Thursday, February 12, 2009

Imagining Barney Frank's testimony about his role in the financial crisis

by Caroline Baum:

Chairman Frank, on July 14, 2008, you made the following pronouncements about Fannie Mae and Freddie Mac, the two huge government-sponsored enterprises that are the key players in mortgage finance:

“Fannie and Freddie are fundamentally sound.”

“They are not in danger of going under.”

“Looking at the financials, they’re solid.”

You followed that analysis with a forecast. Referring to legislation before your committee to allow the Treasury to lend to and buy unlimited shares in the GSEs, you said: “We’re doing three separate things that make it much less likely -- very, very unlikely -- that we’ll have this kind of a housing crisis six months or a year from now.”

Less than two months later, Fannie and Freddie were wards of the state.

Just answer the questions, Mr. Chairman.

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