Barney Frank

Barney Frank Used Influence with Fannie Mae, the Failed Mortgage Giant Bailed Out by Taxpayers

by Hans Bader on May 26, 2011

in Bailout Watch, Economy, Legal, Property Rights

Former House Banking Committee Chairman Barney Frank (D-Mass.) tenaciously opposed efforts to reform Fannie Mae and Freddie Mac, the government-sponsored mortgage giants that were bailed out at a cost to taxpayers of between $148 billion and $363 billion. Now it turns out that he got his boyfriend a “handsomely rewarded gig at Fannie Mae” while Frank “was helping to inflate the housing bubble” by pushing affordable housing mandates and policies that encouraged Fannie Mae to buy up risky mortgages.

Fannie Mae and Freddie Mac engaged in massive accounting fraud and other abuses. But Fannie Mae’s collapse was not entirely due to bad policies of its own making. Pressure from liberal lawmakers like Frank to buy up risky mortgages was also a factor in triggering the mortgage crisis, judging from a story in the New York Times. For example, “a high-ranking Democrat telephoned executives and screamed at them to purchase more loans from low-income borrowers, according to a Congressional source.” The executives of government-backed mortgage giants Fannie Mae and Freddie Mac “eventually yielded to those pressures, effectively wagering that if things got too bad, the government would bail them out.”

Despite his key role in causing the financial crisis, Frank became even more influential after President Obama took office. As the New York Times noted, the massive financial overhaul later passed in response to the financial crisis is “largely the product of extensive conversations” between the Obama administration and “Representative Barney Frank of Massachusetts and Senator Christopher J. Dodd of Connecticut.” That law, known as the Dodd-Frank Act, harms the economy, and violates both the Constitution’s separation of powers, and private property and equal-protection rights.

Frank’s co-sponsor of the Dodd-Frank Act, Senator Chris Dodd, left office in disgrace after ethical lapses. As Victor Davis Hanson notes, Dodd “got a sweetheart deal on an Irish ‘cottage’ from a crooked stock-trader,” “receiving it for hundreds of thousands of dollars less than its market value,” “got two preferential discount mortgage interest deals from the now-bankrupt Countrywide,” “got a sweetheart profit deal from a condo joint-buy with crook Edward Downe, Jr.,” “intervened with the Clinton administration to get the felon Downe pardoned,” and “misrepresented the value of his Irish cottage that he obtained via the agency of the dubious Mr. Kessinger.”

Mark Haines RIP

by Ivan Osorio on May 25, 2011

in Culture, Video, Zeitgeist

Like other regular viewers of CNBC’s “Squawk on the Street,” I was saddened to learn that Mark Haines, the show’s longtime co-host, passed away unexpectedly last night. I’ll miss watching him on weekday mornings. I always enjoyed his direct, no-nonsense approach to interviews. Indeed, this morning, Haines’s CNBC colleague Joe Kernen said that one of the most valuable things he learned from him was not to relent when an interviewee tried to evade a question. That doggedness provided some memorable on-air moments, including this one. It gets really interesting at 4:50.

My full blog post on the above interview is here.

A Republican Sweep Might Not Stop Online Gambling

by Michelle Minton on October 18, 2010

in Nanny State, Personal Liberty, Tech & Telecom

Many analysts and pollsters are predicting a Republican sweep of the coming midterm elections in the House. While Rep. Barney Frank (D-Mass.) seems untouchable, there are no guarantees and in fact, some claim that his challenger, 35-year-old Marine Corps veteran Sean Bielat, is just a few points behind Frank in polling data.

The end of Congressman Barney Frank would very likely be the end of his bill, HR 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, which he has championed (through several incarnations and sessions).

While some advocates of decriminalized Internet gambling fear that the loss of its main champion will kill any possibility of legalization in the next session, their fears may not be warranted.

Last week Chris Krueger,  political strategy analyst with Concept Capital, appeared on CNBC and had this to say about the odds of decriminalizing Net gambling in the wake of a Republican sweep (video available here):

Keep in mind with Internet gaming there’s this pretty decent shot I think that in a lame duck session assuming the democrats lose both the house and senate Barney Frank this could really be his last chance he’s the primary sponsor of this bill. The trump card for Internet gaming for lack of a better word is that it raises 42 billion dollars over 10 years. That’s a big offset that you can tack onto an expensive tax extenders bill or even some sort of a transportation bill…

So in the lame duck with a Republican sweep the odds would go up that an Internet gaming ban lift could get through. Next year though without Barney Frank in his position of leadership I think it faces some long odds. But again it raises 42 billion dollars over 10 years and you can’t discount that in a congress that’s really going to be starved for revenue raisers.

