In his article “Captains of today’s Titanic” (Commentary, Wednesday) Chairman Rep. Barney Frank, Massachusetts Democrat.
Mistaking solid underwriting standards for discrimination against the “underserved,” Mr. Frank and his affordable-housing allies pressed for lower loan-underwriting standards. When it became evident that the reason the underserved were underserved was because they were bad credit risks who defaulted at unprecedented rates, Mr. Frank refused to consider the possibility that he had been wrong. Instead, he absolved the borrowers and the lax credit standards, and he blamed the crisis on the lenders. He should not be allowed to wriggle out of his share of the blame.
Ironically, despite his role in creating the housing market problem, Mr. Frank is one of the primary individuals charged with fixing it. He may be exactly the wrong person for the job because he seems not to understand the fact that risk imparts a cost to the market that can’t simply be legislated away.
Oblivious to the need to impose higher costson higher risks, he appears to be intent on sacrificing the health of the market just to bail out his favored group. For example, he is the prime proponent of preventing the Federal Housing Administration (FHA) from discontinuing its ruinous zero down-payment loan program - exactly the kind of loans that got us into this mess.
Also, he is one of the prime sponsors of the proposal made by a group of major banks that would require the FHA to add up to $300 billion of distressed loans to its portfolio, and is adamantly opposed to requiring a higher fee to be paid by these higher-risk borrowers. Finally, he is pressing beleaguered Freddie Mac to load up on many of these same clunkers.
Congress is always talking about overpaid and incompetent CEO’s who should be removed. Isn’t it time for Mr. Frank to be removed from his chairmanship of the House Financial Services Committee?
VICTOR CHOLEWICKI
Washington
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