Wall Street Journal Editorial Board Stifles Dissenting Opinion

Washington, DC - House Financial Services Committee Chairman Frank released the following statement today regarding the refusal of the Wall Street Journal editorial board to publish his response to an inaccurate editorial in a timely manner:

On Sept 9th, the Wall Street Journal ran an editorial criticizing my record with regard to Fannie Mae and Freddie Mac. The editorial was factually inaccurate. I subsequently drafted a response correcting the numerous errors and engaging the ideological issues where the Journal editorial staff and I have long standing differences of opinion. I submitted my response to the Journal that afternoon. They subsequently said they would run my response in its entirety as a letter to the editor. A full week has passed and they have run nothing.

I am not surprised to find myself in disagreement with the Wall Street Journal on what the government's role should be in helping to build affordable housing, but I am very surprised and deeply disappointed that they would present my view in an intellectually dishonest way and then refuse to allow me the chance to correct their distortions in a timely manner.

The Journal's actions indicate a narrowness of vision and a refusal to entertain contrary opinions that amount to censorship. More importantly, they rob their readers and the broader public of the opportunity to form their own views about issues that currently roil our financial; market place and the resolution of which will have a profound effect on our economic future.

Chairman Frank's response is printed in full below:

Letter to the editor of the Wall Street Journal from Rep. Barney Frank, September 9, 2008:

The Journal's recent misleading and inaccurate editorial on my relationship with Fannie Mae and Freddie Mac leaves out one central fact, and it does so in a very revealing fashion.

At the bottom of the first column of the editorial, the Journal begins by saying that "by early 2007, Mr. Frank was in charge of the House Financial Services Committee, arguing that he had long favored some kind of reform." A reader unfamiliar with the facts would have no idea that I did not simply argue in favor of reform, but presided over passage of a very tough reform bill.

When the Democrats obtained the majority in the 2006 Election, and I became Chair of the Committee, I made a very strong reform bill one of our highest priorities and worked closely with Secretary Paulson to break the logjam that hindered the bill in the past. As a result, the Financial Services Committee, which organized under the Democrats on January 31, 2007, passed the bill restructuring the regulation of Fannie and Freddie -- specifically including all the increased powers that the Bush administration requested -- on March 28, 2007 and the full House followed -- by a vote of 313 to 104 in early May. The House passed these important reforms in May of 2007 -- only four months after we became the majority. It is true that the bill was held up for over a year by inaction in the Senate, but that is not surprising given the difficulty the Senate has moving controversial legislation on any subject.

Additionally, when we were considering the stimulus package in early 2008, I proposed to Secretary Paulson that in addition to raising the jumbo loan limits for Fannie Mae and Freddie Mac, we include the GSE reform that the House had passed. He did not agree, fearing that it might slow things down.

In fact, my reform efforts had begun when we were still in the minority. In 2005, I joined Michael Oxley, then Chairman of the House Financial Services, in supporting legislation to increase the regulation of Fannie and Freddie that passed the House by a vote of 330 to 90. When former Congressman Richard Baker proposed to examine the compensation structure of Fannie's and Freddie's top executives, and some Members of Congress tried to block him, I explicitly spoke out in support of his right to do that and our right, as a Congress, to examine the GSE's compensation practices.

There is another glaring distortion in the editorial, driven by the Journal's opposition to our efforts to help build affordable rental housing. The editorial laments the fact that as part of the ultimate package I received my "biggest payoff" in the Affordable Housing Trust Fund. While that is true, I am struck by the Journal's absolute inability to understand that some of us think that the plight of people who do not have adequate rental housing ought to be addressed. The bizarre belief that adequate housing means homeownership and not rental housing was one of the push factors in the subprime crisis. That is apparently the basis for assuming that the only reason we would support an affordable housing program - along with such as the non-partisan groups as Catholic and Lutheran Churches, Habitat for Humanity, and Enterprise Community Partners -- was so that we could personally profit from this politically. The truth is that the way this fund will be created, Members of Congress will have no say over its disbursements. To the right-wing ideologues who write the Journal's editorials, funding to build affordable residential housing is "loot." Fortunately, that is a distinctly minority opinion in the Congress and in much of the country.

