The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Media malpractice on healthcare, the morgage crisis, and Barney Frank who is at it again.

Posted by iusbvision on July 15, 2009

Investors Business Daily:

The Price Of Media Malpractice
By INVESTOR’S BUSINESS DAILY | Tuesday, June 30, 2009

Barney Frank

Barney Frank

Media: They laugh at his jokes. They say he’s the smartest guy in Congress. And 90% of them agree with him politically. Small wonder the havoc Barney Frank wreaks on the economy gets so little attention.

America has its share of problems, to be sure. But one of the most pernicious is the bias that permeates the media. We’ve been saying this for years, noting how it leads to half-covered issues, an ill-informed populace and wretched legislation that dogs us for decades.

Never, however, has it been as pervasive as now. Yes, the fact that the media are head over heels for our new president has made the favoritism more obvious.

When a major TV network like ABC, whose employees gave 80 times as much in financial contributions to Obama’s presidential campaign as they gave to his opponent’s, lets the president commandeer its news programming to tout a plan to take over the health care industry, it’s hard not to notice.

But it goes much deeper than Barack Obama. It also involves Rep. Frank and other politicians who are in large part responsible for the financial meltdown that led to the economic disaster from which we continue to suffer.

How we got into this, the worst economic fix since the Great Depression, is the most monumental question of our time. Yet despite the information that we and other non-mainstream media have put out, people still haven’t connected the dots.

This was driven home again last week, when it was disclosed that Frank, who is chairman of the House Financial Services Committee, wants standards for mortgages on new condominiums to be relaxed.

Seems the rules have been tightened to limit the exposure of Fannie Mae and Freddie Mac, the two government-sponsored agencies that buy most of the mortgages in America. Frank reportedly believes they’re “too onerous.”

Frank’s suggestion has gotten little press. Where it has been covered, little has been made of the fact that the congressman was a key backer of the lax rules that prevailed in the Fannie- and Freddie-backed subprime loan fiasco that sank the U.S. housing market and global financial markets.

As we said last week, Frank stood “athwart nearly all efforts to reform (Freddie and Fannie) until it was too late.” Rather than run down that list again, we refer readers to Thomas Sowell’s latest book, “The Housing Boom and Bust.”

One of America’s best economists and thinkers, Sowell in 148 pages chronicles this economic catastrophe from the passage in 1977 of the Community Reinvestment Act, which directed regulators to encourage financial institutions to “meet the credit needs of the local communities.”

It goes through the 1990s, when the CRA was revised to (1) pressure banks into relaxing lending standards for low-income borrowers and (2) push Fannie and Freddie to buy subprime loans and subprime securities to meet “affirmative action” quotas.

Sowell’s book also covers the efforts by Frank and others this decade to defend the tottering system and block moves to head off disaster.

Of the many comments by Frank that Sowell quotes is this from 2003: “Fannie Mae and Freddie Mac have played a very useful role in helping make housing more affordable. (Critics) exaggerate a threat of safety” and “conjure up the possibility of serious financial losses to the Treasury, which I do not see.”

Since then, the U.S. Treasury has been forced to bail out the financial system and two major car companies to the tune of $700 billion and counting. As for Fannie and Freddie, they’re in government receivership after adding $238 billion to the nation’s debt to bolster their shaky finances.

Yet back in 2003, Sowell notes, Frank was arguing that the federal government had “probably done too little rather than too much to push (Fannie and Freddie) to meet the goals of affordable housing.”

Sowell quoting Frank: “I would like Fannie and Freddie more deeply into helping low-income housing and possibly moving into something that is more explicitly a subsidy. I want to roll the dice a little bit more in this situation.”

Now Frank is back at the craps table, pushing for another relaxation of Fannie and Freddie loan standards. Yet the media, which seem oblivious to the history of the housing meltdown, apparently see no connection.

The same media, by the way, were just as passive Tuesday when Acorn, the “community group” that Obama once served as legal counsel, held demonstrations at the offices in 15 cities of four mortgage lenders that haven’t signed on to the president’s voluntary “Making Home Affordable” foreclosure-avoidance program.

Such demonstrations wouldn’t be that newsworthy if it weren’t for the fact that Acorn also played a key role in the subprime mortgage crisis by strong-arming banks into making loans they shouldn’t have. Here it’s trying to intimidate lenders once again. Once again, the media apparently see nothing of note.

Until they make the connection, the public at large will never realize it was Big Government, with its horribly conceived and executed programs, that created the mess in which we find ourselves. And it’ll be the public at large that will continue to suffer the devastation of future programs — whether they target housing, banking, energy or health care.

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