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After mortgage meltdown, Barney Frank gets another chance to remake housing finance

The chairman of the House Financial Services Committee played a key role in shepherding the regulatory overhaul bill through Congress. Now he turns his attention to reworking federal housing policy.
By Zachary A. Goldfarb
Washington Post Staff Writer
Tuesday, October 12, 2010; 12:25 AM

Rep. Barney Frank, the disheveled, fast-talking Democrat from Massachusetts, had long been known more for his acerbic tongue than for the cause that has captivated him since he was a young aide in the Boston mayor's office.

Frank had championed housing for America's poor for four decades, but he gained the chance to leave his biggest mark in 2007 when he became chairman of the House Financial Services Committee. He dreamed of tapping into the riches of Fannie Mae and Freddie Mac - at the time, both fabulously successful mortgage finance companies - to help pay for the construction of thousands of affordable apartments.

It was too good to be true. Fannie and Freddie would soon melt down, requiring a federal bailout so far costing more than $160 billion. Frank's critics have alleged that his aspirations blinded him to the danger.

Now Frank is poised to play a pivotal role on Capitol Hill as the Obama administration prepares to tackle the future of Fannie and Freddie and to overhaul how millions of Americans are housed. In taking on their next major economic challenge, senior Obama officials are scheduled to release a proposal in January that would replace the two mortgage giants and rethink federal programs that help make housing affordable.

The coming debate could be the culmination of a career that Frank, 70, has spent trying to ensure that government can provide lower- and middle-class people with access to decent housing.

"A lack of decent housing is central to social problems," Frank said. "FDR said, 'I see one-third of a nation ill-fed, ill-housed, and ill-clad.' Nobody should put me in charge of dressing people, so I had to choose one or the other. I chose housing."

But the deliberations over how to reshape national housing polices after the mortgage meltdown, which triggered the financial crisis and the worst economic downturn since the Depression, could also be a chance to make amends for the lax oversight of Fannie and Freddie.

"I was too late to see they were a problem," Frank said. "I did see them as an important source of rental housing. I did not foresee the extent to which bad decisions . . . were causing problems."

A sense of injustice

Frank was a graduate student in political science at Harvard when he went to work for then-Boston Mayor Kevin White and first confronted the realities of America's public housing. At the time, public housing tended to mean the projects: cinder-block high-rises or low-rise, barracks-style apartments, often dilapidated and dangerous.

As White's chief assistant, Frank was asked to carry out the mayor's plan to give summer jobs, such as cutting lawns at public housing, to kids who lived in the buildings. The Boston Housing Authority, which oversaw the projects, traditionally steered the jobs to political supporters, and the agency's director was not receptive when Frank called.

"I'm not giving my jobs up," the director told Frank. "Are you crazy? "

"The mayor feels," Frank said, "and I agree, that if we give the jobs to people who live there, they'll do a better job because they'll care more about the place."

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