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Frank V. The WSJ

When it comes to placing blame for the housing crisis and financial collapse, conservatives tend to point to what they say were misguided Democratic policies that forced banks to lend to low-income families so that they could buy homes they couldn't afford. The poor people defaulted on the loans and the banks went belly up, goes the argument.

A recent iteration appeared in a Wall Street Journal editorial that accused Barney Frank, the chairman of the House Financial Services Committee, of "spen[ding] his career encouraging mortgage loans to people who can't repay them."

Frank replied to the editorial but the Journal has yet to run it, so he sent it to the Huffington Post, instead. In his response, he digs up a pile of quotes that have him objecting to home loans for low-income folks. And he also finds a Wall Street Journal editorial criticizing him for not doing enough to extend home loans to low-income buyers.

A few excerpts:

On March 6, 2004, the National Journal reported that "When the FHA's plan to insure subprime loans was included in a Senate-passed appropriations bill, Frank...a staunch supporter of low-income housing, wrote a highly critical letter urging that the measure not be included ... Not only had the House committee not examined ...the proposal he said then, but the measure also offered no protection against lenders inappropriately steering people towards these high-cost loans. Nor did it offer safeguards to ensure that participants 'were fully suitable for homeownership.'"

That same year, when the Bush administration insisted that Fannie Mae and Freddie Mac raise the percentage of below-median income homeowner mortgages they bought, I was correctly quoted in a Bloomberg article on June 17th as saying that this would "do some harm," and the writer noted that "Frank's comments echo concerns...that the new goals will undermine profits and put new homeowners into dwellings they can't afford."


But, while the predatory lending bill passed by a large majority in the House, there were staunchly conservative advocates of unlimited homeownership who were critical. One prominent conservative voice lamented in November 2007 that I planned "to hold a committee vote on the Mortgage Reform and Anti-predatory Lending Act that would impose new rules and financial penalties on subprime lenders while providing new lawsuit opportunities for distressed borrowers." In objecting to this legislation, this commentator defended the record of subprime lending, although conceding that there had been some "lending excesses." Decrying the attacks on subprime lending, this statement said that "For all the demonizing, about eighty percent of even subprime loans are being repaid on time and another ten percent are only thirty days behind. Most of these new homeowners are low-income families, often minorities, who would otherwise not have qualified for a mortgage. In the name of consumer protection, Mr. Frank's legislation will ensure that far fewer of these loans are issued in the future."

Exactly. That was my intention then, and it was my intention years earlier when Republicans blocked it and carried out the spirit of these comments to allow fairly unregulated subprime lending. And of course the statement I have been quoting here is theWall Street Journal Editorial of November 6, 2007.

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