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Frank Says ‘Death Panels’ Await Failing Banks Under New Law

U.S. Representative Barney Frank, a Democrat from Massachusetts and chairman of the House Financial Services Committee. Photographer: Kelvin Ma/Bloomberg
U.S. Representative Barney Frank, a Democrat from Massachusetts and chairman of the House Financial Services Committee. Photographer: Kelvin Ma/Bloomberg

Oct. 25 (Bloomberg) -- U.S. Representative Barney Frank said the only death panels created by congressional Democrats will protect taxpayers from ailing financial companies, not ration care to sick individuals as Republicans have claimed.

“We do have death panels,” Frank, a Massachusetts Democrat, said today during a discussion on financial reform at Boston College. “Not for old ladies under health care reform, but for financial institutions under Dodd-Frank.”

The law named for Frank, who leads the House Financial Services Committee, and Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, gives the government authority to unwind collapsing financial firms that may threaten the entire system. Failing banks won’t be protected from bankruptcy as they were during the credit crisis, Frank said.

“Much of this bill makes it less likely that financial institutions will get to the point of failure,” he said. “But if an institution gets to that point, it will fail.”

Republicans including Sarah Palin, the former Alaska governor who was the party’s vice presidential nominee in 2008, accused Democrats of planning death panels for the elderly during debate over health care legislation last year, citing a provision for end-of-life counseling.

The Dodd-Frank measure, enacted in response to the 2008 subprime mortgage crisis that led to the failures of Lehman Brothers Holdings Inc. and Bear Stearns Cos., imposes new rules on derivatives markets and creates a consumer-protection agency at the Federal Reserve to monitor everything from home loans to credit cards.

Fewer Jobs

In response to a student’s question about careers in the financial-services industry, Frank said he hoped there would be fewer Wall Street jobs in coming years.

“I would hope some years from now the financial industry will have shrunk some, because there was a lot of activity that should never have happened, from subprime lending to credit default swaps,” Frank said.

That view was seconded by Federal Deposit Insurance Corp. Chairman Sheila Bair, who spoke on the panel alongside Frank and former Federal Reserve Chairman Paul Volcker.

“There has been a misallocation of resources,” said Bair, whose agency serves as receiver for banks that have been failing at the fastest pace since the savings-and-loan crisis.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net.

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