In an interview with Money, Frank was asked about Fannie Mae and Freddie Mac:
I believe Fannie and Freddie are better off than the market thinks. Over the long term the market is a very rational distributor of resources, but in the short term it can fall prey to hysteria. Sometimes you need to deal with that.Apparently, Warren Buffett is one of the rumormongers. Last week he said that the two mortgage finance companies "don't have any net worth," and added that shareholders are likely to be wiped out.
Part of the problem is rumormongering by short-sellers. Our hope is that just by making U.S. financial support available, we'll quiet the fears and eliminate any need for that support.
It's unfortunate that Congressman Frank has fallen into the trap of name-calling, questioning the motives of the handful of savvy investors who were prescient enough to foresee trouble at Fannie and Freddie. We're in an era of financial McCarthyism, where anyone who raises questions about companies is a "rumormonger" or a "short seller." That's dangerous for the market in the long run because it squelches dissent and contributes to speculative bubbles.
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Reader Comments (Page 1 of 1)
8-25-2008 @ 6:26PM
william lindblad said...
Thank you. It is about time that someone found Barney. Now, when is someone going to ask (&^#***e) where he was when this was going on???????????
His statement is a classic case of "damage control", AKA put blame elsewhere.
This is the committee that had the power to STOP the 100% financing, no down, no credit check mania that has gotten the good responsible working class and nearly all of the nations retirees into deep doo-doo economically.
The only thing that Barney and his entire committee should do is bow their heads in shame and fade into oblivion. If not, I hope that the taxpaying citizens figure out WHO is responsible and see that all get the gate.
It would seem that all are serving interests other than the people. Case in point-the OFHEO is the overseer of Fannie and Freddie. Did the committee call for resignations? Did the committee admonish the leaders of the OFHEO? Hell no, they gave them a pat on the head. I don't want to miss the fact that Senate has a finance committee also. The problem there is that they are elected for 6 years and everyone tends to forget. In the case of the House - its two, let's not forget.
The only one that tried to speak up was Al Jackson, the former HUD secretary.
He knew what he was talking about.
Al got hit with a bribery accusation and resigned. That's months ago.
9-24-2008 @ 5:27PM
Dick Hartop said...
I have seen you on TV a few times and am impressed.
Dear Chairman Frank I wish you were running for president
I also wish you were in my district.
I hope that we can converse, I am an old Yankee Democrat from NH.
Food for thought: I believe that eliminating ARM's would keep uninformed borrowers from defaulting on their mortages and facing foreclosure. This acrtion would be a big step to energizing our economy.
Dick Hartop
Wheaton IL 60189