On the fifth anniversary of the Lehman Brothers collapse, former congressman Barney Frank (D-Mass.) appeared on CNBC to discuss the state of the financial system and housing market.
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In the segment, he flatly denies his role in the housing boom saying instead that he advocated for rentals among poor families rather than home ownership, a policy that was fervently pursued by the government throughout the early 2000s.
“My prediction was, even with Fannie, that we should be doing low-income people rental housing,” he said.
“I’ve been a strong pusher for rental housing. But in terms of home ownership, I’ve been skeptical.”
While he may be correct that rental properties are more a practical option for low-income Americans, this is anything but the position he took during the housing boom.
“We have, I think, an excessive degree of concern right now about home ownership and its role in the economy,” Frank said in 2005 on the House floor.
“You’re not going to see the collapse that you see when people talk about a bubble. Those of us, on our committee in particular, will continue to push for home ownership,” Frank said.
Watch:
[youtube=http://www.youtube.com/watch?v=CoPKRBD9E6Y&w=640&h=360]
As chairman of the House Financial Services Committee, he was at the center of the housing boom. When others sounded their concerns of a housing bubble, Frank dismissed the claims as a partisan agenda.
“I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision],” he said. “I want to roll the dice a little bit more in this situation towards subsidized housing …”
His knowledge of the financial system led him to co-author the Dodd-Frank financial reform, that has been routinely criticized since it was signed into law, and remains unimplemented.
Frank’s role in the housing bubble has been continually criticized.
Economist Peter Schiff Monday sounded off about Frank’s change of position.
“There is Barney Frank, on the floor of the House of Representatives, pushing for home ownership and trying to push against any regulatory effort to reign in the activities Fannie Mae and Freddie Mac, some of his biggest contributors that were keeping him in office,” Schiff says.
“Well he was right about one thing, it wasn’t the dot-com bubble. It was a lot worse than the dot-com bubble. The speculation was even more rampant than it was in the dot-com. And thanks to the efforts of guys like Barney Frank, the big risk was in the lenders…in the housing market, thanks to the government…homeowners were gambling with taxpayer money,” Schiff continues.
“Now you have the principle conspirators, the principle agents of cause in the House, five years later, on television rewriting history.”
Betsi Fores is a Content Editor for Rare. Follower her on Twitter @ejfores
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