So, while legalization of Internet gambling may still have a shot in a Republican-controlled House and Senate, I doubt that the version we would see would be any more free market than Barney Frank’s current bill. Most likely, it will look something like decriminalized alcohol sales after prohibition with the government retaining a death-grip on the neck of the industry for as long as it can.

Many Free Checking Accounts Disappearing Due to Dodd-Frank Financial “Reform” Law

by Hans Bader on September 22, 2010

in Economy, Legal, Politics as Usual, Regulation, Sanctimony, Zeitgeist

The so-called financial “reform” bill that passed Congress — the Dodd-Frank Act — is wiping out many free checking accounts, since many banks can’t afford its red tape unless they either charge a monthly fee, or require a minimum balance of well over $1,000.

Ted Frank’s bank is now charging him a $15 monthly fee and $0.50 per check on his formerly free checking account, thanks to the consumer “protection” red tape in the Dodd-Frank Act, which was recently signed into law by the president.

Earlier, the same thing happened with credit cards, where a law passed by Congress in 2009 had the effect of reviving annual fees and wiping out many cash-back and rewards programs.  Congress passed a law called the CARD Act of 2009 (Credit Card Accountability Responsibility and Disclosure Act) that resulted in some of my wife’s previously-free credit cards charging her an annual fee, or chopping her rebates on purchases (she canceled those cards, and used other cards instead; but some cardholders don’t have other cards without annual fees).  Many, but not all, credit cards have reinstated annual fees or canceled rebates and rewards programs thanks to the CARD Act.  The law effectively forces responsible people to subsidize irresponsible people.  Passed in the name of consumer protection, it actually ripped off many consumers.

Democrats Block Reform of Corrupt Mortgage Giants; Fannie Mae and Freddie Mac Will Receive Billions More in Bailouts for Government-Sponsored Enterprises

by Hans Bader on May 12, 2010 · 1 comment

in Bailout Watch, Economy, Employment, Legal, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Zeitgeist

In a party-line, 56-to-43 vote yesterday, Senate Democrats blocked any reform of Fannie Mae and Freddie Mac, the corrupt, government-backed mortgage giants that even administration officials admit were at the “core” of “what went wrong” in the financial crisis.

President Obama received $125,000 in contributions from Fannie Mae and Freddie Mac executives as a senator, second only to the corrupt Senator Chris Dodd, who is retiring this year over financial improprieties (such as his real estate gift from a lobbyist and “sweetheart mortgage from Countrywide Financial“), yet is the chief drafter of the financial “reform” legislation expected to pass the Senate by next week.

The financial “reform” bill would devastate the venture capital markets needed to create jobs and small businesses, by imposing onerous restrictions on so-called “angel financing.”  It would also give government officials the ability to nationalize businesses that they claim are at risk of failing–and block meaningful judicial review of such seizures by shareholders alleging violations of their constitutional rights.  (That will increase the ability of presidents to shake down businesses for donations to their political allies, since a business in danger of being seized by the government will try to curry favor with government officials.)  The bill’s House architect, Barney Frank, boasts that it will create “death panels” for American companies (this is the same Barney Frank who for years blocked any reform of Fannie and Freddie).

Mortgage giant Fannie Mae is seeking another $8.4 billion in federal bailout money, after the Obama administration earlier lifted a $400 billion limit on bailouts for Fannie Mae and Freddie Mac, two mortgage giants known as the Government-Sponsored Enterprises (GSEs).   Last week, the other GSE, Freddie Mac, asked for $10.6 billion more in bailouts. The Obama administration is certain to approve the new bailout request: “Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie,” reports the New York Times.

Obama’s so-called financial “reform” proposal does nothing to reform Fannie Mae and Freddie Mac, admits Obama’s Treasury secretary, Timothy Geithner, who concedes they were “a core part of what went wrong in our system.” (At the direction of the Obama administration, Freddie Mac is now running up $30 billion in losses to bail out mortgage borrowers, some of whom have high incomes.  Federal regulators sought to make Freddie Mac hide the resulting losses from the SEC and the public.)  By contrast, the Republican alternative “aims to wind down, and break up” Freddie Mac and “limit taxpayer exposure” to its losses.

