Man of the people Barney Frank is proving how difficult it is for elected officials to learn the lessons of history. In a move that goes beyond dumb, Frank has written a letter to government-backed mortgage lenders Fannie Mae and Freddie Mac asking them to relax recently tightened mortgage standards for condominiums.

What part of “subprime crisis” doesn’t blustering Barney get? In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of the units have been sold, up from 51%. And Freddie Mac is due to implement similar policies next month.

But according to Frank this “may be too onerous” and could lead condo buyers to shun new developments, according to the paper.

Frank’s fingerprints are all over the subprime mess and the ensuing credit crunch. Yet he continues to pin the recent collapse on the private market.

The Wall Street meltdown was caused by “bad decisions that were made by people in the private sector,” says Frank, who has gone on to assert that the country is in the economic mess it’s in today “thanks to a conservative philosophy that says the market knows best.”

As Jeff Jacoby put it in the Boston Globe last year, “Barney Frank’s talking points notwithstanding, mortgage lenders didn’t wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers.”

Here at Notes we find it deeply offensive when elected representatives lie to the people who elected them and pay their salaries. And the “it as the private market wot done it” explanation of the subprime debacle wheeled out by the likes of Frank makes our blood boil. Consider the following facts:

1. The roots of this crisis go back to the Carter administration. That was when government officials began accusing mortgage lenders of racism because urban blacks were being denied mortgages at a higher rate than suburban whites.

2. In 1977, Congress passed the Community Reinvestment Act. This allowed regulators to punish banks that failed to “meet the credit needs” of “low-income, minority, and distressed neighborhoods.” By necessity, lenders began loosening their underwriting standards and making increasingly shoddy loans.

3. Fannie Mae and Freddie Mac – the twin government-chartered mortgage finance firms – encouraged these “looser” (read: subprime) lending standards by authorizing ever more “flexible” criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

4. Whatever the intentions of members of Congress, the results were as preposterous as they were disastrous. As Jacoby wrote in the Boston Globe: “A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. ‘Lack of credit history should not be seen as a negative factor,’ the Fed’s guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as ‘valid income sources’ to qualify for a mortgage. Failure to comply could mean a lawsuit.”

5. Now enter Frank. As the Wall Street Journal put it last year, “His record is close to perfect as a stalwart opponent of reforming the two companies, going back more than a decade”. In 2000, then Republican Congressman Richard Baker proposed a bill to reform Fannie and Freddie’s oversight. Frank dismissed the idea, saying concerns about the two were “overblown” and that there was “no federal liability there whatsoever.”

6. Two years later, Frank had the following to say in response to another push for reform of the toxic mortgage twins. “I do not regard Fannie Mae and Freddie Mac as problems. I regard them as great assets.” Their assets are now the taxpayers’ (toxic) assets – $5.4 trillion of them.

(In a recent issue we said Frank was an “ass hat.” We thought it had a nice ring to it. But our ever watchful editors didn’t like it. They didn’t understand the term. So, we explained that it referred to someone whose head is so far up their rear end it could pass for a hat. Today, we repeat the claim unreservedly.)