I acknowledge differences between myself and the Journal as to whether or not we should be trying to build affordable rental housing and as to whether or not some public role in housing finance is worth supporting. But the Journal's assertion that support for those two entities meant opposition to reform is entirely wrong, and it is presented in one of the most dishonest pieces of journalism I have seen. The Journal's error concerning what happened when the Democrats took over the majority early in 2007 is a classic example of ideological bias. It is important to repeat that the editorial omits the key point, that it was exactly in that period that the House Financial Services Committee, that I chair, passed and helped pass through the House a bill that embodied the reforms asked for by the Bush administration, and that was the basis for Secretary Paulson's and Director Lockhart's recent actions. Your readers deserve the whole story. The Journal's original letter can be found here.

Comments

[mhelburn]

The problem is that the bonds were insured multiple times and the insurers are bankrupt. If Paulson can get the price of the bonds up in one fell swoop, the insurance obligations disappear and the insurers can continue in business.


This is necessary because there was no regulation in the derivatives market. Imagine how long your house would be standing if anyone could buy insurance on it. The people who bought insurance on bonds they didn't possess will be out of luck on paper.. well, too bad. If the insurers go belly-up, they won't get anything anyway.

This will clean up the derivatives market

Buy moving the assets to the taxpayer, the prices will be fixed higher and the insurer's obligations will go down. The mark to market pricing isn't a valid figure. I wouldn't buy the whole bunch for price to maturity either. They have to be discounted so taxpayer risk is lessened.

Should some people go to jail.. You bet. But not right now. Get this paper marked up and then we can get on with the prosecutions. Attaching riders about helping homeowners stay in their home or executive pay doesn't belong on this legislation. If we put a bunch of other things in this fund, we won't be able to tell how the bonds are doing.

If we have no credit working, we will spiral down and nobody will be able to buy or sell a home.

[usacicsass]

For 16 years reformers in Congress have tried to improve oversight of Fannie Mae and Freddie Mac and prevent the government-chartered companies from putting the housing market and the whole economy at risk. All that time, Frank was involved in efforts to block those attempts, and in the last eight years he was a leader of those efforts. Barney Frank should be thown in gail.

[wendynyc]

Corporate-acy not democracy!

[politicky]

Not surprised that the WSJ reacted that way. I wish you were my congressman Mr. Frank.

[dezzertguy]

The WSJ responded today to Frank's complaint about their rejection of his response to their editoral. Once gain, the call out the Congressman and provide the full facts about his support of Fran and Fred. When they called his office for more clarification, the spokewoman hung up on them. It is cool to see one of the imperial congressmen be brought to task by the media. The MSM never holds Dems to task and that the WSJ is doing this is terrific. The WSJ has facts and knowledge which the politican cannot spin into his advantage. So he just hangs up. This is great.

http://online.wsj.com/article/SB122161010874845645.html

[klmebane]

"The MSM never holds Dems to task..."

what?? please, tell me, when was the last time a republican was called out on bs? and i don't mean for cheating on his wife, i mean for something significant and related to his political obligations. the MSM is owned by conservatives. there are about 7 large companies that own ALMOST ALL of the media in this country. i don't know about you, but that strikes me as a conflict of interests. as for support of fran and fred... tell me if i'm wrong, but aren't republicans the ones always screaming about how regulation keeps the market from functioning properly? is their definition of proper function allowing businesses to make money however they want to without any concern for the people they might be taking advantage of?

[S1m0n]

Frank claims that the piece was "factually inaccurate", but his rebuttal fails to disprove or deny any of the facts. In fact, he concedes all the WSJ's facts were true. All he really wants to do is argue about the piece's conclusions, not it's accuracy.

