the first Secretary of Sexual Reorientation.
Will there be hearings on this? Maybe. But the demoncRATS will be in the majority and thus be in control. Besides, the republicans will be afraid to lay any blame on Barney because they may be labeled as homophobes. The law doesn’t apply to demoncRATS.
Nothing to see here, move along….keep it moving…
mountainmanbob on October 4, 2008 at 8:59 AM
From the Fox story:
In Bill O’Reilly’s interview with Frank, Barney asserts that he only became chairman of the committee in 2007, in a pathetic attempt to dodge responsibility for any prior action on his part. The fact is that Frank began serving on the committee in 1981, and in 2003 he became the committee’s ranking Democrat and a prime obstructionist to Bush Administration attempts at reform.
Buy Danish on October 4, 2008 at 9:04 AM
Obama keeps blathering that he warned about sub-prime mortgages. If McCain doesn’t ask Obama why Obama has the Queen of sub-prime mortgages- Penny Pritzker- as his finance chairman then McCain is nuts and deserves to lose.
drjohn on October 4, 2008 at 9:11 AM
Does anyone see a problem with wealthy Democrats buying into certain entities thereby deciding who survives and who doesn’t? Mr. Buffet has sunk a lot of money into Goldman Sachs and GE this past week. Maybe it is just a good buy because they handled the situation better than other institutions but Sec. Paulson being a former Goldman Sachs guy makes me nervous. This mess is so convoluted that it looks like a power grab to me. I need to go make a new tinfoil hat.
Cindy Munford on October 4, 2008 at 10:03 AM
Did anyone notice how the FDIC limit being increased to 250K was some sort of big deal? Under the old limit, if you have over 100K, you simply open another account to put the overage in. To me, unless I’m missing something, is another example of our elected officials lying to us.
Also, how do any of us know if the instability in the market was manipulated to scare us into supporting the bailout? It sounds far fetched and conspiratorial, but would anyone put it past them?
csdeven on October 4, 2008 at 10:12 AM
A…..yeah….and in addition to that, it might be a real good idea for McMaverick to call Obama out on his claim and ask him WHEN and WHERE he warned about this. Press him for SPECIFICS. Because this claim by Barry is a BLATANT LIE.
FiveWays on October 4, 2008 at 10:14 AM
You guys are not going to believe this, but I know Herb Moses and I know about his relationship with Barney Frank. I had forgotten all about it until these stories hit last week. I can’t say too much here. But someone needs to ask how Moses got his job at Fannie Mae with little prior qualifying experience, and why his departure coincided with his breakup with Barney. When he left Fannie Mae it was no vountary, and he had no other job. He ended up moving to California and is now apparently a mere loan officer with Wells Fargo. You would think that a person with high-level experience in product development at Fannie Mae could land a better job.
Fannie Mae exerted influence with Congress in MANY different ways, and Barney Frank was probably not the only powerful Democrat on Capitol Hill who may have arranged a cushy job for someone there.
It was well know in Washington that Fannie Mae was among the most gay-friendly companies in terms of hiring and benefits. It prided itself on being a “progressive” employer. If anyone could access the archives of the Washington Blade (gay newspaper), I am sure you could find some great articles about Fannie Mae as a place to work. There are still many gay people in high level jobs there. I have always thought that this was a big reason Barney Frank had a soft spot, and perhaps a blind spot, for the company. This company knew what it was doing in terms of buying support from the Black Caucus, the “gay caucus,” the female members of Congress, etc. and not just through direct lobbying and campaign contributions. It used its hiring very skillfully.
rockmom on October 4, 2008 at 10:29 AM
‘Kept’…Surely you mean ‘keep’ them in office as no one is foolish enough to believe the idiots who sent Dodd or Franks to Washington will now throw them out, regardless of their guilt??
JIMV on October 4, 2008 at 11:39 AM
Sven – great reference. It sounds like they use the same heavy handed thugs that obama uses. Maybe they are the same.
Bambi on October 4, 2008 at 12:21 PM
Great, I brought this up 8 days ago.
This still wont be covered by the MSM because Barney is gay and the two, Herb and Barney, still have a relationship.
If there is one person in the world most responsible for this bailout disaster, it is Barney.
shooter on October 4, 2008 at 12:28 PM
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