Fox News: Barney Frank Escaped Blame for Fannie Mae's Problems Because He Is Gay

When Barney Frank corrected him, Bill O'Reilly threw a tantrum in front of 5.6 million viewers. Then things got interesting. The next day, the Washington Deputy Managing Editor at Fox News uncovered a new angle on the financial crisis. Bill Sammon alleged that Congressman Frank had escaped blame for the problems at Fannie Mae because he was gay.

Sammon's piece wasn't exactly original reporting. He paraphrased an earlier article titled, "Media Mum on Barney Frank's Fannie Mae Love Connection." The "love connection" was a relationship that Frank had with Herb Moses, who was once an executive at Fannie Mae. Frank's romantic involvement with Moses, and Moses' employment at Fannie Mae, both ended ten years ago, in 1998. As Hank Paulson, the Federal Reserve, and the SEC all confirmed, the financial crisis "was triggered by a dramatic weakening of underwriting standards for US. subprime mortgages, beginning in late 2004."

Sammon's original source material was offered up by one of those right wing storefronts, the Business & Media Institute. Sammon quoted Business & Media Institute vice president Dan Gainor, a frequent guest on the Fox Business Network. "If this had been his ex-wife and [Frank] was Republican, I would bet every penny I have - or at least what's not in the stock market - that this would be considered germane," said Gainor. "But everybody wants to avoid it because he's gay. It's the quintessential double standard."

Did a Fox News executive decide to go after Congressman Frank because O'Reilly was embarrassed in front of 800,000 people who caught the meltdown on YouTube? That's the more obvious, and superficial, motivation. Frank also impugned the veracity of reporting by Brit Hume, who dutifully repeats lies fed to him by Karl Rove. Here's Congressman Frank setting the record straight on O'Reilly:

"You've misrepresented this consistently. I became chairman of the committee on January 31st, 2007. Less than two months later, I did what the Republicans hadn't been able to do in 12 years -- get through the committee a very tough regulatory bill...The Senate was dragging its feet, as often happens. And in January of 2008, I asked Secretary Paulson to put in the stimulus bill. So the earliest chance I got to put tough regulation of Fannie Mae and Freddie Mac, we did it."

And here's Brit Hume lying yesterday on Fox News Sunday:

"And what happened here is -- and Fannie Mae and Freddie Mac were very much at the center of this. And it is an odd and, I think, unusual paradox of this whole situation that it was actually Republicans at critical junctures who were pushing for more regulation. Normally they push for less. In this instance, they were pushing for more. And it was principally Democrats, led by Barney Frank, Chris Dodd and others, some Republicans as well -- Bennett of Utah being a conspicuous example -- who resisted this, successfully in the end.

"And there was an effort to -- made to appoint a world-class regulator, as the phrase goes, to supervise Fannie Mae and Freddie Mac, which were -- which were creating a market for these packages of mortgages, some good, some bad. They would buy them up and securitize them, sell them, and it enabled a lot of -- a lot of entities, big banks and investors to get in on the housing boom."

Hume paraphrased Karl Rove, who was quoted at length in "Media Mum on Barney Frank's Fannie Mae Love Connection."

"'All of this bad stuff on Wall Street happened because people got greedy and the greed started at Fannie Mae and Freddie Mac,' Rove said. 'And I know this because five years ago, the administration was alerted by the regulator, James Lockhart, that there was insufficient authority and that these institutions - particularly Fannie - were out of control.'

"Rove said the Bush administration's efforts to reform Fannie and Freddie were opposed by congressional Democrats - specifically Frank and Senate Banking Committee Chairman Christopher Dodd, D-Conn.

"'And I got to tell you, for five years, I was part of an effort at the White House to fight this and our biggest opponents on the Hill who blocked this every step of the way were people like Chris Dodd and Barney Frank. And Fannie and Freddie are the $200 billion contagion at the center of this.'"

The Business & Media Institute writer got his quotes from Karl Rove's Sept. 17 appearance on Hannity & Colmes.

Hume first echoed Rove's propaganda on October 1, 2008, as part of the "straight news reporting" on Special Report. Media Matters identified and explained the falsehoods.

And on Bill O'Reilly, Barney Frank recounted the chronology that absolves the Democrats of any blame.

"Now from 1995 to 2006, when the Republicans controlled Congress, and we were in the minority, we couldn't get that done [i.e. legislate improved regulation of Fannie Mae]. Although in 2005, Mike Oxley, of Sarbanes-Oxley fame, a pretty tough guy on regulation, did try to put a bill through to regulate Fannie Mae. I worked with him on it. As he told The Financial Times, he thought ideological rigidity in the Bush administration stopped that. But the basic point is that the first time I had any real authority over this was January of 2007. And within two months, we had passed the bill that regulated."

