WASHINGTON Representative Barney Frank helped his then-companion land a job at mortgage giant Fannie Mae in the early 1990s at the same time Congress was writing legislation to improve oversight of the lender, according to New York Times reporter Gretchen Morgenson, who recently wrote a book examining the financial crises.
Frank was a member of the House Financial Services Committee in 1991 when he "actually called up the company and asked them to hire his companion, who had just gotten an MBA from the Amos Tuck School of Business," Morgenson said during a recent appearance on National Public Radio.
"Of course the company was happy to provide a job for his companion and rolled out the red carpet in a series of interviews with a variety of executives, and it ultimately did hire the man," she said. "And he stayed there for I believe seven years."
Morgenson did not say the hire had anything to do with the collapse of Fannie Mae in 2008, but gave it as an example of the cozy relationship that Fannie Mae executives had with lawmakers who were charged with overseeing them.
She said Frank aggressively defended the mortgage giant after it hired his live-in partner, Herb Moses.
"He was very aggressive to, for instance, the head of the Congressional Budget Office at that time, who was trying to call for increased capital requirements and to call for a focus on safety and soundness at Fannie Mae, that Frank really took him apart in testimony," Morgenson said, according to a transcript of NPR's Fresh Air.
Frank said in an interview this morning that he did recommend Moses for the job but did not solicit his hiring.
"He applied, and they asked me and I said, 'Yeah, I think he'd be great,'" said Frank, who noted that Moses was qualified for the job, an entry-level analyst post.
"He had an MBA, he was an economist at the Agriculture Department," he said.
Frank said he does believe relations between Fannie Mae executives and Congress were "too cozy," but he said he was not in a leadership position or on the subcommittee overseeing the mortgage agency when Moses worked there.
He said that one time, when the committee was considering a bill that would have affected executive salaries at Fannie Mae, he did not cast a vote for or against it, but simply voted "present" and made a public statement at the time that his partner worked there and so he would not participate in the vote.
Frank also noted other instances that Morgenson recounted in her book, when his mother received an award from the housing agency for her work in providing housing to the elderly and when he fought to have a woman appointed to a board for ending elder homelessness.
But he said neither instance affected his oversight duties and in any case, problems with toxic loans at Fannie and fellow lender Freddie Mac began in the 2000s, long after Moses left. Moses left in 1998 when he and Frank split.
Frank told the Globe last fall that he missed the warning signs of the mortgage giant's insolvency and risky lending practices because he was wearing "ideological blinders," and thought attacks on the lender were partisan and without merit.
Frank defended practices at Fannie Mae until 2007, when he was chairman of the Financial Services Committee, but by then the agency had underwritten millions of dollars worth of risky mortgages.
"It really was far too late, and he had been such a vocal supporter for so long that it was sort of an odd turnabout," Morgenson said.
Donovan Slack can be reached at firstname.lastname@example.org. Follow her on Twitter @DonovanSlack.
About Political Intelligence
Glen Johnson is Politics Editor at boston.com and lead blogger for "Political Intelligence." He moved to Massachusetts in the fourth grade, and has covered local, state, and national politics for over 25 years. E-mail him at email@example.com. Follow him on Twitter @globeglen.