“American taxpayers are paying for $6.8 billion of the Greek bailout” through contributions to an international bailout fund backed by the Obama administration.   Greece is being bailed out by Europe and the international community because it is running up huge budget deficits due to a bloated bureaucracy and government pensions that let many Greeks retire in their 50s. “The Obama administration wants to use U.S. tax dollars to bail out a nation that is in a financial death spiral brought on by years of amazingly irresponsible deficit spending and similar behaviors often found in socialist states.”

Rioters in Greece killed three bank employees last week in their rage over possible budget cuts.  “The protesting civil servant workers trapped the bank employees in a burning building.”

The Obama administration earlier lifted the $400 billion limit on bailouts for Fannie Mae and Freddie Mac, so that they could continue to buy up junky mortgages at taxpayer expense, and showered their executives with $42 million in compensation.

Fannie and Freddie helped spawn the mortgage crisis by acting as loan toilets, buying up risky mortgages and thus creating an artificial market for junk.  “From the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime.”  They paid their CEOs millions, and engaged in massive accounting fraud — $6.3 billion at Fannie Mae alone — to increase the size of their managers’ bonuses.  As Government-Sponsored Enterprises, they were exempt from the capital requirements that apply to private banks, so they did not have enough reserves to cover their losses when their mortgages started defaulting.

Banking expert Peter Wallison, who warned for years about the risky practices of Fannie and Freddie, says Obama’s proposals will lead to “bailouts forever.”  Obama claims that it will not lead to more bailouts.  But as Congressman Brad Sherman (D-Calif.) admitted, the “bill has unlimited executive bailout authority. . .The bill contains permanent, unlimited bailout authority.”

Government pressure on banks to make loans in economically-depressed neighborhoods was a major cause of the mortgage crisis.  If Obama has his way, that pressure will increase.  The House earlier approved Obama’s proposal to create a politically-correct entity called the Consumer Financial Protection Agency. “The agency would be in charge of enforcing the Community Reinvestment Act, a law that prods banks to make loans in low-income communities.”  It would do so without regard for banks’ financial safety and soundness, even though the Community Reinvestment Act was a key contributor to the financial crisis.

Internet Gambling Catches Second Wind

by Brian McGraw on April 23, 2010 · 1 comment

in Nanny State, Personal Liberty

Pokerati.com reports that Senator Harry Reid (D-Nev.) is working on a new bill (one of many in the past year) to legalize and regulate online poker. It is unclear at the moment why or how this would differ from current efforts by Barney Frank. The bill is expected to be introduced in the second quarter of 2010, a few months after the enforcement deadline for the UIGEA.

In exchange for desperately needed campaign money, Reid has (likely) struck a bargain with Harrah’s Entertainment and MGM (who have collectively donated almost $300,000 to his 2010 campaign) to introduce legislation for regulated online poker on their behalf. The absence of sports-betting references from the bill gives it a higher chance of seeing support in Congress.

To explain recent progress, Pokerati links to a news story documenting the American Gaming Association’s (the biggest lobbying group for American brick-and-mortar casinos) official change in opinion on the desirability of Internet poker. Regarding the timing of all of this, Pokerati summarizes:

1. Let the UIGEA go into full effect June 1.
2. Eliminate the most powerful online poker operators currently in the industry (i.e. Tilt and Stars).
3. Pass a new law.
4. Let Harrah’s, the Sands, and MGM/Mirage set up shop.
5. Then let the European poker sites join the party.

How should we feel about this? On one hand, the underhanded method of sending the competitors packing then coming back to play ball is crony capitalism at its finest. On the other hand, the Vegas conglomerates haven’t been allowed to enter the Internet poker market at all.

Furthermore, support of a powerful industry is the necessarily catalyst for off-the-radar issues like Internet gambling to ever have attention paid to it in Washington. Without their support, it remains buried on page 7 of a socially conservative senator’s “things-to-outlaw” list.

Oh, and legalization would apparently create jobs. Is that before or after it bankrupts American families and destroys the social fabric of our society?

