Congressman Barney Frank says he wants some of those responsible for
our current financial meltdown to be prosecuted. And we couldn't agree
more. First up in the court dock: Rep. Barney Frank, D-Mass.

Even by the extraordinarily loose standards of Congress, it takes some
chutzpah for someone such as Frank to suggest that he'll seek
prosecutions for those behind the housing and financial crunch and for
what he called "a strongly empowered systemic risk regulator."

Frank: Fannie Mae and Freddie Mac's point man in Washington.
For Frank, perhaps more than any single individual in private or
public life, is responsible for both the housing market mess and
subsequent bank disaster. And no, this isn't partisan hyperbole or
historical exaggeration.

But first, a little trip down memory lane.

It was Fannie Mae and Freddie Mac, the two so-called Government
Sponsored Enterprises (GSEs), that lay behind the crisis. After
regulatory changes made to the Community Reinvestment Act by President
Clinton in 1995, Fannie and Freddie went into hyper-drive, channeling
literally trillions of dollars into the housing markets, using
leverage and implicit taxpayers' guarantees.

In November 2000, President Clinton's Housing and Urban Development
Department would trumpet "new regulations to provide $2.4 trillion in
mortgages for affordable housing for 28.1 million families." The
vehicles for this were Fannie and Freddie. It was the largest
expansion in housing aid ever.

Still, from the early 1990s on, many people both inside and outside
Washington were alarmed by what they saw at Fannie and Freddie.

Not Barney Frank: Starting in the early 1990s, he (and other
Democrats) stood athwart efforts by regulators, Congress and the White
House to get the runaway housing market under control.

He opposed reform as early as 1992. And, in response to another
attempt bring Fannie-Freddie to heel in 2000, Frank responded it
wasn't needed because there was "no federal liability there
whatsoever."

In 2002, Frank nixed reforms again. See a pattern here?

Even after federal regulators discovered in 2003 that Fannie and
Freddie executives had overstated earnings by as much as $10.6 billion
in order to boost bonuses, Frank didn't miss a beat.

President Bush pushed for what the New York Times then called "the
most significant regulatory overhaul in the housing finance industry
since the savings and loan crisis a decade ago."

If it had passed, the housing crisis likely would have never boiled
over, at least not the extent it did, taking the economy with it.
Instead, led by Frank, Democrats stood as a bloc against any changes.

"Fannie Mae and Freddie Mac are not facing any kind of financial
crisis," Frank, then the ranking Democrat on the Financial Services
Committee, said. "The more people exaggerate these problems, the more
pressure there is on these companies, the less we will see in terms of
affordable housing."

It's hard to say why Frank did all this. It could be his close ties to
the Neighborhood Assistance Corp., a powerful housing activist group
based in Boston, which controls billions in loans. Or that he received
some $40,100 in campaign donations from Fannie and Freddie from 1989
to 2008. Or that he has been romantically linked to a one-time
executive at Fannie during the 1990s.

Whatever the case, his conflicts are obvious and outrageous, and his
refusal to countenance reforms of Fannie and Freddie contributed
mightily to today's meltdown. If you're looking for a culprit in the
meltdown to prosecute, no one fits the bill better than Frank.

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