Here's what actually happened. In October 2005 the House, by a vote of 331-90, passed a bill to establish a new federal regulator created for Fannie, Freddie and the Federal Home Loan Banks. The new regulator was authorized to set capital standards and, if it deemed necessary, require reductions in mortgage portfolios. The White House opposed the proposed legislation and instead supported the pending Senate bill. But the Senate bill never came up for a vote, and the legislation died.

In other words, the Republicans failed to negotiate a deal when they were in charge, and now place the blame on others. And once again, Fox News treats their distortions of history as reportable fact.

One Republican has a different take on events. Rep. Michael Oxley claims his bill was opposed by White House "ideologues" who wanted to privatize Fannie and Freddie and who opposed a bigger government role.

Comments

[Mezzeta]

I agree. Barney being gay has nothing to do with Barney's prominent role in the Fannie & Freddie Fiasco. But, just being Barney is enough reason that he should be voted out asap...he is an embarrassment to the great State of Massachusetts.

[kevinmcd]

i agree with everything said

[MajorKong]

Fox News new motto: "Just making sh*t up as we go along".

[RobinSeattle]

You know, if you are going to tell a lie, make it a plausible one. Franks relationship ended a good two years before Fannie Mae and Freddie Mac begin to nose into the dark side with these ARMs and the GOP was controlling both houses of Congress at the time to boot.

This "because he's gay" meme is one of the silliest explanations I have ever heard anyway. What, suddenly the public is ardently sympathetic to the gay community? Not quite (sadly). The GOP owes Frank an apology and Sammon should be fired for journalistic incompetence. But then again, if people were fired at Faux Nooz for a lack of journalistic integrity, that outlet would have have been a daily test pattern for several years now.

God, what a scurvy crew the yellow elephants are.

[kevinlangendorf]

The only thing surprising about Fox news blaming the gays for all this is that it took them so long to do it.

[HairyReid]

Loved to see O'Reilly lose it so completly at Franks...a classic meltdown by an egomaniacal know it all! Problem is...he wasn't completly wrong! Franks IS ,in large part, culpible for the Fannie Mae fiasco. Between his position and that of Dodd from Connecticut,a large burden of guilt falls squarely in the laps of the Dems in Congress! While the banks foundered,Dodd was busy campaigning for his run at the presidency. Some things bode bad news for the Dems this election cycle....Dodds record and position,the Dem inaction,Frank's having"sexual involvement "with one of the top Fannie Mae execs AND; FOX has some very high viewership ratings,particularly O'Reilly! If Fox watchers vote,Franks may lose his current re-election bid and Obama may get more of a thumping than polls show! Watch for McCain to thump the Dem/Senate Banking Chairman in the Debates!

[funkalicious]

Why do we protect bad actors just because they are democrats.
Barney Frank did his job he came out of a closet where he was as a boy lying and covering up.. being out has led many people to the light free of shackles and fear of retribution for being gay that is laudable.
However when it comes to Freddie and Fannie, Barney Frank was blinded either by good intentions or hiding problems in a closet willfully covering up huge problems at the GSE's.

He led many to believe that FRE & RFRM were sound institutions even as they were clearly in trouble he has continually worked to shelter the bad behavior that ran rampant at those agencys as they took on more and more bad debts at the end they lowered thelending requirements to just a 3% down payment as housing was dropping 25% .

That was inviting jingle mail as the home owner was immediately upside down on the loan.. placing taxpayers on the hook for the bad debt.

Either Barney Frank is a fraud and a liar or worse just plain incompetent. It is time for him to step aside we can no longer afford his poor leadership or the results of another 700 billion dollar debacle like the latest bailout for investment bankers he passed the markets have spoken it is a complete and utter failure.
Thanks for your service don't let the door hit you on the way out.

[willjones321]

Here is the real reason that Bill O'Reilly melted down in his interview with Barney Frank: Over the past five years Bill has earned in excess of 100 million dollars. With the current financial crisis, and as the market has tumbled, Bill has been losing millions of dollars. He is mad about that and this is the reason he has become so angry.

[CaptainObvious]

"It's the quintessential double standard."

And Fixed News should know - they are the "gold standard" of the "double standard".

[KateinAZ]

When is Fox going to be fined for propagandizing the American public? The air waves belong to us, lets put an end to this horrible slanted "news"! We have laws against propaganda in this country.

[RobHunt]

"We have laws against propaganda in this country."

No we don't. We aren't in China (thank God.) You want restrictions on free speech? Move to Canada or Europe.

[Maschine]

Now why are you pinning something negative against Canada ...Again.

Are we not good neighbours. Are our natural resources we supply you so distasteful. Are our labor standards not good enough. Are we not a good source of labor or do you prefer speaking to Chinese for your parts. Do we not spend money in your country. Do we not shed blood to support your banana republic. Do we not lend a hand when its required. Do we not live in relative peace with one another.

Really, what do you have against Canucks ?

