Barney Frank drops a bombshell: How a shocking anecdote explains the financial crisis

[TheNutcracker]

Barney Frank has a new autobiography out. He’s long been one of the nation’s most quotable politicians. And Washington lives in perpetual longing for intra-party conflict.

So why has a critical revelation from Frank’s book, one that implicates the most powerful Democrat in the nation, been entirely expunged from the record? The media has thus far focused on Frank’s wrestling with being a closeted gay congressman, or his comment that Joe Biden “can’t keep his mouth shut or his hands to himself.” But nobody has focused on Frank’s allegation that Barack Obama refused to extract foreclosure relief from the nation’s largest banks, as a condition for their receipt of hundreds of billions of dollars in bailout money.

The anecdote comes on page 295 of “Frank,” a title that the former chair of the House Financial Services Committee holds true to throughout the book. The TARP legislation included specific instructions to use a section of the funds to prevent foreclosures. Without that language, TARP would not have passed; Democratic lawmakers who helped defeat TARP on its first vote cited the foreclosure mitigation piece as key to their eventual reconsideration.

TARP was doled out in two tranches of $350 billion each. The Bush administration, still in charge during TARP’s passage in October 2008, used none of the first tranche on mortgage relief, nor did Treasury Secretary Henry Paulson use any leverage over firms receiving the money to persuade them to lower mortgage balances and prevent foreclosures. Frank made his anger clear over this ignoring of Congress’ intentions at a hearing with Paulson that November. Paulson argued in his defense, “the imminent threat of financial collapse required him to focus single-mindedly on the immediate survival of financial institutions, no matter how worthy other goals were.”

Whether or not you believe that sky-is-falling narrative, Frank kept pushing for action on foreclosures, which by the end of 2008 threatened one in 10 homes in America. With the first tranche of TARP funds running out by the end of the year, Frank writes, “Paulson agreed to include homeowner relief in his upcoming request for a second tranche of TARP funding. But there was one condition: He would only do it if the President-elect asked him to.”

http://www.salon.com/2015/03/31/barney_frank_drops_a_bombshell_how_a_shocking_anecdote_explains_the_financial_crisis/

[MannyGoldstein]

1. President Obama was primarily raised in his grandparents home.

His grandmother was a bank vice-president. Perhaps that's what's made him so deeply sympathetic to bankers.

[TheNutcracker]

3. That's comical. We need a button for that...for now this will have to do!

[Fred Sanders]

14. You forgot the sarcasm emoticon?

[rhett o rick]

25. What no comment on the OP? Did you just stop by to give Manny a jab?

Last edited Tue Apr 7, 2015, 09:55 AM - Edit history (1)

It's not that Manny doesn't deserve a jab once in a while, just seems like some (not you) are obsessed with him. Personally, I think he is given way too much credit.

[TheNutcracker]

2. Thanks for kicking...this is BILLIONS of OUR DOLLARS, being kept by the banks!

[Enthusiast]

60. Only rich people can be trusted with money.

[TheNutcracker]

4. I wonder if Racheal would cover this? Or Ed? Someone???

[Enthusiast]

61. You kid?

[merrily]

74. Not what they get paid to do.

[Wellstone ruled]

5. Wow!!!

This is very interesting to say the least. Do you think maybe Larry Sommers Robert Rubin and Rahm Emanuel were running interference for Paulson. Mr. Obama has some splanin to do. Ouch!!!! New this story was reported on a financial blog way back when,just could not be sure. Jamie Dimon the smartest man I knew,yah right.

[TheNutcracker]

6. This is the root of U.S rot. Yes, Obama has some splanin to do. But where is that money, and

we STILL want it....right??????????


We do not ignore this. Or we get what we deserve.

[Wellstone ruled]

8. Allways wondered why

Chris Dodd went away quietly? Got a hunch Joe Biden is involved up to his neck in here. Is this what Barney means by couldn't keep his hands off? This is one hell of a bombshell and maybe this is why the Clinton Camp is so quiet. New Paulson a others involved were as dirty as they come. Dashle and Gephart were named in blog stories as to their lobby work for Wall Street. Norm Coleman and Vin Webers names popped up from time to time.

