Dayhoff Soundtrack: Smoking Gun: Frank Memo Exposes Dem Campaign To Protect Financial Crisis Culprits

Saturday, May 08, 2010

Smoking Gun: Frank Memo Exposes Dem Campaign To Protect Financial Crisis Culprits

House Republican Leader John Boehner - - Smoking Gun: Frank Memo Exposes Dem Campaign To Protect Financial Crisis Culprits
GOP Leader: “The Only Reason For Democrats To Continue Coddling Fannie Mae And Freddie Mac Is To Protect Themselves, Not American Taxpayers.”

Washington, May 6 -

Just hours before one of the government mortgage companies responsible for triggering the financial meltdown reported that it will need another taxpayer bailout, one of its chief enablers on Capitol Hill, House Financial Services Chairman Barney Frank (D-MA), issued a memo urging the Obama Administration to circle the wagons.

For years, Republicans consistently raised red flags about Fannie and Freddie’s financial condition and proposed responsible reforms only to be thwarted by Democrats such as Chairman Frank who have deep political ties to the worst offenders. These same powerful Democrats are now pushing for a financial reform bill that doesn’t even address the need to fix these government mortgage companies. Now, with Freddie Mac set to ask American taxpayers for another massive bailout check, Chairman Frank is pleading with fellow Democrats to hold the line.

According to Politico, Chairman Frank’s memo – which was not written for public consumption expresses concern “that the GOP is scoring points with its attacks on housing giants Fannie Mae and Freddie Mac, and he’s urging the White House to fight back.” House Republican Leader John Boehner (R-OH) responded to Chairman Frank’s memo and Washington Democrats’ coordinated effort to protect Fannie Mae and Freddie Mac:

“After freely enabling the high-risk lending that allowed Fannie Mae and Freddie Mac to run our economy into the ground, Washington Democrats are shamelessly propping up their political benefactors at taxpayer expense. The only reason for Democrats to continue coddling Fannie Mae and Freddie Mac is to protect themselves, not American taxpayers. But with Americans clamoring for an end to backroom deals and permanent bailouts, Chairman Frank and Washington Democrats have nowhere left to hide.”

A must-read editorial in today’s Wall Street Journal notes how “reforming the financial system without fixing Fannie and Freddie is like declaring a war on terror and ignoring al Qaeda”:

“One sign that the White House financial reform is less potent than its advertising claims is that it doesn't even attempt to reform the two companies at the heart of the housing mania and panic, Fannie Mae and Freddie Mac. …

“Unreformed, they are sure to kill taxpayers again. Only yesterday, Freddie said it lost $8 billion in the first quarter, requested another $10.6 billion from Uncle Sam, and warned that it would need more in the future. This comes on top of the $126.9 billion that Fan and Fred had already lost through the end of 2009. The duo are by far the biggest losers of the entire financial panic—bigger than AIG, Citigroup and the rest.

“From the 2008 meltdown through 2020, the toxic twins will cost taxpayers close to $380 billion, according to the Congressional Budget Office's cautious estimate. The Obama Administration won't even put the companies on budget for fear of the deficit impact, but it realizes the problem because last Christmas Eve it raised the $400 billion cap on their potential taxpayer losses to . . . infinity. Moreover, these taxpayer losses understate the financial destruction wrought by Fan and Fred.”

In an editorial last week, The Christian Science Monitor asked the obvious question:

“How can Wall Street itself be reformed without a Fannie-Freddie overhaul? The US mortgage market remains the second largest market for securities in global finance. The two GSEs represent nearly half of the residential mortgage market. And even as Mr. Obama promises no repeat of the big bailouts of 2008-09, he’s still putting money into these big players.”

Much like the backroom deal-laden health care law President Obama and the Democratic Congress forced upon a nation that didn’t want it, President Obama’s Wall Street bailout bill contains a host of special-interest carve-outs and loopholes designed to favor Democrats’ most powerful campaign contributors, bureaucrats, and political allies. Today’s Politico takes a look out how “when Democrats set out to reform Wall Street, they also included a few provisions that benefit their allies in the labor movement.” To learn more, visit the GOP Leader Blog.

House Republicans have listened to the American people and introduced comprehensive financial reform legislation that would end the endless bailouts, reform Fannie Mae and Freddie Mac, and hold Wall Street accountable. For more information on the House Republican plan, click here.