On Thursday night’s Bill O’Reilly TV show, the “O’Reilly Factor”, there was a brief but very heated interview between O’Reilly and Representative Barney Frank. For the most part, this interview consisted of heated accusations made by Bill O’Reilly, with Barney Frank rebutting by repeatedly denying statements made by Bill O’Reilly and by accusing O’Reilly of ranting. Bill O’Reilly accused Barney Frank of having major responsibility for the financial troubles of Fannie Mae and Freddie Mac, thus helping to bring on the present financial crisis. For the most part, the only evidence presented by Bill O’Reilly was a short video made less than 3 months ago during which Barney Frank publicly stated that the stock shares of Fannie Mae and Freddie Mac, although not really a good buy at the time he was speaking, were in fact a good buy for long-term investors. (I am paraphrasing here. A transcript can be found on this web site.) Barney Frank repeatedly replied by saying that he never recommended that people go out and buy stock in Fannie Mae and Freddie Mac; he had only said that the stock would probably be a good investment sometime in the future. In that sense Barney Frank was right, at least as I could tell from the video. Bill O’Reilly did not do himself any favors by frequently shouting at Barney Frank, and by constantly accusing him of recommending the stock, never mind whether that was a recommendation for purchase now or in the future.
What was sorely lacking in that interview were more details, plus additional information about Barney Frank. In this blog entry I provide some of this additional information. First of all, one thing Barney Frank mentioned several times to Bill O’Reilly was that he had only become the Chairman of the House Banking Committee in January of 2007, less than 2 years ago, strongly implying that he had no responsibility for what happened before that date. (The troubles with Fannie Mae and Freddie Mac started well before that date.) But this is very misleading, because although Barney Frank did not become the Chairman of the committee until January of 2007, he has been an active member of that committee since at least 1991, quite a long time ago. As an active member he had full voting rights, and of course he was able to contribute to the actions of that committee, even though he was not the Chairman until nearly two years ago. And when he was not the Chairman, he was the highest-ranking member for awhile, and he certainly pushed for resolutions and legislation which made it easier for Fannie Mae and Freddie Mac to guarantee more home mortgages to people who were not very credit-worthy. As a congressman, Barney Frank has never been a shy, reserved person, but rather a very active and outspoken individual who tried to do things that he wanted done. An Internet search will show several instances in which Barney Frank’s membership in this committee over the past fifteen years did not add responsibility to Fannie Mae and Freddie Mac, but which instead sometimes made it easier for them to be more irresponsible. (One such article can be found here.) Finally, during the O’Reilly interview, Barney Frank said that, when he was not the Chairman of the Committee, he tried to “reform” these institutions (with the help of others), but the reforms were blocked by Republicans and Republican administrations. Only when he became Chairman did he manage to get a reform bill passed. However, as reported on another TV interview, this “reform” was of no real consequence. According to the latter interview, for years the top-level management of Fannie Mae and Freddie Mac received bonuses based on the total amount of mortgage loans that these institutions guaranteed or purchased; the quality of the mortgages did not come into play. Instead this so-called “reform” just made some mathematical changes to the way in which these bonuses were calculated, and these changes did not include any real accounting of whether or not the mortgages themselves were really good or bad.