[appalachiablue]

18. Dodd had mortgage deals thru crook Angelo Mozilo of Countrywide. See #12. Also told CT people

he'd never become a lobbyist. Last I checked he's one for the MPAA, the Motion Picture Assn. of America.

http://en.wikipedia.org/wiki/Chris_Dodd

[sabrina 1]

37. Don't forget Timothy Geithner. I remember Elizabeth Warren grilling him about the Mortgage relief

funds and how ANGRY he got when she insisted that he explain why they were not being used for homeowners as intended.

She stated that out of 50 billion, only about $200 million had been allocated.

She wanted to know why.

He angrily told her, and maybe this was a slip on his part, that those funds 'were never meant to help everyone'.

What happened to them, do we even know?

Reading this OP from Barney Frank, who is rightfully angry imo, that we blamed Congress for not caring about homeowners, when in fact it was CONGRESS who insisted that help for homeowners be part of any agreement to bail out the Banks.

Now I'm wondering if they just allowed that allocation of funds to Homeowners just to get the billions they so desperately needed but it was 'never intended to help everyone' as Geithner stated.

No wonder the Banks hate Warren. She may have come close to exposing the plot to hold on to those funds which would explain Geithner's extreme anger at her pressing him for answers as to WHY they were doing that.

At the time of her questioning of Geithner, I believe time was running out for homeowners to get some of that relief. Many who tried told of being tricked into long delays which Warren was concerned about.

This from Frank confirms what many people thought after witnessing Geithner's extreme anger and attempts to not answer Warren's questions.

Seems it was never intended to go to homeowners. So what happened to those billions?

[Wellstone ruled]

53. Thank you for the reminder.

Remember a story out of Rolling Stone about Geithner having a desk at Goldman-Sachs. And many of his staff were GS staffers. Old age sucks,forgetfulness.

[merrily]

75. The likes of Dodd and Frank did not have to knuckle under to Obama or Geithner, either.

Yes, I know, it's a lot to refuse a newly elected, popular President of your own Party who now has a lot to say about your political future. But, claiming the orders came down from the President elect does not buy anyone a 100% pass from me. Attempts to pass the buck are not exactly a profile in courage. Neither is being more worried about your Party and/or your own re-election than you are about protecting the interests of the American people, which is the job you sought and got paid to do.

Nor does Obama get a pass by pointing to either his team or Congress.

Obama and his team are to blame, and so are Dodd, Frank and others.

[sabrina 1]

76. I absolutely agree with you. Right from the beginning they did not stand up when it was

necessary.

But think about it, WE are told right here on DU that WE must not stand up when our Party is on the wrong track. Pressure is applied to those who point that certain policies AND nominees should be opposed, not supported.

Such pressure doesn't affect some people, but it does cause many to remain silent, or to leave DU.

Still, there IS no excuse for elected officials to vote AGAINST the interests of the people who elected them.

Kucinich and a few others for the most part did not just go along, but voted eg, against funding the War machine, and were threatend and pressured by their own party for doing so.

And not supported when they were up for reelection.

It's OUR fault also, because we don't pressure OUR PARTY enough so that they know their jobs will be gone if they DON'T do what is right.

See the many posts here demanding that we 'vote for the 'D' even if you have to hold your nose to do it'.

Obama is responsible for appointing Republicans to Cabinet positions.

And Wall Street Insiders, like Geithner who never should have held that position. He was a FOX put in place to protect Wall St. interests.

[merrily]

77. John Oliver calls them dingoes who are hired as babysitters.

[sabrina 1]

78. I agree with John Oliver. n/t

[TheNutcracker]

7. Tomorrow, each of us call our one congresscritter and tell them you're waiting for the release

of the funds.

[Autumn]

9. Banks first. People don't count.

[Omaha Steve]

10. K&R!

[DesertDiamond]

11. So funny, just today I was wondering why the banks were allowed to use the bailout money to invest

overseas instead of to prevent foreclosures. I know nobody's perfect, and I love a lot of things President Obama has done, but if this is true then this one is horrendous.

