In 2003, both Senator Christopher Dodd and Congressman Barney Frank pressured Congress not to hold FNM and FMC accountable to reasonable lending standards. Frank was famously quoted as saying: "I'd like to roll the dice.." As late as the summer of 2008, Dodd claimed FNM and FMC were on sound financial footing. Within two months of Dodd's fatuous claim, both FNM and FMC were put into receivership and bailed out by the US taxpayer.
So, who were FNM and FMC? FNM is known as "Fannie Mae." FNM were created in 1938 for the sole purpose of using the credit of the American taxpayer to buy residential mortgages that met FHA (Federal Housing Agency) lending standards. FMC was created in the 1970s for the sole purpose of buying residential mortgages from thrifts and savings and loans. By 2007, half of all residential mortgages in America were owned by FNM and FMC.
So, what happened in 2003. In 2003, both Dodd and Frank pushed FNM and FMC to lower the lending standards of purchased mortgages. This pushed the mortgage originators to lower their standards as well. The result: subprime and alt-a mortgages that had little chance of solvency if housing prices fell, became the norm.
Thanks, Chris Dodd and Barney Frank. It wasn't the mortgage lenders or the banks that caused the disaster of 2008. You guys deserve full credit for the disaster, by forcing the taxpayer to fund a quasi-government agency to buy substandard mortgages and spur the most dangerous housing boom in American history.
Of course, after 2008, Dodd and Frank ran the Senate and House Banking committees and switched course. These two blamed the banks for the problem that they alone created. By forcing FNM and FMC to buy sub-standard mortgages, Dodd and Frank triggered the bubble in housing that ultimately collapsed in disaster in 2008.
Dodd and Frank co-authored the most punitive financial legislation in US history and all but guaranteed that the US would be unable to truly recover from the 2008 disaster. Dodd-Frank shifted the blame for the 2008 collapse onto the banks and away from themselves -- the real culprits. The average American has paid an enormous price for the perfidy of Chris Dodd and Barney Frank.
If your main purpose was to seriously damage the great American economic engine, you could not have done a better job than Chris Dodd and Barney Frank.
As the Wall Street Journal notes today, in a detailed review of Dodd-Frank regulations and their trials in court, the Dodd-Frank laws are an unmitigated disaster of questionable constitutionality.
Dodd-Frank and Obamacare will go down in history as two of the biggest legislative and economic blunders in American history. As always, the average American is the victim. Chris Dodd and Barney Frank are wealthy elitists, living a life of luxury and glory, while the average American struggles to get a job and a mortgage loan.