O'Reilly falsely claimed that Rep. Frank "sat by" while "Freddie Mac and Fannie Mae made bad loans"

››› ››› RAPHAEL SCHWEBER-KOREN & JEREMY HOLDEN

In a column, Bill O'Reilly falsely claimed that Rep. Barney Frank "sat by as mortgage brokers Fannie Mae and Freddie Mac made bad loans." Also, Fox News Sunday host Chris Wallace did not challenge a similar claim by Sen. Jon Kyl that efforts by the Bush Administration and Republicans in Congress to regulate Freddie Mac and Fannie Mae "were stopped at every turn by Democrats." In fact, more than a year ago, Frank sponsored a bill to create the Federal Housing Finance Agency, granting that agency "general supervisory and regulatory authority over" Fannie Mae and Freddie Mac and directing it to reform the two companies' business practices and regulate their exposure to credit and market risk.

In a September 18 column, Fox News host Bill O'Reilly falsely claimed that Rep. Barney Frank (D-MA) "sat by as mortgage brokers Fannie Mae and Freddie Mac made bad loans" and asserted that "[i]nstead of demanding responsible business practices from Fannie and Freddie, Frank continued to pound the table to extend even more credit to 'low income' families." In fact, Frank did not "s[i]t by." He sponsored H.R. 1427, a bill to create the Federal Housing Finance Agency (FHFA), more than a year ago, granting that agency "general supervisory and regulatory authority over" Fannie Mae and Freddie Mac and directing it to reform the two companies' business practices and regulate their exposure to credit and market risk. In May 2007, the House passed H.R. 1427. Also, on the September 21 edition of Fox News Sunday, host Chris Wallace did not challenge a similar claim by Sen. Jon Kyl (R-AZ) that efforts by the Bush Administration and Republicans in Congress to regulate Freddie Mac and Fannie Mae "were stopped at every turn by Democrats."

Among other things, Frank's legislation, titled the "Federal Housing Finance Reform Act of 2007," directed the FHFA director to "ensure" that Fannie Mae and Freddie Mac "operate[] in a safe and sound manner, including maintenance of adequate capital and internal controls" and to establish standards at those two entities for "management of credit and counterparty risk" and "management of market risk." The legislation also required the FHFA director to "establish standards by which the portfolio holdings, or rate of growth of the portfolio holdings, of the enterprises will be deemed to be consistent with the mission and the safe and sound operations of the enterprises." In addition, it authorized the director to "require" a regulated entity "to dispose of or acquire any asset, if the Director determines that such action is consistent with the purposes of this Act or any of the authorizing statutes."

The bill was introduced on March 9, 2007, and the House Financial Services Committee passed it on March 29, 2007, less than three months after Frank assumed the chairmanship of the committee when Democrats took over the House of Representatives in January 2007. The full House subsequently passed it by a vote of 313-104 on May 22, 2007. The Senate did not act on the legislation. The FHFA was eventually created after Congress incorporated provisions that House Speaker Nancy Pelosi (D-CA) said were "similar" to those of H.R. 1427 into the Housing and Economic Recovery Act of 2008, which the president signed into law on July 30.

The White House Office of Management and Budget described the bill in a May 16, 2007, Statement of Administration Policy, which noted objections to some provisions but nevertheless "support[ed] House passage of H.R. 1427":

The regulatory regime envisioned by H.R. 1427 is an improvement over current law. The bill enhances the regulatory oversight of the housing GSEs [government sponsored enterprises, which Fannie Mae and Freddie Mac were at the time] by establishing a new Federal Housing Finance Agency (FHFA) and providing this new housing GSE regulator with: (1) greater authority to set capital standards; (2) authority to place a troubled GSE into receivership (mandatory in some cases); and (3) authority to approve new activities and oversee mission compliance. In addition, H.R. 1427 grants the new housing GSE regulator specific authority to regulate the retained mortgage portfolios of Fannie Mae and Freddie Mac. This authority is grounded in considerations regarding the mission of and safe and sound operations of Fannie Mae and Freddie Mac, but would also authorize the new regulator to consider all potential risks posed by the portfolios. This provision helps to address the systemic risk that Fannie Mae and Freddie Mac pose to our financial system and ensures that they will better address their core affordable housing mission.