[appalachiablue]

13. How about that, helping overseas banks but not distressed Americans. Troubling-

[appalachiablue]

12. This is concerning, wonder why Frank is revealing it now. Before leaving Congress

Chris Dodd received a couple sweetheart mortgage deals, one for property in Ireland through Countrywide Financial, whose CEO and Chairman, Angelo Mozilo was deemed one of the top 10 culprits of the 2008 subprime mortgage industry and financial crisis by CNN.

http://en.wikipedia.org/wiki/Angelo_Mozilo

[hughee99]

31. Frank is revealing it now because he's selling

A book.

[appalachiablue]

35. That's in the OP & he was just on Bill Maher discussing his book. The timing of it, the year

before the 2016 election and his decision to include the information especially as a fmr. longtime Dem. Party leader is what I'm talking about. The political impact of it could be significant for the Democratic Party in the next election and beyond.

[cascadiance]

47. Arguably the corporate media would have squashed his account had he talked on it earlier...

... and things could have been made worse then with that bill if that had happened. With a book ready to be published, it will be harder for the corporate media to rewrite what he's trying to tell us now.

It is the common practice these days when someone comes out with a book trying to expose corporate shills or other problematic activity, that the author and his book are dismissed as being "he/she is selling a book" as if what they get back in sales is the only motivation for them writing it, as opposed to exposing truths that the corporate media has been paid to ignore in recent times.

If we had a better media landscape, then we might have more real time exposure of wrongdoing like what happened with Watergate than what we have today. Look at how Greenwald is also harassed and how he has to go so much to alternative news media sites instead of our "mainstream" (aka corrupt corporate) media to get his stories out.

[Thespian2]

15. K & R !!!

[JDPriestly]

16. That's ugly.

Last edited Tue Apr 7, 2015, 01:42 AM - Edit history (1)

I have a friend who held out for years and recently lost her home. The mortgage crisis continues for the unlucky few. And the many who went into bankruptcy are also still paying for the irresponsibility and fraud of the mortgage companies, appraisers and banks. This sheds new light on the failure of the Obama's Justice Dept. to indict the big bankers and mortgage company leaders and others in the business.

[hunter]

17. The "Obama is a Socialist!" meme was all packaged up and ready for widespread distribution.

It fell flat.

Whatever you think about Obama, he is a shrewd politician.

The banks had already screwed us. The game was rigged. They were setting up Obama to fail, to take all the blame for a crisis he was not responsible for.

Imagine Romney as our President. That should scare the shit out of you.

[Wellstone ruled]

19. Couple of things that I seemed interesting

at the time. First,when Larry Sommers was finally shown the door as well as Rambo Rahm,suddenly there was a tiny bit of concern for the millions who lost there homes who were honest buyers and not some POS that was current and had the legit paperwork. Second,when Country Wide was a back stop and Rubin left Citi,that's when another some what am concerned statement came out. Fully realize this who disaster began under Bush/Cheney/Paulson and Greenspan,but,bad consul within the White House made it worse.

[Unknown Beatle]

21. True.

But explain why Obama bailed out Wall Street with our hard earned tax dollars and refused to help Main Street. The answer is simple.

[merrily]

28. Obama doesn't need any more terror posts. Save them for Hillary.

I survived Romney as Governor quite nicely, although, clearly, our Democratic legislature kept him in check.

[Doctor_J]

20. wait...Obama is a water carrier for big business? for jamie dimon??

I'm shocked! The hundred billion dollar per year guarantee for Big Insurance makes sense now. So does the school privatization. So does the fracking. And the TPP. God, how could we have seen it??

[JEB]

22. K&R for exposure.

[dreamnightwind]

23. bump

I've been pissed at this the whole time, finally gave up hope of any principle reduction. Still facing foreclosure on an underwater mortage, and looking for work, hopefully it works out, in the meantime my parents contiinue (so far) to help with mortgage money. They foamed the runways for the banks (Geithner's words) and let the underwater homeowners sink.

[merrily]

33. Sorry. I have a dear family member still struggling with all that, too.

[dreamnightwind]

65. thx merrily

[Lil Missy]

24. You lost me at "Frank's wrestling with being a closeted gay congressman"

Franks closeted??

What a bunch! I stopped reading there - anything after that has to be more bullshit.

[merrily]

29. Huh? He was elected to Congress in 1972 and did not come out until 1987.

So, he served closeted for about 14 years. He wrote about that in the autobiography he is currently promoting. Besides, whether Frank was ever closeted in Congress or not is hardly the main point of the OP.