[Bluedog12]

Barney the WSJ has never been about truth. It's business before facts.

[mezz1962a]

Frank did nothing as chairman overseeing Fannie and Freddy.

The Democratic controlled congress is responsible for the economic crisis that is going on now.

Even when the gas crisis was at a fever pitch the Dems decieded it was high time for vacation. Now they go around saying it was Bush's fault.

Maybe it is high time CNN and MSNBC get off theor Fannies and stat doing some reporting on where the blame should lie The Democratic led congress, Nancy pelosi and Obama

[SoMG]

Mezzi962a wrote: "The Democratic controlled congress is responsible for the economic crisis that is going on now."

HAHAHAHAHAHAHAHAhAAH ROTFL

[blp58]

Democratic controlled Congress? More like Republican obstructionist Congress! Are you kidding me? Do you think any bill stopping this financial malfeasance hadn't a snowballs chance in hell of ever making the floor?

BTW please quote anyone that thinks that offshore drilling will ever lower gas prices. WAKE UP! WHy are you so in love with BIG OIL?

[Aramingo]

That's funny, I thought this whole thing started because sub-prime mortgages were deregulated in 1999. That would be a republican congress with enough votes to override a presidential veto. Giving mortgages to people who can't afford them seems to catch up wiht you eventually. Whodathunkit?

[xrebel]

Wrong. The Clinton adminstration pushed Fannie and Freddie into loosening up things for the subprimes. Here's an article about it:

http://articles.latimes.com/1999/oct/01/business/fi-17374

[davboz]

Well, you thought wrong.

[Nickesq]

Wrong from the start. Republican Phil Gramm spearheaded the elimination of the vigorous regulations that characterized the banking industry in the 1990's in the wake of the S&L crisis. No one but an utter fool believes that offshore drilling is a good idea. It was a Republican scam that failed.

[biglover]

nice try mezz1962a but we aren't buying your b/s. The problems all lie with the republicans and no one is buying your b/s except you. Again you thugs continue to stick your heads in the sand and hope this will all go away if you just continue to deny the fact that your party STINKS.

[duufus]

are you trying to say...that the dems should have overturned gop policy?
coz if thats what you are implying....then the dems should overturn evrybit of gop policy...
and theirs only one way to do it

vote Obama 08

[leeannethethird]

Keep your eye on the the Fed where the solution to the crises is worse than the problem. The US Treasury is being run by the same predators who created the problem.

See Rubini at http://www.rgemonitor.com/roubini-monitor/253625/the_transformation_of_the_usa_into_the_ussra_united_socialist_state_republic_of_america_continues__at_full_speed_with_the_nationalization_of_aig:

"And by nationalizing AIG the government that two days ago drew a line in the sand on no more bailouts with its decision to let Lehman go bust has now opened the floodgates of moral hazard again as well as fueling private firms" demands for a bail out. Already Ford and GM are requesting loan guarantees and Congress is considering them."

"... We have defeated the USSRR to create a communist economy in the most advanced free market economy in the world. And calling it socialism (even socialism for the rich, the well connected and Wall Street) is giving a bad name to the failed experiment of socialism. What this government is doing is more akin to the creation of a corporatist state (like the fascism of Italy or Germany's Third Reich) where private sector interests are protected (gains privatized and losses socialized) and the government taken over by corrupt and reckless private interests."

[Pulemerci]

Isn't that what the NY Times did to McCain after they published an article by Obama but refused to publish McCain's?

[blp58]

Yeah, because McCains article was bullshit Repub talking points. Oops, that's right we're talking WSJ! You're right, why didn't they print that?

[alanposting]

Was not the Wall Street Journal purchased by the Australian right wing Fox merchant Murdoch? I just can't wait to read more garbage and lies from the WSJ.

[davedee]

Barney, did you forget about this NYT article?

http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=all

Quote:

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

[mamacat]

The article you have provided a link to is from 2003, while the crisis with Fannie and Freddie is recent. I am not sure of the relevancy of something that old, in this context. A lot of things have happened since 2003.

