When Barney Frank corrected him, Bill O'Reilly threw a tantrum in front of 5.6 million viewers. Then things got interesting. The next day, the Washington Deputy Managing Editor at Fox News uncovered a new angle on the financial crisis. Bill Sammon alleged that Congressman Frank had escaped blame for the problems at Fannie Mae because he was gay.
Sammon's piece wasn't exactly original reporting. He paraphrased an earlier article titled, "Media Mum on Barney Frank's Fannie Mae Love Connection." The "love connection" was a relationship that Frank had with Herb Moses, who was once an executive at Fannie Mae. Frank's romantic involvement with Moses, and Moses' employment at Fannie Mae, both ended ten years ago, in 1998. As Hank Paulson, the Federal Reserve, and the SEC all confirmed, the financial crisis "was triggered by a dramatic weakening of underwriting standards for US. subprime mortgages, beginning in late 2004."
Sammon's original source material was offered up by one of those right wing storefronts, the Business & Media Institute. Sammon quoted Business & Media Institute vice president Dan Gainor, a frequent guest on the Fox Business Network. "If this had been his ex-wife and [Frank] was Republican, I would bet every penny I have - or at least what's not in the stock market - that this would be considered germane," said Gainor. "But everybody wants to avoid it because he's gay. It's the quintessential double standard."
Did a Fox News executive decide to go after Congressman Frank because O'Reilly was embarrassed in front of 800,000 people who caught the meltdown on YouTube? That's the more obvious, and superficial, motivation. Frank also impugned the veracity of reporting by Brit Hume, who dutifully repeats lies fed to him by Karl Rove. Here's Congressman Frank setting the record straight on O'Reilly:
"You've misrepresented this consistently. I became chairman of the committee on January 31st, 2007. Less than two months later, I did what the Republicans hadn't been able to do in 12 years -- get through the committee a very tough regulatory bill...The Senate was dragging its feet, as often happens. And in January of 2008, I asked Secretary Paulson to put in the stimulus bill. So the earliest chance I got to put tough regulation of Fannie Mae and Freddie Mac, we did it."
And here's Brit Hume lying yesterday on Fox News Sunday:
"And what happened here is -- and Fannie Mae and Freddie Mac were very much at the center of this. And it is an odd and, I think, unusual paradox of this whole situation that it was actually Republicans at critical junctures who were pushing for more regulation. Normally they push for less. In this instance, they were pushing for more. And it was principally Democrats, led by Barney Frank, Chris Dodd and others, some Republicans as well -- Bennett of Utah being a conspicuous example -- who resisted this, successfully in the end.
"And there was an effort to -- made to appoint a world-class regulator, as the phrase goes, to supervise Fannie Mae and Freddie Mac, which were -- which were creating a market for these packages of mortgages, some good, some bad. They would buy them up and securitize them, sell them, and it enabled a lot of -- a lot of entities, big banks and investors to get in on the housing boom."
Hume paraphrased Karl Rove, who was quoted at length in "Media Mum on Barney Frank's Fannie Mae Love Connection."
"'All of this bad stuff on Wall Street happened because people got greedy and the greed started at Fannie Mae and Freddie Mac,' Rove said. 'And I know this because five years ago, the administration was alerted by the regulator, James Lockhart, that there was insufficient authority and that these institutions - particularly Fannie - were out of control.'
"Rove said the Bush administration's efforts to reform Fannie and Freddie were opposed by congressional Democrats - specifically Frank and Senate Banking Committee Chairman Christopher Dodd, D-Conn.
"'And I got to tell you, for five years, I was part of an effort at the White House to fight this and our biggest opponents on the Hill who blocked this every step of the way were people like Chris Dodd and Barney Frank. And Fannie and Freddie are the $200 billion contagion at the center of this.'"
The Business & Media Institute writer got his quotes from Karl Rove's Sept. 17 appearance on Hannity & Colmes.
Hume first echoed Rove's propaganda on October 1, 2008, as part of the "straight news reporting" on Special Report. Media Matters identified and explained the falsehoods.
And on Bill O'Reilly, Barney Frank recounted the chronology that absolves the Democrats of any blame.
"Now from 1995 to 2006, when the Republicans controlled Congress, and we were in the minority, we couldn't get that done [i.e. legislate improved regulation of Fannie Mae]. Although in 2005, Mike Oxley, of Sarbanes-Oxley fame, a pretty tough guy on regulation, did try to put a bill through to regulate Fannie Mae. I worked with him on it. As he told The Financial Times, he thought ideological rigidity in the Bush administration stopped that. But the basic point is that the first time I had any real authority over this was January of 2007. And within two months, we had passed the bill that regulated."
Here's what actually happened. In October 2005 the House, by a vote of 331-90, passed a bill to establish a new federal regulator created for Fannie, Freddie and the Federal Home Loan Banks. The new regulator was authorized to set capital standards and, if it deemed necessary, require reductions in mortgage portfolios. The White House opposed the proposed legislation and instead supported the pending Senate bill. But the Senate bill never came up for a vote, and the legislation died.
In other words, the Republicans failed to negotiate a deal when they were in charge, and now place the blame on others. And once again, Fox News treats their distortions of history as reportable fact.
One Republican has a different take on events. Rep. Michael Oxley claims his bill was opposed by White House "ideologues" who wanted to privatize Fannie and Freddie and who opposed a bigger government role.