Limbaugh falsely asserted "Banking Queen" Barney Frank "created" subprime mortgage crisis

During the January 7 broadcast of his nationally syndicated radio show, Rush Limbaugh falsely asserted that Rep. Barney Frank (D-MA) "created the problem" of the subprime mortgage crisis. Limbaugh claimed that Frank's "definition of affordable housing was to make sure that people who couldn't pay the loans back got the loans, the mortgages. He forced Fannie Mae and Freddie Mac to do this." In fact, Frank has advocated for policies that emphasize low-income home rentals as opposed to homeownership and supported legislation to strengthen oversight over Fannie and Freddie. Indeed, in a profile of Frank for the January 12 edition of The New Yorker, staff writer Jeffrey Toobin wrote: "According to Frank, at the root of the real-estate crisis was a misguided notion that homeownership should be available to all people -- what President Bush has called 'the ownership society.' "

In his profile of Frank, Toobin wrote:

According to Frank, at the root of the real-estate crisis was a misguided notion that homeownership should be available to all people -- what President Bush has called "the ownership society." "The 'I told you so' here is that homeownership is a nice thing but it is not suitable for everybody," Frank said at Boston College. "There are people in this society who don't have enough money to be homeowners, and there are people whose lives are not sufficiently integrated for them to take on the responsibility to be a homeowner. And we did too much pushing of people into inappropriate mortgages and into homeownership." He said that many people would always be renters, and that there was nothing wrong with this. "We need to get back in the business of building rental housing and preserving the housing we have," he said.

Additionally, as Media Matters for America has documented, Frank has supported efforts to strengthen oversight of Fannie and Freddie, including:

• In 2005, Frank, then the ranking Democrat on the House Financial Services Committee, worked with committee chairman Rep. Michael Oxley (R-OH) on the Federal Housing Finance Reform Act of 2005, which would have established the Federal Housing Finance Agency (FHFA) to replace the Office of Federal Housing Enterprise Oversight (OFHEO) as overseer of the activities of Fannie Mae and Freddie Mac. 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 to the bill on the House floor imposed restrictions on the kinds of nonprofit organizations that could receive funding under the bill.

• In early 2007, as chairman of the House Financial Services Committee, Frank sponsored H.R. 1427, a bill to create the FHFA, granting that agency "general supervisory and regulatory authority over" Fannie Mae and Freddie Mac, and directing it to reform the companies' business practices and regulate their exposure to credit and market risk. 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 for "management of credit and counterparty risk" and "management of 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 the president signed into law on July 30, 2008.

Indeed, in his profile, Toobin wrote:

In 2005, while the Democrats were still in the minority, Frank contributed to a bipartisan effort to put his objectives -- tighter regulation of Fannie and Freddie and new funds for rental housing -- into law. At the time, Fannie and Freddie were regulated by a small agency within the Department of Housing and Urban Development; the bill proposed to create an independent agency to monitor their operations. Frank and Michael Oxley, who was then chairman of the Financial Services Committee, achieved broad bipartisan support for the bill in the committee, and it passed the House. But the Senate never voted on the measure, in part because President Bush was likely to veto it. "If it had passed, that would have been one of the ways we could have reined in the bowling ball going downhill called housing," Oxley told me. "Barney, to some extent, is misunderstood -- with this image of him as a fierce partisan. He is an institutionalist. He believes in the House and in the process. He eschews the grandstanding style that so many members use and prefers to work behind the scenes and get something done."

Limbaugh's attack on Frank echoes false accusations by media conservatives that proponents of the expansion of affordable housing are responsible for the financial crisis. Moreover, his attacks on Fannie Mae and Freddie Mac promote a myth that their activities caused the subprime crisis. In fact, as economist Dean Baker noted: "Fannie and Freddie got into subprime junk and helped fuel the housing bubble, but they were trailing the irrational exuberance of the private sector. They lost market share in the years 2002-2007, as the volume of private issue mortgage backed securities exploded."

