James Lockhart's Disingenuous Claims

James Lockhart, former regulator of Fannie Mae and Freddie Mac, appeared on CNBC yesterday to respond to questions raised by passages from former Bush Treasury Secretary Hank Paulsen's newly-released book.

Lockhart's comments provided an ideal example of how federal regulators, Congressmen and administration officials, both former and current, twist and misrepresent history in their quest to appear blameless, heroic and successful.

In Lockhart's case, he contrasted his office's takeover of Fannie and Freddie, whose oversight he bungled in the first place, with Lehman's demise.

Crowing proudly, Lockhart claimed that there was no systemic shock from his handling of the two GSEs as his regulatory office placed them into "conservatorship," while Lehman's poorly-handled bankruptcy had a catastrophic impact on financial markets.

Of course, Lockhart conveniently glossed over the fact that his and Paulsen's actions meant that the Federal government guaranteed Fannie's and Freddie's obligations, thus removing any need for financial markets to panic.

But there was Lockhart, grinning and taking credit for what was actually caused by your and my role as taxpayers.

Lockhart also failed to mention the continuing losses stemming from the GSEs' operations, and the recent action by Geithner to uncap taxpayer exposure to their losses going forward.

That's success, Jim? I'd hate to see the cost of a failure in handling Fannie and Freddie.

Following Lockhart's dissembling on the matter of Fannie and Freddie, a CNBC anchor asked him if, in his new capacity as Vice-Chairman of one of Wilbur Ross' companies, his advocacy of principal forgiveness for mortgage loans wasn't convenient for his new employer, who happens to own substantial mortgage servicing companies that will benefit from being allowed to charge for implementing these revisions to the mortgages?

Lockhart again danced around the question, claiming to have been in favor of this tactic last year, and assuring the questioner that his and Ross' stances were beyond reproach.

Throughout the interview, Lockhart exhibited a nervous, anxious visage and manner which contradicted his words.

So much for truth about the past, or present, from our regulators. Especially when they are in that revolving door between their government posts and new, related private sector positions.