Thomas Sowell

Much of this money has been extracted in the form of risky mortgage loans of the sort that have been at the center of the housing boom and bust, and its repercussions in financial markets and in the economy as a whole.

Among others who have been at the heart of the risky lending behind the financial meltdown are Fannie Mae and Freddie Mac, whom Congressman Barney Frank has also championed and protected. When federal regulators uncovered irregularities in Fannie Mae's accounting, and in 2004 issued what Barron's magazine called "a blistering 211-page report," Barney Frank lashed out -- not at Fannie Mae, but at the regulators who uncovered Fannie Mae's misdeeds. He said "a leadership change" in the regulatory agency was "overdue."

Politicians who say we need more regulation almost never mean regulation in the sense of impartially enforcing explicit rules, such as the accounting rules that Fannie Mae was violating to cover up its own risks. They mean regulation with arbitrary powers, such as those under the Community Reinvestment Act, which enable regulators to carry out the agendas that politicians give them.

When Congressman Jim Leach tried to get stronger regulation of Fannie Mae and Freddie Mac back in 1992, and when President George W. Bush did so in 2004, Barney Frank opposed them.

A reining in of Fannie Mae and Freddie Mac would be a reining in of Barney Frank's power. But he can't stop the voters from reining in his power, unless he can once more get by this election year with pious rhetoric to conceal his cynical actions.


Thomas Sowell

Thomas Sowell is a senior fellow at the Hoover Institute and author of The Housing Boom and Bust.

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