[optech007]

The point is Bush saw problems back in 2003 and Barney didn't

[mezz1962a]

Yes since 2003 the Dems took controll of both houses and for the past 2 years did nothing except go on vacation and pull out the "It's Bush's fault" line

[JustTheBasicFacts]

Other than describing that the Fannie and Freddie warning signs were there years ago, and discussing there were at least some attempts at adding regulation or oversight before spiraling into a crisis, as they have, yes it is not particularly relevant.

[lbjranch]

Fannie and Freddie have been in trouble since '03...was an open secret in Washington. Unfortunately they were very successful at lobbying Congress and preventing Congress from stepping in to reign in their irresponsible lending practices. Guess who was the #1 recipient of their lobbying $?,,,,,

[watchTVgetSTUPID]

We need to reform our media. It is no longer the 5 Ws of facts (Who What When Where Why) but subtle to overt propaganda tools controled by Republican backers. In Orlando, I live with wall to wall Republican hate radio across the dial with nothing to set he record straight with the facts.

We need to force full divestiture of the media from the handfull of owners who have the power to tell the big lie hundreds of times on radio radio every day in most major markets. Most of the country only hears what the extremest republicans want them to hear. No one should be allowed to control a market and no one should be allowed more than a couple stations.

[mamacat]

You are right.

Perhaps the prevalence of shock-jocks in todays media explains why the McCain/Palin ticket now feels that they can rely predominantly on lies in their campaign - because the right-wing shock-jocks and conservative controlled press don't care about the lies.

[dezzertguy]

Is unusual a Dem would not be allowed free reign in the MSM. Of course, the "affordable housing" argument is a red herring. The real issue is political payoffs. Sens Dodd and Obama received much funding from these companies. Gorlick just made a lot of money and other Dems. You can hide behind "affordable housing" but this can be accomplished without political payoffs. This is just another point that shows government should not be involved in business to this extent and stick to basic government services.

[dhertzfe]

Enough ... Obama received donations from Feddie Mac and Fannie Mae EMPLOYEES, not the companies themselves. Stop twisting the facts.

[dezzertguy]

No thttp://www.opensecrets.org/news/2008/09/update-fannie-mae-and-freddie.htmlwisting facts, just presenting them. If you think employees do not donate to politicans that support their industry, you need to read more. And the companies did give directly to organizations such as the Congressional Black Caucus. Remeber Jamie Gorelick and Frank Raines were big executives there as well as the former vice presidential search co-chair. Both partties enjoyed the support of the companies. They were tied in politically. Is just at this time Dodd, as well as his sweatheart mortgage and Obama are big winners.

http://www.opensecrets.org/news/2008/09/update-fannie-mae-and-freddie.html

You may read and if you wish, learn.

[dhertzfe]

Obama received donations from Feddie Mac and Fannie Mae EMPLOYEES, not the companies themselves. Stop twisting the facts.

[Jayne Lyn Stahl - Huffpost Blogger]

Thank you for bringing this to light, Barney. We can expect to see more of this kind of censorship as a result of media consolidation which, ironically, as you know comes about as a result of deregulation which has spilled over from the Reagan years through the present. Rupert Murdoch is the symptom, not the disease---the disease is "free market" monopolies.

You make an essential point about the absence of rentals from discussion of the housing market, and the need for affordable rental housing. The government is prepared to spend millions in taxpayer money to bail out Lehman Brothers, but not a dime to build affordable rental infrastructure in our nation's major cities, and is, yet again, robbing from the poor to pay the rich.

The more newspapers, and television stations, any one individual can own, the more we can expect editorial boards to cower in fear of printing dissenting viewpoints.

Bias is a four letter word, but bias that results from ideological distortion is even more insidious. Your contributions to progressive social change, in this country, are irrefutable; thank you!