Frank Criticizes Regulator's Warnings Months Before GSEs Collapse
Video of February 2009 presentation at Boston University
April 5, 2010
Seven months before the failure of Fannie Mae and Freddie Mac, U.S. Rep. Barney Frank (D-Mass.) said their regulator was getting "carried away" and noted that the two government-controlled enterprises were better prepared to endure the housing crisis than other institutions.
Around 45 minutes into a one-hour event at Boston University School of Law on Feb. 11, 2008, Frank acknowledged the "fear" by some about the two secondary lenders but warned that their regulator, the Office of Federal Housing Enterprise Oversight, was getting "carried away" with predictions of "gloom and doom."
"In fact, Fannie Mae and Freddie Mac, which are housing-only financial institutions, have weathered this terrible housing crisis better than a lot of others," the legislator said. "When we talk about stress test ... they've been through stress reality."
On Sept. 8, 2008, the new regulator of Fannie and Freddie -- the Federal Housing Finance Agency -- seized both companies and placed them into conservatorship. As of now, the federal government has provided more than $100 billion in capital support to the two secondary lenders and promised to cover an unlimited amount of losses, while residential delinquency stands at the highest level on record.
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