On Fox Broadcasting Co.'s Fox News Sunday, Wallace did not challenge Kyl's claim that "from 2002 right on through until recently, the Bush Administration and Republicans have sought to further -- or have sought to put regulations on the government-sponsored entities, Freddie Mac and Fannie Mae -- the groups that I think everybody agrees started this whole problem by the securitization of these mortgages -- and they were stopped at every turn by Democrats." Kyl further claimed that the "bottom line is, Republicans have been calling for regulations on Freddie Mae -- Freddie Mac and Fannie Mae since 2002. Democrats have resisted it." Wallace did not point out that it was a Democrat-led Congress that passed regulatory reform of Fannie Mae and Freddie Mac.

From O'Reilly's September 18 column:

Once again the federal government has left Americans in a precarious state as a terrible storm is passing through the U.S. economy. Like Hurricane Katrina, some folks thought the government could keep them from harm, but, as in New Orleans, things have gotten out of control quickly as bad housing loans have shredded the economy.

[...]

Congressman Barney Frank also sat by as mortgage brokers Fannie Mae and Freddie Mac made bad loans even though Frank, as head of the House Banking Committee, certainly knew the score. Instead of demanding responsible business practices from Fannie and Freddie, Frank continued to pound the table to extend even more credit to "low income" families. The mortgage companies were happy to accommodate him, giving big money to folks with little collateral.

[...]

That could happen this time around. Poor leaders like [Securities and Exchange Commission chairman Christopher] Cox and Frank are just a small part of a corrupt system that is now harming honest Americans. Whoever the next President is must put an end to this.

From the September 21 edition of Fox Broadcasting Co.'s Fox News Sunday:

KYL: What I would note is, that from 2002 right on through until recently, the Bush Administration and Republicans have sought to further -- or have sought to put regulations on the government-sponsored entities, Freddie Mac and Fannie Mae -- the groups that I think everybody agrees started this whole problem by the securitization of these mortgages -- and they were stopped at every turn at Democrats.

My point here is that if we're talking about the free market and regulations this is one area where Republicans were willing and desirous to regulate, Democrats were not.

WALLACE: We've got less than a minute left, and I give it to you.

SEN. CHARLES E. SCHUMER: You know, John McCain in one week went from sounding like Milton Friedman to Huey Long. That kind of language that he used, you've never heard it from him before, and I would just say in this last week John McCain's economic pronouncements have been erratic. The first day he says -- Monday he says the economy is strong, the second day he is against the bailout of AIG, third day he is for the bailout of AIG, fourth day he calls for the firing of Chris Cox without saying what the policy changes are. Chris Cox is just --

WALLACE: The head of the SEC [Securities and Exchange Commission].

SCHUMER: Head of the SEC, but he's an appointee of the president. And the fifth day he has the populist rhetoric, which we've never heard from him, and he sounds like Huey Long. I don't think it gives people confidence in John McCain's stewardship of the economy.

WALLACE: All right. Real quick.

KYL: But bottom line is, Republicans have been calling for regulations on Freddie Mae -- Freddie Mac and Fannie Mae since 2002. Democrats have resisted it. My friend Chuck Schumer, in fact, even said that the new regulator that we finally got into place shouldn't come into being until next year. Thank God he was in place to find out what the books of those companies were really like.

WALLACE: Senator Kyl, Senator Schumer, we're going to have to leave it there.

Posted In
Economy, Housing
Network/Outlet
Fox News Channel
Person
Bill O'Reilly, Chris Wallace
Show/Publication
FOX News Sunday
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