Frank recommended partner for housing agency
Says legislative role wasn’t compromised
WASHINGTON — Representative Barney Frank, who for more than two decades has been a member of the House committee charged with oversight of mortgage giants
Frank confirmed an account of the hiring that appeared in a new book about the nation’s financial crisis by New York Times reporter Gretchen Morgenson. But he said his then-companion, Herb Moses, was qualified for the job and the hire did not shade his views as a lawmaker.
The Newton Democrat said he told a high-ranking administrator that Moses had the credentials for the position and would be a good choice. But he said he never asked anyone at the agency to take action.
“I never asked them to hire him,’’ Frank said in an interview yesterday, drawing a distinction between recommending him and specifically asking that Moses be hired.
At the time, Frank served on the Financial Services Committee, which was producing legislation to improve oversight of Fannie Mae. Frank eventually rose to chairman of the powerful committee in 2006. But he said that in 1991, his oversight responsibilities were minimal because he did not serve on the subcommittee drafting the oversight bill and because he was a relatively junior member of the committee.
Frank also said problems with subprime mortgages at Fannie Mae and Freddie Mac did not occur until the early 2000s, long after Moses left the job at Fannie Mae in 1998, the year Frank and Moses split up.
In the new book, Frank recounts to Morgenson a conversation he had about Moses with the vice president of housing initiatives at Fannie Mae, Gerald R. McMurray, in 1991. Frank is quoted in the book saying that he told McMurray that Moses had been an economist with the Department of Agriculture and had received an MBA from Dartmouth.
“I talked to Jerry McMurray and said: ‘Herb’s a very good economist and has a business degree,’ ’’ Frank is quoted as saying.
Morgenson discussed Frank’s actions in a National Public Radio interview this week, and the issue was reported by the Boston Herald yesterday. Morgenson said in an interview with the Globe yesterday that the hire is an example of the cozy relationship that Fannie Mae executives had with lawmakers who were charged with overseeing them. She said she misspoke in telling the radio interviewer that Frank called Fannie Mae officials on Moses’ behalf; her book does not say Frank called anyone.
“I think what it was, was an example of the type of favors that Fannie Mae was happy to provide,’’ she said. Morgenson also reported in the book that Fannie Mae made sizable grants — $25,000 in 1994 and $50,000 in 2001 — to a Boston organization cofounded by Frank’s late mother and twice gave the group an award for its work in providing housing for the elderly. Frank said yesterday in an interview with the Globe that the grants to the organization, the Committee to End Elder Homelessness, did not influence his duties.
Frank said the conversation about Moses with McMurray came during a chance meeting at a Capitol Hill reception. Almost immediately afterward, an array of Fannie Mae executives interviewed Moses and hired him, according to Morgenson’s book.
Frank said he recalled only one time in the 1990s when Moses’ position affected his role on the Financial Services Committee, when the committee was considering a bill that would have affected executive salaries at Fannie Mae. He said he simply voted “present’’ — not for or against — and made a public statement at the time that his partner worked there and so he would not participate in the vote.
McMurray said yesterday in an interview that he did not know Moses was romantically involved with Frank when he picked out his application from a stack sent to him by the personnel department at Fannie Mae. He said Moses told him about the relationship during an interview later, and it had no impact on his decision to hire Moses. He said he would have hired him with or without his connection to Frank or the congressman’s recommendation.
“He turned out to be a terrific addition for us,’’ McMurray said. “Barney never called or pressured me in any way, shape, or form.’’
McMurray worked for the Financial Services Committee as a staff director on the subcommittee for housing and community development for more than 20 years before being hired at Fannie Mae in 1989. He has long been a supporter of Frank’s. The two knew each other when they attended Harvard University in the 1960s — Frank as a graduate student in political science and McMurray as an undergraduate. Campaign finance reports show he contributed $500 to Frank’s campaign account in 1995 and $500 in 2000.
Moses did not return a message left seeking comment.
Republicans tore into Frank in a statement yesterday, saying his actions “take shameless politics to a new low.’’
“The fact that Barney Frank didn’t see this as a conflict of interest is alarming by itself, but it’s so deceitful that it really shows voters that he’s not looking out for them in Washington,’’ said Tory Mazzola, a spokesman for the National Republican Campaign Committee.
Frank’s relationship with Fannie Mae and Freddie Mac became a frequent flashpoint in his last election campaign. Frank’s opponent, Sean Bielat, repeatedly accused Frank of failing to properly oversee the mortgage agencies.
The Globe reported last fall that Frank, after becoming ranking member of the Financial Services Committee in 2003, missed warning signs that Fannie and Freddie were underwriting risky loans that could threaten their solvency. He told the Globe that he had been wearing ideological blinders — that he believed criticism of the agencies was motivated by partisanship and without merit.
Fannie and Freddie nearly collapsed in 2008, forcing the federal government to buy $150 billion worth of stock in the enterprises and $1.36 trillion worth of mortgage-backed securities.