Barney Frank Cracking Jokes Again...or Just on Crack?

My friend Mark passed this article on to me and I couldn't help but blog about it because either Barney Frank is joking or he's an even bigger idiot than I once thought (if that's possible).

Fannie, Freddie asked to relax condo loan rules

Fannie and Freddie got into a boat load of financial trouble because, at the insistence of Congress, they were insuring mortgages with little to no proof from homeowners that the mortgages could be paid off. This was all in the name of helping people achieve the American dream of home ownership even if they only had a snowball's chance in hell of ever paying off that obligation. These subprime borrowers began defaulting in droves causing Fannie and Freddie to go down with the ship.

So, in response to mistakes made in the past, Fannie and Freddie tightened up some of their mortgage insuring standards. For instance, we all remember the recent condo project collapses in places like Miami that sparked a lot of the housing market bust. Investors were paying ludicrous amounts of money to buy condos that had not even been built yet, much less occupied, with the hopes of flipping them for a quick buck. It worked for a while, but when the prices reached a certain level, no more buyers were available and these stupid investors were left holding the bag. This is called the "greater fool" theory of investing--you buy when prices are high and hope there is a greater fool than you willing to pay more than what you paid. There's my short lesson on supply and demand in case you weren't paying attention in high school and college economics.

So, Fannie and Freddie have decided not to insure loans to purchase condos if fewer than 70% of the units are sold, where more than 15% of the occupants are delinquent on their condo fees, or where a single person owns more than 10% of the units. It seems reasonable that these 3 factors could be an indication of lack of financial viability.

Apparently Barney Frank and his cohort Anthony Weiner were sleeping through the housing bust because they have fired off a letter to the CEOs of Fannie and Freddie complaining that the new standards are too prohibitive and might interfere with the housing market recovery.

It seems unlikely Barney would be using his Congressional letterhead to play a practical joke on Fannie and Freddie, so I have to assume he's serious. The article says Fannie and Freddie are preparing their response to lawmakers. I think my response to Barney would be, "get off the crack, idiot!" And for all the folks in Massachusetts who keep voting for this guy, you get off the crack too!