Fannie and Freddie finally called to Crisis Commission

by John Berlau on April 9, 2010 · 1 comment

in Bailout Watch, International, Legal, Nanny State, Personal Liberty, Politics as Usual, Sanctimony, Stimulus to Nowhere, Zeitgeist

It is good that the commission, after several months, is finally visiting the role of Government-Sponsored Enterprises, but the setup of today’s hearing is still providing a far from adequate investigation. Former CEO Daniel Mudd came late in the game from 2005 to 2008, and the commission must call Mudd’s predecessor, Franklin Raines, to give testimony about his tenure as CEO in which so many expansions were made and policies were put in place that contributed significantly to the crisis. Having Mudd testify without Raines, would be like hearing only from Ben Bernanke but not Alan Greenspan about the activities at the Federal Reserve.

Still, because of the facts brought forth in Greenspan’s testimony on Wednesday, and the diligent questioning of commissioners< Peter Wallison and Keith Hennessey some revealing facts came out that demonstrate that Fannie and Freddie played an even more significant role in the financial crisis than previously known. These findings could not have come at a better time, as both Obama and lawmakers like House and Senate Banking Committee Chairmen Barney Frank and Chris Dodd want to sweep the GSE’s problems under the rug.

Amazingly, they have no immediate plans to rein in Fannie and Freddie, despite their admonitions of how urgent it is to ram through “financial reform” that would hit a broad swath of financial and nonfinancial companies. And the Obama administration’s “Christmas bailout” of the GSE’s – the December 24 order removing the caps of $200 billion dollars that the Treasury was authorized to spend on each of the two mortgage underwriters – exposes the American taxpayer to unlimited liability for the entities and their potential new missteps.

One of the most important moments of the hearing came in a little-notice moment on Wednesday, during the second panel after the much-discussed testimony of Greenspan. This was when Commissioner Wallison asked Patricia Lindsey, former Vice President of Corporate Risk for now-bankrupt subprime mortgage originator New Century Financial Corporation, about her firm’s dealing with Fannie.

Lindsey confirmed that Fannie directly bought many of New Century’s bad mortgages all through the last decade. This is one more piece of evidence that directly refutes the notion that Fannie and Freddie were late to the subprime party, and pushed there by private sector competitor. One the contrary, it shows that the GSEs were important drivers of the subprime party. (This part of the hearing can be viewed here — http://www.c-span.org/Watch/Media/2010/04/07/HP/R/31521/Financial+Crisis+Inquiry+Cmsn+Public+Hearing.aspx – and occurs at about the 50-minute mark.)

Greenspan himself provided facts that whatever one may think of his other actions – and I think he does bear significant blame for keeping interest rates too low for too long – no one has refuted. He pointed out that the firms purchased 40 percent of all private-label subprime mortgage securities during 2003 and 2004. “To purchase these mortgage-backed securities, Fannie and Freddie paid whatever price was necessary to reach their affordable housing goals,” he said. And Greenspan also noted that “the enormous size of purchases” by the GSEs during this time was not revealed until Fannie reclassified in September 2009 a large part of its prime mortgage portfolio as subprime.

Indeed, According to housing expert Edward Pinto, Fannie’s former chief credit officer who has presented his findings before Congress and should himself be asked to testify before the commission, millions of mortgages to borrowers with credit scores of less than 660 – considered by prominent researchers to be the dividing line for subprime loans — had been labeled by Fannie and Freddie as prime going back as early as 1993. In his writings for the American Enterprise Institute, Commissioner Wallison noted that this misrepresentation by the government-backed mortgage giants could have itself been a major factor in inflating the housing bubble. “Market observers, rating agencies and investors were unaware of the number of subprime and Alt-A mortgages infecting the financial system in late 2006 and early 2007,” he wrote.

Competitive Enterprise Institute President Fred Smith had long warned about the systemic risk Fannie and Freddie posed to the financial system, warning as early as 2000 that their implosion could cause a taxpayer bailout of as much as $200 billion. That turned out to have greatly underestimated the $400 billion the bailout has already cost taxpayers and the possibly hundreds of billions more it will cost them, since the Obama administration removed the cap on Treasury Department assistance.

But at the time, Smith’s was a voice in the wilderness as members of Congress pooh-poohed the notion of Fannie and Freddie ever slipping up. In 2003, Rep. Barney Frank, D-Mass., now chairman of the House Financial Services Committee, even publicly called for the mortgage entities to “roll the dice” on less credit worthy borrowers.

The Bush administration also pushed policies that tilted incentives toward home ownership, and the mistakes of politicians of both parties should be examined in thorough hearings. Unfortunately, it still looks as though politicians are still giving a pass to the fat cats from Washington. But hopefully the rallying cry after these hearings will be “Fix Fannie and Freddie First.”

