Barney Frank doesn't ever change

Barney Frank has successfully downplayed the connection between his encouragement of Fannie and Freddie to make mortgages to minorities and the poor and our financial meltdown. Sure the right-wing bloggers and conservative journalists point this out, but he keeps on doing what he's always been doing. So here he comes yet again to try to repeat some of the same policies that got us into this mess. Byron York reports on how he wants to take money that the government received from TARP paybacks and dividend funds from banks in order to shovel more money into the federal government help out low-income people who got mortgages that they weren't able to afford.

But now Rep. Barney Frank, the chairman of the House Financial Services Committee, has come up with a proposal to spend any TARP profits before they can be returned to the taxpayers. Last Friday, Frank introduced the "TARP for Main Street Act of 2009," a bill that would take profits from the program and immediately redirect them toward housing proposals favored by Frank and some fellow Democrats.

In exchange for receiving TARP money, financial institutions were required to hand over shares of preferred stock that paid a dividend for the government. In theory, if a financial institution paid the dividend faithfully, and then repaid the TARP money, then the government would turn a profit. Last month, the General Accountability Office (GAO) reported that, through June 12, 2009, the government had received $6.2 billion in dividend payments. The original TARP legislation required that money made from the program "shall be paid into the general fund of the Treasury for reduction of the public debt."

Frank, however, wants to spend the money before it can be used to pay down anything. First, the "TARP for Main Street" proposal would take $1 billion "from dividends paid by financial institutions that have received financial assistance provided under…the Emergency Economic Stabilization Act" and apply it to a trust fund that Frank has long wanted to create for low-income rental housing. (The measure, unfunded, was part of last year's bailout of Fannie Mae and Freddie Mac.) Next, Frank would take $1.5 billion from TARP dividends for a so-called "neighborhood stabilization" fund. Republican critics have charged that both measures might allow federal dollars to be distributed to activist groups like the Association of Community Organizers for Reform Now, or ACORN.

The "TARP for Main Street" bill would also spend $2 billion, apparently from remaining TARP funds, to subsidize people who are delinquent on their mortgages, and another $2 billion to "stabilize multifamily properties that are in default or foreclosure."

The government has been spending money as fast as it could print it or borrow it from bondholders like the Chinese and Saudis. President Obama wants to boast that these TARP funds actually made a profit for the country. But instead of using those profits to pay down our debt or just to go back into the Treasury to fund spending that has already been voted on, Frank wants to continue his same ol', same ol', and start up a new program built on the same lines as his old failed policies.