Republicans decided that targeting Christopher Dodd (right) and Frank – not terribly well known outside the Beltway -- might make for good campaign rhetoric. The new villains: Dodd and Frank?

John McCain and his Republican allies have elevated as political villains an unlikely pair to deflect blame for the slumping economy.

During a town hall in Wisconsin on Thursday, McCain called Senate Banking Chairman Christopher J. Dodd (Conn.) and House Financial Services Chairman Barney Frank (Mass.) “willing co-conspirators” in the current financial collapse.


This comes as conservative talk radio hosts and an outside group aligned with the GOP accuse the duo of similar crimes against the economy, particularly an allegation that congressional Democrats blocked legislation to increase regulations and oversight for mortgage giants Fannie Mae and Freddie Mac.

This latest back-and-forth shows how political the economic crisis has become after party leaders on both sides of the aisle helped usher legislation through Congress last week granting the Department of the Treasury historic authority to buy up to $700 billion in distressed mortgage-related assets.

Republicans and Democrats observed a tentative truce during negotiations over that bill. But this week they were back at one another’s throats, and Republicans decided that targeting Dodd and Frank – not terribly well known outside the Beltway — might make for good campaign rhetoric.

"The fact is that the same people that are now claiming credit for this rescue are the same ones that were willing co-conspirators in causing the problem,” McCain told supporters at a town hall meeting in Waukesha, Wis., on Thursday. “Congressman Barney Frank and Senator Chris Dodd are two of them.''

Dodd shot back later that afternoon, saying, “John McCain can spend the next 25 days trying to erase his 25-year record of deregulation, but the American people aren’t buying it.

“The truth is, as Chairman of the Commerce Committee, John McCain was the master of deregulation,” Dodd continued in a statement released by his office. “Now all of a sudden he’s found religion and is trying to paint himself as a populist regulator, but it’s not going to work.”

On Wednesday, the American Issues Project, a conservative group that has run ads trying to tie Barack Obama to radical Vietnam-era bomber Bill Ayers, began airing a television ad linking campaign donations from Fannie and Freddie to influential Democrats, like Dodd, as a major reason for the deep slide in the financial markets.

“Chris Dodd takes big money from Fannie and Freddie,” the narrator says in the ad. “Dodd kills reform — and secures a sweetheart mortgage for himself.”

This plotline has exploded among grassroots activists across the country.

On Monday, business leaders in Warner Robins, Ga., asked Democratic Rep. Jim Marshall about Frank’s close ties with the two mortgage giants during an appearance organized by the local Chamber of Commerce.



And conservative talk-radio is rife with chatter about the role Dodd and Frank played in opening the door for this era of tight credit and plunging financial markets – all while most national and local polls show the GOP bearing the political brunt of this slide.

But the main justification for these attacks – that congressional Democrats colluded with Fannie and Freddie to block increased regulation – ignores a central fact: The fight to impose tougher oversight on the two government-sponsored secondary lenders was predominantly waged between the White House and Republicans on Capitol Hill – with Frank playing a bit role in the stalemate.

In fact, in 2005, Republicans on the Financial Services panel, led by then-Chairman Mike Oxley (R-Ohio), pushed for tougher regulation, but the White House fought those efforts, preferring instead to privatize the two mortgage giants, which rely on government guarantees to package home loans and resell them for a profit.

From the beginning, Democrats blamed the Bush administration and the GOP’s cozy relations with Wall Street – Speaker Nancy Pelosi (D-Calif.) even made that point in a controversial speech on the House floor before a failed vote last Monday.

The eloquently expressive Frank fired a salvo on Monday during a mortgage foreclosure symposium in Boston when he complained that Republicans are unjustly seizing on his efforts to expand affordable housing as a root cause of the foreclosure epidemic sweeping this country.

“They get to take things out on poor people,” Frank said, according to press reports. "Let's be honest: The fact that some of the poor people are black doesn't hurt them either, from their standpoint. This is an effort, I believe, to appeal to a kind of anger in people."

House Republican Leader John A. Boehner of Ohio fired back by poking fun at Frank’s speech impediment.

“You know where he’s from. He’s from Massachusetts, although he can’t say the word ‘Massachusetts,’” Boehner told a group of Republican donors in Atlanta on Tuesday.

On Thursday, in a sign that this political debate has taken on a personal edge for many of the participants, Dodd said, “This is not the John McCain I have known all these years. He’s been erratic, angry, and shown uncertain leadership in a time of crisis.

“I didn’t hear from him once when we were negotiating the economic rescue package until he pulled a campaign stunt, parachuted into Washington and accomplished nothing except unnecessarily delaying this agreement for another week,” Dodd said. “If he wants to be angry at someone, he should be angry at himself, his party, and this president for being asleep at the wheel and causing this crisis.”

Parnes reported from Waukesha, Wis.