Government Uses Takeover of Mortgage Giants to Deliberately Increase Their Massive Losses at Taxpayer Expense

by Hans Bader on January 5, 2010

in Bailout Watch, Economy, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

The Wall Street Journal notes that the Obama administration has used the federal government’s bailout of mortgage giants Fannie Mae and Freddie Mac to do the exact opposite of what the federal government claimed it would do when it took them over a year ago.  It took them over in the name of winding down their risky loan portfolios, so they would stop running up losses at taxpayer expense.  But the Obama administration is deliberately making them run up huge losses to help out irresponsible borrowers who potentially might default on their mortgages.  “In today’s Washington, we suppose, it only makes sense that the companies that did the most to cause the meltdown are being kept alive to lose even more money.”

Over Christmas Eve, the Obama administration not only lifted the $400 billion limit on the bailout (and showered their CEOs with cash), but also ended “a key requirement of the 2008 bailout—that Fan and Fred begin shrinking the portfolios of mortgages they own on their own account, which total a combined $1.5 trillion.”

The Obama administration is now deliberately making them lose money:  “the government has directed both companies to pursue money-losing strategies by modifying mortgages to prevent foreclosures. . . Fannie reported last quarter that loan modifications resulted in $7.7 billion in losses.”

“Much of this is being done off the government books,” to hide the costs of the Obama administration’s record deficit spending.  And their CEOs are being paid a fortune, the Journal notes, because “Fannie and Freddie are exempt from the rules” limiting compensation at private banks.

The mortgage crisis was caused partly by the reckless government-sponsored mortgage giants Fannie Mae and Freddie Mac, and partly by the affordable-housing mandates imposed on them.

But Obama’s proposed financial rules overhaul does absolutely nothing about Fannie Mae and Freddie Mac, admits Obama’s Treasury Secretary, Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.”

And banks will now be pressured to make even more risky loans.  The House has approved Obama’s proposal to create a politically-correct entity called the Consumer Financial Protection Agency. “The agency would be in charge of enforcing the Community Reinvestment Act, a law that prods banks to make loans in low-income communities.”  The Community Reinvestment Act was a key contributor to the financial crisis.  But the Administration’s proposal would direct the new agency to enforce the Community Reinvestment Act without regard for banks’ financial safety and soundness.

Obama’s financial-regulation plan is “largely the product of extensive conversations” with two lawmakers responsible for the current financial mess, the corrupt Chris Dodd, and Barney Frank.

Another $75 billion in taxpayer money is already being wasted on mortgage bailouts that economists and real estate experts say is actually harming the economy and the real estate market.

Obama’s Recent $75 Billion Mortgage Bailout Fails: Harmful to Economy, Housing, and Construction, Say Economists and Real Estate Experts

by Hans Bader on January 4, 2010 · 2 comments

in Bailout Watch, Deregulate to Stimulate, Economy, Legal, Politics as Usual, Regulation

Economists and real estate experts are saying that a $75 billion mortgage bailout program designed by the Obama administration has backfired and harmed the housing market, reports The New York Times:

The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good. . .experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

That “’has the effect of lengthening the crisis,’ said Kevin Katari, managing member of Watershed Asset Management. . . ’We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway,’ and ‘banks have been using temporary loan modifications under the Obama plan as justification to avoid an honest accounting of the mortgage losses still on their books,’” delaying a recovery in the housing market and the construction industry.

The failed mortgage bailout is reminiscent of the government’s attempt to reduce burdens on irresponsible credit card borrowers, through a new law, the CARD Act of 2009, that backfired and resulted in the return of annual fees, bizarre interest rate hikes for some responsible borrowers, and the elimination of many cash back and rewards programs.

Earlier, the government pushed through billions more in other mortgage bailouts, to bail out even reckless high-income borrowers, and forced financial institutions the government took over in the name of fiscal responsibility, like Freddie Mac, to run up billions in losses bailing out irresponsible borrowers.

Banks will now be pressured to make even more risky loans. The House has approved Obama’s proposal to create the so-called Consumer Financial Protection Agency. Government pressure on banks to make loans in economically-depressed neighborhoods was a key reason for the mortgage meltdown and the financial crisis. Yet Obama’s disturbing proposal would empower the new agency to enforce the Community Reinvestment Act without regard for banks’ financial safety and soundness.  The Community Reinvestment Act was a key contributor to the financial crisis.