Later in the broadcast, Limbaugh played a parody song, titled "Banking Queen," featuring an impersonation of Frank by comedian and frequent Limbaugh contributor Paul Shanklin. In the parody, Frank, who refers to himself as "the banking queen," threatens banks to make loans or they'll "be fined," adding: "My friends at Fannie sure need it, do it my way or beat it."

From the January 7 broadcast of Premiere Radio Networks' The Rush Limbaugh Show:

LIMBAUGH: Barney Frank -- I want to go to yesterday's audio sound bite roster. Barney Frank -- actually, we have some stuff from today and yesterday. Yesterday, he was on with Chris Cuomo, Good Morning America. And I'll tell you, Barney is getting more and more contentious with his buddies. I mean, the people in the drive-by are Barney's buddies. And he's getting contentious with them, often for no reason, which means he's defensive.

But first, from MSNBC today, Joe Scarborough's morning show. Scarborough said, how do we stop the next big bust on Wall Street? We had the '87 crash, we had the Asian crash, we had the dot-com crash, and the telecom crash, and now we've got the housing bubble crash. And I'll tell you, the next crash, as I just -- I just said, folks, we are insane. It was just two months ago that we learned that massive debt that can't be repaid causes bubbles to burst big time, and now we've got trillion-plus, billion, or trillion-dollar deficits promised by Obama for years. So that's the next one to bust. And -- and Scarborough is asking Barney Frank, how do we figure out what the hell we're doing on Wall Street?

FRANK [audio clip]: Not deregulation that was the problem. It was a failure to adopt new regulations for a new phenomenon, the securitization. The biggest part of this problem was subprime loans -- money lent to people to make them homeowners who couldn't afford the loans, who should not have been considered to be, in many cases, capable financially of homeowning. You've got to recognize reality. We have begun to adopt legislation to prevent that. We can stop the last problem from recurring; nobody can know what the next problem will be.

LIMBAUGH: This is -- I mean -- he created the problem. This -- folks, this is more than chutzpah. He created the problem. This is a sound bite that gets you out of your chair. I don't believe I just heard this. He created it. His definition of affordable housing was to make sure that people who couldn't pay the loans back got the loans, the mortgages. He forced Fannie Mae and Freddie Mac to do this. ACORN was involved -- Obama's group. This was a Democrat [sic] Party operation through and through. And instead of answering questions from Joe Scarborough, Barney Frank ought to be answering them as a witness before some other congressional committee.

So, now we have begun to adopt legislation to prevent this? I mean, all you can do is laugh. I know some of you people are put out with me because I'm laughing at this. Well, what are we going to do? I mean, you can't go through your life angry all the time like the liberals do, but this -- OK, let's move on to Good Morning America with Chris Cuomo and Barney Frank.

[...]

LIMBAUGH: Well, it certainly was the way the subprime mortgage thing went down. It certainly was the way Congress was in charge of telling Fannie Mae and Freddie Mac what to do. Barney Frank leading the way, folks -- he was, and is, the "Banking Queen."

[begin audio clip]

You can build
You can buy
Any house your heart desires
Zero down
Financing
I am the banking queen

Friday night and your cash is low
I know a place that you can go
Get your house and use it
Go ahead abuse it
You can do anything

Go out and have a fling
I am the banking queen
Old and sweet
Go ahead and do our thing
Banking queen
Don't complain
Or you'll hear me scream, oh yeah

You can build
You can buy
Any house your heart desires
Zero down
Financing
I am the banking queen

Told the bankers: Hey, you guys
Make the loans or you'll be fined
My friends at Fannie sure need it
Do it my way or beat it
While the stock's crashing

That doesn't mean a thing
I'm still the banking queen
Never spanked for a single thing
Banking queen
Don't complain
Or you'll hear me scream, oh yeah

You can build
You can buy
Any house your heart desires
Zero down
Financing
I am the banking queen

[end audio clip]