Moreover, I very much doubt you stopped reading.

[tkmorris]

56. Some people want very much to not know certain things

If it contradicts their worldview their instinct is to avoid it like used bandages from an Ebola treatment facility.

[merrily]

73. Worldview or mission?

[sabrina 1]

55. You should not have stopped reading because if you had continued to read you have

learned why there was no bailout for Main St while Wall St made off with billions of our tax dollars AFTER having gambled away people's futures, after all the corruption that was revealed.

Assuming you care about the working class that is.

If not, then you stopped at the right place.

Frank was a Congressman for a long time. He went through hell as a Gay member of Congress during his early years as a member there.

Not sure what you are finding funny about this.

[rhett o rick]

26. I am glad the Obama Admin has put systems in place to prevent this in the

future. This extortion will happen again and again until we take the power away from Goldman-Sachs and buddies. HRC probably isn't the person to do it.

[merrily]

27. Also, bonuses for Executives involved in TARP, incl. AIG:

President Barack Obama said, &quot I)t’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?" and "In the last six months, AIG has received substantial sums from the U.S. Treasury. I’ve asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole."[3][4]

BUT:

Initially, Senator Chris Dodd was identified by Treasury Department spokesmen as being responsible for the inclusion of the provison exempting such bonuses from the executive pay limits clause of the TARP. However, on February 14, 2009, the Wall Street Journal published an article, Bankers Face Strict New Pay Cap,[61] discussing a retroactive limit to bonus compensation inserted by Chris Dodd into the TARP bill that passed in the Senate.

The same article went on to mention that Treasury Secretary Timothy Geithner and Lawrence Summers "had called Sen. Dodd and asked him to reconsider". When the bill left conference, Dodd's provision had been removed and replaced with the explicit exemptions lobbied for by Geithner and Summers.

As Dodd explained in his March 18 interview on CNN,[62] at Geithner and the Obama Administration's insistence he removed the language he had himself inserted and replaced it with Geithner and Summers' loophole, which thus allowed the bonuses which formed the basis for the AIG scandal.

Dodd retreated from his original statement that he did not know how the bill was changed [63] Dodd was criticised by many in the Connecticut media for the apparent flip-flop.[64][65] In a March 20, 2009 editorial the New Haven Register called Dodd "a lying weasel" [66] The same day, Hartford Courant columnist Rick Green called on Dodd not to seek re-election in 2010.[67]

http://en.wikipedia.org/wiki/AIG_bonus_payments_controversy

[stevenleser]

30. "He would only do it if the President-elect asked him to.” What kind of B.S. is this?

Why would the opinion of the President-elect matter on an issue of policy. A President-elect has zero power, and does not have full access to all the facts yet that he will have once inaugurated. The only thing a President-elect should be doing between election day and inauguration day is putting together his team and starting to research the most pressing issues for his administration.

The President-elect is not supposed to be acting on policy decisions. This strikes me as complete B.S.

[merrily]

32. What are you doubting? Bush did say he would not request TARP II unless Obama asked him to

and, very shortly after Bush said that, Obama asked Bush to request it.

Were you not following that at the time?

See also Reply 27.

If both those things are true--and they are--why is it so far-fetched that the OP is also true?

Why on earth would Frank lie about a Democratic President? And, if Frank lied, why has the WH not denied it?

[stevenleser]

34. I followed it and that is also ridiculous. He's not the President until inauguration day.

He deserves no blame and no credit for anything until then. It's OK for the incumbent to inform him, but saying something is up to the President-elect is ridiculous.

[merrily]

36. It happened and Obama and his advisors very much participated.

If you think that is ridiculous, take it up with Obama.

Bush was under no obligation to request release of Tarp II. Bush could have left office without ever having requesting release of Tarp II at all. He only had a couple of weeks to go at the time, but apparently Obama did not want to wait. When Bush said he would request it only if the President elect asked him to, Obama piped right up and requested release. He did not say, Gee, Pres. Bush, that will not be up to me for another two or so weeks. Until then, it's all your call."

And if Obama did not want to impact it, why did he send Geithner and Summers to mess with Dodd and Frank over things like executive bonuses and mortgages?