The mortgage crisis was also caused by the reckless government-sponsored mortgage giants Fannie Mae and Freddie Mac, and by federal affordable-housing mandates. But Obama’s proposed financial rules overhaul does absolutely nothing about Fannie Mae and Freddie Mac, admits Obama’s Treasury Secretary, tax cheat Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.”

Worse, the Obama Administration lifted the $400 billion limit on bailouts for Fannie and Freddie, so that they could continue to buy up junky mortgages at taxpayer expense, and showered their executives with $42 million in compensation.

Obama’s financial-regulation plan is “largely the product of extensive conversations” with two lawmakers responsible for the corrupt status quo, Chris Dodd and Barney Frank, and it expands the reach of regulations that have been used by left-wing groups to extort pay-offs from banks.

“How ACORN Destroyed the Housing Market”

by Hans Bader on November 16, 2009

in Bailout Watch, Economy, Legal, Personal Liberty, Politics as Usual, Precaution & Risk, Sanctimony

Federal affordable-housing mandates were a major factor in the mortgage crisis, fueling the housing bubble and the subsequent collapse of the housing and financial markets, which helped bring down the economy.  Even the liberal Village Voice has admitted that.  Who drafted those awful mandates?  ACORN, reports the Washington Examiner, in “How ACORN Destroyed the Housing Market.”

How did ACORN cause the “housing bubble” and “financial collapse”?  ACORN lobbyists drafted “affordable-housing” mandates to pressure the mortgage giants to buy up more risky loans and mortgages from low-income communities, loans that banks in turn were pressured to make by the Community Reinvestment Act, explains The Wall Street Journal.

ACORN also helped spawn the mortgage crisis by promoting “liar loans.”   It has a long history of  financial fraud, vote fraud, tax evasion, waste, and mismanagement.

Lawmakers and the Obama administration have studiously ignored ACORN’s role in spawning the financial crisis, because many liberal lawmakers have long had close ties to ACORN.  ACORN is a left-wing group that launched Obama’s career as a community organizer.  (ACORN stands for Association of Community Organizations for Reform Now.)  Obama has long-standing ties to ACORN, and an ACORN affiliate received received $800,000 from Obama’s campaign.

In recent months, lawmakers distanced themselves from ACORN, and cut off its federal housing funds, after it was caught on videotape in a child prostitution promotion scandal.  (ACORN is now suing the federal government in court, to force it to resume funding ACORN.  Earlier, it sued the private citizens who exposed its role in the scandal for $2 million).

However, in the long run, ACORN is likely to continue to benefit from its close ties to liberal lawmakers and the administration.  Entities related to ACORN stand to reap millions from Obama’s financial regulation proposals and health-care reform proposals.

Meanwhile, the Obama administration is busy promoting the junky, risky mortgages that fueled the housing bubble, showing that it has learned nothing from history.  One result is that the Federal Housing Administration, which is making many such loans, has gone into a “nose dive” and may need a multibillion-dollar taxpayer bailout, reports the Washington Post.

Obama wants to create a bureaucracy called the Consumer Financial Protection Agency. “The agency would be in charge of enforcing the Community Reinvestment Act, a law that prods banks to make loans in low-income communities.” The Community Reinvestment Act was a key contributor to the financial crisis.  Yet Obama’s plan would empower the CFPA to enforce the Community Reinvestment Act without regard for banks’ financial safety and soundness.

The mortgage crisis was also caused by the reckless government-sponsored mortgage giants (”GSEs”) Fannie Mae and Freddie Mac, and by federal affordable-housing mandates.

But Obama’s proposed financial rules overhaul does absolutely nothing about Fannie Mae and Freddie Mac, admits Obama’s Treasury Secretary, tax cheat Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.”

Worse, Obama’s plan is “largely the product of extensive conversations” with two lawmakers responsible for the corrupt status quo, Chris Dodd and Barney Frank, and it expands the reach of regulations that have been used by left-wing groups to extort pay-offs from banks.

Recently, the administration got rid of the inspector general for Fannie Mae and Freddie Mac, after making Freddie Mac run up $30 billion in losses from the Obama administration’s mortgage bailouts, which bailed out even high-income borrowers who irresponsibly mismanaged their finances.  Earlier, Obama fired an inspector general, Gerald Walpin, who uncovered misuse of funds by a prominent Obama backer, smearing the inspector general with allegations that turned out to be false.

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