Barney Frank, the liberal Massachusetts Democrat and incoming chairman of the House Financial Services Committee, offers this "grand bargain": If business supports parts of his agenda, such as empowering unions, he'll champion the corporate cause on immigration, foreign direct investment, and trade. Washington correspondent Lorraine Woellert talked with Frank.
On the grand bargain:
Many Americans believe growth hurts them. They're angry. So business can't get a trade bill through, it can't get rational immigration policy. There are real problems here economically and morally, but politically we've got to accompany new policies with rules. I'm for more immigration, but I want people to be able to join unions. That's the bargain. Democrats can get things through the Congress, but we've got to get the President to sign them. It seems to be in our mutual interest to start working together.
There are deregulatory things I want to do; I think in some cases we have hindered the market. Where there is consumer fraud I'm worried, and where poor people get screwed. But take hedge funds. If you've got $10 million and you want to invest in a hedge fund, smoke three packs of cigarettes a day, and ride your motorcycle without a helmet, good luck to you. All my energy goes to try to protect people from other people. I have zero energy left to try to protect people from themselves.
On limiting executive pay:
Let the shareholders vote, and we won't take a substantive position [or hold hearings].
On the role of directors:
I think boards see themselves as legitimately adversarial toward the unions, but not toward the CEO.
On shareholder access to proxies:
Shareholder democracy solves a lot of problems. We're not talking about a lot of individual cranks. We're talking about some fairly responsible people with a lot at stake. They're not interested in damaging a corporation. They're not interested in sacrificing profit for social causes.
On foreign investment in the U.S.:
We're ready to pass a bill [to set guidelines and more stringent requirements], but if the Senate can't pass it, we'll ask the President to sign an executive order [formalizing enhanced oversight].
On overseas outsourcing of jobs:
You can't stop it.
On how best to deal with China's undervalued currency:
We threaten economic retaliation. We greatly underestimate the attractive power of the American market. Why are the Chinese financing our deficit? Because they love us or because it's the best place to make money? I'd tell the Chinese we're going to put some restrictions on what they can sell here. If they couldn't sell in America, they would fall apart.
On health care:
We have this ass-backward view that if we spend money on Boeing (BA), beer, NASCAR, and pornographic movies, that's good, it's adding to the GDP. But if I'm really sick and I want a private hospital room instead of being in a ward, that sends the GDP percentage of health care up and that's bad. My solution is Medicare for everybody, with increasing co-pays according to your income.
We will raise the limit of the median house price that the Federal Housing Administration can insure. Then we'll take the money that generates to offset the higher loan-loss rate when we extend [guaranteed loans] to lower-income buyers.
I'm convinced that accounting for derivatives ranges somewhere between astrology and alchemy. We worry about pension funds getting in over their heads with hedge funds. There could be regulation.
I'm uncomfortable having to oppose policies that could be helpful to people in other countries. But I cannot support policies that put the entire burden of helping the poor overseas on middle- and working-class people here.
On Hank Paulson:
It turns out there's a lot to be said about having a person from Wall Street as Secretary of the Treasury.