Dodd, Frank and Financial Reform: A Different Record

I recently finished reading Karl Rove's Courage and Consequence. Among other interesting revelations was the back story of the would-be-rescuers of our financial system, Congressman Barney Frank and Senator Chris Dodd.

One bill would have subjected Fannie Mae and Freddie Mac to the kinds of federal regulation that banks, credit unions, and savings and loans have to comply with. No Democrat supported it and, most importantly of all, Senator Chris Dodd threatened to filibuster if Banking Committee chairman Richard Shelby, Alabama's senior senator, attempted to bring it to the floor. Dodd got his way--and thus helped pave the way to the largest financial crisis since the Great Depression
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the leading reform opponents--this tale's true villains--were Democratic congressman Barney Frank of Massachusetts and Connecticut senator Chris Dodd. Frank first dismissed our fiscal warnings, suggesting administration officials would "exaggerate a threat of safety and goodness [to] conjure up the possibility of serious financial losses to the Treasury, which I do not see" and called Fannie and Freddie "fundamentally sound financially." Later, Frank went so far as to argue that this "is an artificial issue created by the administration. . . . I don't think we are in any remote danger here." Even as Fannie and Freddie collapsed and helped drive the financial crisis of 2008, Frank labeled Bush's call for reform "inane." Dodd was less angry than Frank--though this could be said of virtually everyone on Capitol hill--but he was just as wrong in his diagnosis of the problem and his opposition to reform, saying in 2004 that these companies were "one of the great success stories of all time." As Fannie and Freddie spiraled downward, Dodd suggested Bush "immediately reconsider his ill-advised" call for reform. Dodd had received preferential treatment on his mortgages from one of the biggest bad actors in the lending business, Countrywide. Despite this--and proving there is nothing as brazen as a politician with a sweetheart mortgage deal and no conscience--Dodd went on after Fannie and Freddie were rescued with taxpayer dollars to attack the Bush administration for not recognizing that they were in trouble. "Why weren't we doing more . . . I have a lot of questions about where was the administration over the last eight years." Once the problem helped spark a crisis, Frank and Dodd voted in 2008 for the Bush administration's reform bill, which they had opposed in 2005. It was perhaps the most blatant case of hypocrisy I have witnessed in Washington, where hypocrisy is common currency
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Among those Democrats who backed Dodd's filibuster and opposed reform was the freshman senator from Illinois, Barack Obama. He was the third-largest recipient of campaign gifts from Fannie and Freddie employees in 2004. Since winning the White House, he has pointed to the economic problems he "inherited," but he has never owned up to his role in creating them.

For more insights from the inside, I highly recommend picking up your own copy of Rove's book.