Barney Frank argued this week that he had always warned about the excesses of pushing home ownership and had advocated for rentals instead. Our friends at Verum Serum couldn’t believe their ears, because Frank has long been one of the loudest voices supporting the CRA and Fannie/Freddie policies that encouraged irresponsible lending. Here’s Frank making that clear on the floor of Congress on June 27, 2005, in support of the recognition of National Home Ownership Month:
I think we have an excessive degree of concern right now about home ownership and its role in the economy. Obviously, speculation is never a good thing. But those who argue that housing prices are now at the point of a bubble seem to me to missing a very important point. Unlike previous examples we have had, where substantial excessive inflation of prices later caused some problems, we are talking here about an entity — home ownership, homes — where there is not the degree of leverage we have seen elsewhere. This is not the dot-com situation; we have problems with people having invested in business plans for which there was no reality. People building fiber-optic cable for which there was no need. Homes that are occupied may see an ebb and flow in the price at a certain percentage level, but you’re not going to see the collapse that you see when people talk about a bubble. And so, those of us on our committee in particular, will continue to push for home ownership.
Now check what Frank claims was his position all along:
Now, suddenly, home ownership was a conservative idea, and Frank suddenly realizes that people should only buy houses when they can afford them. Only a politician could lie with such a lack of conscience, but with a surfeit of sanctimony.
His “Bubble? What bubble?” performance in June 2005 should become required viewing for anyone who wants the real history of how the economy collapsed. In another addition to the Someone Left The Irony On Department, Frank scolds the people behind the dot-com bubble for not having realistic business plans while Frank protected Fannie Mae and Freddie Mac from regulators who warned that the two GSEs had the same exact problem. And Frank was right that the housing collapse wouldn’t be as bad as the dot-com pop — but in fact it was much, much worse, thanks to Congressional action that mandated the creation of mortgage-backed securities that spread the poison of bad loans throughout the global financial system. The dot-com bubble burst resulted in a mild recession, but Frank’s supposedly-impossible housing bubble collapse sent the entire world economy crashing into a heap.
Clueless? A liar? In this case, Frank qualifies as both.