CNN's John King did not challenge Cheney's false claim that “chairmen” Frank, Dodd were “stone wall” to Fannie/Freddie reform

Written by Nathan Tabak

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On CNN's State of the Union, host John King did not challenge former Vice President Dick Cheney's false claim that the Bush administration tried “to impose reforms on Fannie Mae and Freddie Mac, and we ran into a stone wall on Capitol Hill in the form of the chairmen and -- of the Banking Committee in the House and the Senate, Barney Frank and Chris Dodd.” In fact, Frank and Dodd were not “chairmen” until 2007, after which time Congress passed oversight legislation of Fannie and Freddie.

On the March 15 edition of CNN's State of the Union, host John King did not challenge former Vice President Dick Cheney's false claim that the Bush administration tried “to impose reforms on Fannie Mae and Freddie Mac, and we ran into a stone wall on Capitol Hill in the form of the chairmen and -- of the Banking Committee in the House and the Senate, Barney Frank and Chris Dodd.” In fact, Frank and Dodd were not “chairmen” of their respective committees until 2007; prior to that, Republicans controlled both houses of Congress and failed to pass oversight legislation. Indeed, it wasn't until Democrats controlled Congress that oversight legislation of Fannie and Freddie finally passed.

As Media Matters has repeatedly noted, in early 2007, as the new chairman of the House Financial Services Committee, Frank sponsored H.R. 1427, a bill to create the Federal Housing Finance Agency (FHFA), granting that agency “general supervisory and regulatory authority over” Fannie and Freddie and directing it to reform the companies' business practices and regulate their exposure to credit and market risk. 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 Bush signed into law on July 30, 2008.

Furthermore, before taking over the House Financial Services Committee chairmanship, Frank worked with committee chairman Rep. Michael Oxley (R-OH) on the Federal Housing Finance Reform Act of 2005, which would have established the FHFA to replace the Office of Federal Housing Enterprise Oversight (OFHEO) as overseer of the activities of Fannie and Freddie. After voting for the bill in committee, Frank voted against final passage of the bill on the House floor, stating that he was doing so because an amendment added to the bill on the House floor imposed restrictions on the kinds of nonprofit organizations that could receive funding under the bill.

From the March 15 edition of CNN's State of the Union:

CHENEY: We are in the midst of a worldwide economic period of considerable difficulty here. So it's -- I think in terms of trying to assess it and trying to fix it and undress it, it's important to understand that. It doesn't do just to go back and say, well, George Bush was president and that's why everything's screwed up, because that's simply not true.

KING: I think some people do go back, though, sir, and say -- understanding that. And the Democrats were in charge the last two years of your administration; that's a point that should be made. And you're right, other governments around the world have been caught up in this.

But I think some Americans say, wait a minute, he was the MBA. Dick Cheney was the veteran Washington insider and a CEO who came back into government. How could they have not seen this coming? Was everybody, not just the administration -- I'm not trying to pin this on the Republicans -- but was the White House, everybody in Congress regardless of party, leaders around the world so caught up in the boom that they had blinders on and didn't see the warning signs?

CHENEY: I think so. I don't recall, you know, sort of a general warning of concern until things started to turn -- turn south on us. I do remember, and I mentioned earlier, Fannie Mae and Freddie Mac.

As best I can tell from looking at the evidence, the failure of Fannie Mae and Freddie Mac was one of the key ingredients that caused the subsequent financial problem and economic recession. We did try, earlier in the administration, to impose reforms on Fannie Mae and Freddie Mac, and we ran into a stone wall on Capitol Hill in the form of the chairmen and -- of the Banking Committee in the House and the Senate, Barney Frank and Chris Dodd. The Democrats absolutely opposed any effort to reform those two institutions, and I think the collapse of those institutions, as much as anything, contributed to the financial difficulties we've been living with since.

KING: I want to move on to other issues after a break, but before we go to the break, any regrets about the financial bailout package that started in your administration? The Obama administration is building on it. They say they're fixing some things they thought went wrong in the Bush administration, but I know hindsight is easy, but looking back now from outside of the government, was it a mistake?