We can say want we want when we want, unless its bullshit. And I think thats what this thread is all about, not free speech, but rather the freedom to to believe whats being fed to you over your airwaves has some semblance of truth.

If you want a saner country to live in, where , yes , we do try and make a better life for everyone, move to Canada. You are free to speak your mind.

[NoMoFearNoMoHate]

McCain supporters only:

http://www.youtube.com/watch?v=Rc46IeJp-_w

[indianaeric]

Actually, Bush supported Barney Frank's house bill, at least officially:
http://www.whitehouse.gov/omb/legislative/sap/110-1/hr1427sap-h.pdf
The Senate bill, S2036 was introduced by Shumer and sent to the banking committee but was never considered.
One should be careful about claims of calling for Fannie and Freddie reform. Some of these were to either weaken or completely privatize and deregulate, or regulate the same as private institutions. The motivation was that private institutions complained about the competition from Fannie and Freddie, not that they were engaging in economically destabilizing activity. Frank's bill had some actual regulatory teeth, unlike the bill that is the basis of McCain's claim of reform S190 (2005), house version HR1461. HR1461 passed the house but S190 was killed in the republican majority banking committee. Bush opposed this bill:
http://www.whitehouse.gov/omb/legislative/sap/109-1/hr1461sap-h.pdf
McCain signed on as a co-sponsor in 2006, after the bill was dead, and 2 days after the OFHEO (Fannie and Freddie's financial regulator) released their widely reported and scathing report on Fannie's accounting scandal. McCain basically regurgitated some of OFHEO report and signed on as a co-sponsor of the dead bill S190, and did nothing else.

[TongoRad]

Is there a grassroots effort to boycott Faux News sponsors? There should be.
Don't do business with companies that support these creeps.

[NoMoFearNoMoHate]

Skin the Fox.

http://skinthefox.com/sponsors_001.htm

Have at it folks! And don't forget what Wal-Mart has been up to!

I love walking past these places and thumbing my wallet at them! Feel sorry for those that work there though.

[eladora]

I read that list and Ameriquest is a sponsor? I thought they went under. That was one of the crookidest lenders out there and they sponsored the high and mighty Faux?

[gretcheno]

I sold real estate in Las Vegas and the problem was that people were buying 300k + homes and getting 3/1 arm loans therefore qualifying for a higher priced home and thier note would be for a home that was far cheaper. And when it was time to refinance the loans these people could not afford the new payments and that is what I think is happening all across this great land.The lenders knew this was going to be a problem now the bottom has fallen out and everyone wants to blame minorities, etc.

Greed got the best of them all.

[Overd0g]

Nobody blames minorities that I've heard (unless they lied on their applications). However, blaming the stupid politicians who loaned money to them should be blamed.

[kevinmcd]

Yes, the right wingers like George Will and that crazy Michelle Mileken (sp) and many others are claiming that the policies of liberals forced lenders to loan money to unqualified minorities. They claim it started in Carter era! Their editorials are all over newspapers throughout the country. They claim the whole mess was caused by these policies--funny how almost all the bad mortgages were given over the past few years but they are saying policies of the 70s caused it. THat is why it is so important for them to focus on Fannie/Freddie--they are blaming "affirmative" lending by those institutions on the Dems/ liberals who wanted to help the poor. Liberals need to do a better job of debunking these wild theories. THey are not explaining the basis of the mess clearly enough -this blog above helps but somebody needs to get to the facts about the number of minority loans and establish the right's lies.

[eladora]

You are exactly right . Also--noone figured that prop values would plummet so fast . Even if someone paid every payment their house now appraises for less making a refinance into a fixed rate impossible so they are stuck with the adjustable and cannot make those payments.

[mlaiuppa]

Personal attacks.

The last refuge of the right wing. Especially when the facts are against them.

[Uncle Aina]

It's funny isn't it? We actually can think for ourselves. We do remember things. We can spot lies and half-truths. This all began with Reagan, and except for Clinton's terms the US has had recession after recession while corporations and defense contractor scoop up billions of dollars - then get bailed out.
Don't try and tell me otherwise because I didn't decide this yesterday..I decided it over 2 decades of watching it happen. Iran Contra, Ollie North, Star Wars defense, mx missiles,B1 bombers, pardoning casper weinberger, Keating 5, Africa yellow cake uranium, "mission accomplished", abu graib, Blackwater, on and on. IT'S ALL THE SAME. GREEDY WHITE MEN GETTING PAID. Simple as that.
Why wouldn't Bill Oreilly cling to this as long as he can? HE IS ONE OF THEM.

[scadabout]

I love you, Uncle Aina

[wlpc]

Franklin Raines (black), Chris Dodd (white) , Barney Frank (white) and Obama (black) all made a boatload of money during this time from Uncle Fannie/Freddie. I don't think you can characterize it as "greedy white men", just greedy men. Maybe we should leave women in charge of finances--I don't see greedy women anywhere near this story.