[stevenleser]

38. That's besides the point. It's ridiculous. nt

[merrily]

40. Again, take it up with Obama if you think it ridiculous.

[stevenleser]

46. I don't have to do anything. I'm right. Constitutionally, a President-Elect has zero power. Period.

[merrily]

48. De facto, and clearly, Obama did not agree.

He exercised power and Bush, Dodd, et al. ceded it.

Constitutionally, neither Cheney nor Rove had any power, either. Yet, I have little doubt they exercised power.

[Enthusiast]

62. You know ridiculous, that much is for certain.

[certainot]

45. yep

[hughee99]

51. Really? Paulson and Bush were lame ducks.

You don't understand why someone might not want to put a policy in place that they feel might hinder their successor without checking with their successor first? The last thing Paulson wanted to hear after leaving offices was that the Obama Administration couldn't fix the financial crisis because of some policy Paulson put in place on his way out the door. Getting President-elect approval for such policies (especially ones you didn't want to implement anyway) gave him a CYA for such things.

Isn't this exactly the sort of thing they create "transition teams" to review so it's harder for the outgoing Administration to drop a bunch of cherry bombs in the toilet (accidentally or on purpose) and then just walk away.

[uponit7771]

70. This is what Obama FUDrs are hanging their hats on, the "percieved" power of an elect not someone

... in office.

More FUD bullshit

[progressoid]

39. " You’d think someone would have noticed."

A lot of shit was overlooked while the media was fixated on birth certificates and such.

[merrily]

41. In fairness, media always overlooks a lot of shit and creates diversions.

It's one of their new roles in our modern society.

[nolabels]

42. I wonder how they find enough newprint to cover up the next crash that's coming.

Some of our tools that we use have changed but our genetic makeup that make us do some of the things we do have changed very little

[certainot]

49. IMO most mediums are dedicated more to ignoring important stuff and

the only medium really effective for creating diversions is the rw radio monopoly.

firstly because it can blanket the country with cordinated repetition from multiple sources (400 professional liars on 1000 radio stations reaching 50 mil a week) and secondly because it is unchallenged in that media form- it's 95% rw- in most parts of the country there are no free alts for politics while driving or working, creating a huge near-captive audience.

all other media in our lousy democracy have some competition going on- the web or printed page is easy to turn to alts, and so is the TV channel.

however pitiful the options are, the widespread unchallenged repetition/buzz needed to create major lies and turn molehills into mountains on a regular basis, controlled from the right's think tanks, usually starts with the talk radio PSYOPS

[One_Life_To_Give]

43. Makes one wonder if Perhaps Wall Street going Bankrupt might have been the better choice?

Makes one wonder if Perhaps Wall Street going Bankrupt might have been the better choice? After all those firms who gambled and lost went bankrupt. Perhaps a better system would have arisen from the ashes. For those of us on Main St. could it really have been much worse?

[KansDem]

57. I agree with you 100%

During the crisis the mantra was "if Wall Street goes under, many Americans would lose their pensions!" Therefore, it was essential to "save the banks."

In the wake of their criminal activity, why couldn't the banksters have been arrested and their assets seized? Then form a puiblic entity like the Bank of North Dakota to oversee the assets. Victims of the banksters could have been compensated and pensions secured by newly-appointed bank officials working on behalf of the public.

I'm positive there would have been public-minded individuals with banking savvy that could run the operation. The trials and imprisonment of the banksters could then proceed.

[SleeplessinSoCal]

58. It would have been a lot worse than 1929

And we were already at war in 2008, so going into war would not have be any kind of fix.

What is needed still is reinventing Glass-Steagall.

[ieoeja]

44. Reading Larry Summers letter to which the Salon article links, Frank is wrong.

"We will implement smart, aggressive policies to reduce the number of preventable foreclosures by helping to reduce mortgage payments for economically stressed but responsible homeowners, ..."

1. It states "preventable foreclosures" by which they presumably meant "homes not already in foreclosure".

2. TARP most definitely did include programs to "reduce mortgage payments". I don't need no stinkin' link to tell me that happened. I was one of the recipients.

