Fannie, Freddie and Barney Frank's Latest Excuse

The great Charlie Gasparino in today’s New York Post:

The notion of “housing” as a God-given right had been promoted by people like Barney Frank for nearly two decades. Their vehicles to expand homeownership for all were “government-sponsored enterprises” Fannie and Freddie — which, starting in the mid 90s, began buying up and placing guarantees on mortgages taken out by people with lower incomes and lousy credit histories.

Giving low-income people access to the housing market sounds nice enough — but the reality was far different. Housing prices were bid up to levels that made repaying mortgages nearly impossible. When the bubble burst, the government “sponsored” agencies were in hock for billions — and so was their “sponsor,” the US taxpayer.

And once Fannie and Freddie stopped making loans to anyone with a hearbeat (and many people without jobs), housing prices began to deflate, taking the banking system and the rest of the economy with it.

Now it looks like Fannie and Freddie are back to their old tricks — with the evident support of both Barney Frank and President Obama.

Spencer Bachus, the top Republican on Frank’s Financial Services Committee, tells me that both agencies have started new programs that once again make loans and guarantees to “subprime” borrowers, or people with the lowest credit ratings — the same sort of lending practices that contributed to their collapse back in 2008.

He demanded an explanation from Edward DeMarco — who, as acting director of the Federal Housing Finance Agency, is supposed to be overseeing Fannie and Freddie. Bachus reports that DeMarco told him, “He was unaware these programs were started.”

Bachus is in line to run the committee if the Republicans win control of the House in November. In a recent Fox Business Network interview, he told me that, as chairman, he’d put two issues at the top of the agenda:

* Ending “too big to fail” — notion that banks like Citigroup must be bailed out by the American taxpayer when they lose money.

* Shutting down, once and for all, Fannie Mae and Freddie Mac.

Read the whole thing here.