[CK_John]

50. Big deal Frank shocking anecdote was on Bush's watch, the Sen from Il was just a Sen.

Barney Frank is just an angry old "I coulda been a contender".

[WillyT]

52. K & R !!!

[Buzz cook]

54. Well there is this.

former chair of the House Financial Services Committee

I'm not an Obama fan and I agree that he bears a huge amount of responsibility in the failure of HAMP and other ways home owners could have been rescued.

But here is Frank the chairman blaming Obama and missing the point that he as chairman could have inserted provisions in any bill that would have aimed funds to home owners.

Heck he could have passed a HOLC bill which only would need 51 votes.

So maybe Frank is pointing at Obama to divert attention form himself.

[Enthusiast]

59. It isn't a bombshell to many of us. Many of us have known this from the start.

It was deeply disturbing. Disturbing things of a similar nature continued to pile up. They have piled up until there is but one unmistakable conclusion.

[Enthusiast]

63. During the State of the Union Address the President said there are irresponsible home borrowers too.

Last edited Tue Apr 7, 2015, 05:37 PM - Edit history (1)

I'm so glad the President was on it!

[appalachiablue]

66. Was that said at the 2009 SOTU? The blame the homeowner meme is a distortion from

the finance industry and others in the last 6 years.

In a recent interview on FSTV, awarded journalist Ron Suskind gave a lecture on his 2012 book, 'Confidence Men'. He focused on operations taking place in the WH administration during the financial crisis. In his view, the women around, Christina Rohmer, WH economic council advisor, Sheila Baird FDIC, Elizabeth Warren and Hillary Clinton are all very practical, tough and steady as opposed to some of the males in banking and leadership roles.

It was also Brooksley Born, CTFC, chief financial regulator who sounded The Warning in 1988 to Greenspan, Rubin, Levitt, Geithner and Summers about the dangers of high risk financial derivatives. Although her charges were dismissed she turned out to be right.

In the next Democratic WH and cabinet I look forward to a change of staff to economists and financial experts like Krugman and Stiglitz rather than WS bankers. Richard Trumka of the AFL-CIO has already expressed to Clinton Hillary there must be a different team for support.

[Enthusiast]

67. I believe it was the 2009 SOTU. Needless to say I am a huge fan of Krugman and Stiglitz.

I don't think Krugman and Stiglitz will ever be allowed to access positions of influence.

[merrily]

71. There were a lot of stories about that planted in media as well.

"Liar loans." Homeowners who could no longer afford to pay their mortgages abandoning their homes and leaving the poor widdle banks holding the bag--and the real estate (which is exactly what a nonrecourse mortgage contemplates-you don't pay, the bank gets to foreclose). In reality, many of those mortgages were recourse mortgages and banks were chasing the homeowners for the difference between the value of the under water homes and the the value of the mortgage.

How do I know they were planted? Because they were all over the place and our media today is not exactly investigative. Do I know who planted them? No. My guess is they came from many sources.

[ieoeja]

64. Frank is flat out *wrong*. TARP reduced my mortgage payment.

See post #44.

http://www.democraticunderground.com/10026467188#post44

[appalachiablue]

68. A neighbor of my brother got a reduction also. A woman, lawyer, with two kids, the little girl

is very ill with neuroblastoma cancer for 9 years. The woman lost her job c. 2009. The mortgage company reduced her payment by $30.

[merrily]

72. Frank would know what went on behind the scenes.

I don't doubt your statement about getting a reduction, though.

[Doctor_J]

79. why do you think that your individual experience negates everything in the article?

Jesus, you're like the heritage care fan club who don't care about people like me who are now paying 15 times what we used to.

[bvar22]

69. The Greatest Heist in American History,

cleverly designed to coincide with the change over of administrations,
giving plausable deniability to both Parties.

[font size=3]Paulson with co-conspirators

Now THIS is Bi-Partisanship!
Better get used to it, SUCKERS!
Hahahahahahahaha![/font]


They all took Victory Laps in front of the TV cameras, slapping each other on the back and congratulating themselves on 'Taking On the Big Banking Interests",
and "saving the economy".

Whether they "saved the economy" is debatable.
What is NOT debatable is that the saved their own investment plans from taking a quarterly hit
while Americans were thrown out of their homes.


Thanks, guys!