Frank Exit May Leave Wall Street Rules Vulnerable to Republicans
U.S. Representative Barney Frank’s decision to retire at the end of his term will leave House Democrats without one of their most skillful debaters and their chief negotiator on banking and finance.
Frank has been at the forefront as Congress tried to prop up and reform the financial system during the most distressed economy since the Great Depression.
During 30 years in Congress, the 71-year-old Massachusetts Democrat has inflamed Republican critics with his advocacy for gay rights, cuts in defense spending and a strong government role in housing for low-income people. He led the Financial Services Committee during the 2008 credit crisis and was instrumental in passing the $700 billion bank bailout. He co- authored what would become the 2010 Dodd-Frank Act -- a 2,300 page overhaul of Washington’s rules for Wall Street.
Frank had “the capacity to work with people on the other side,” said Bill Delahunt, a former Democratic congressman from Massachusetts. “While he could be a stern voice, at the same time his real talent was to be able to get things done.”
Republicans, who almost unanimously opposed Dodd-Frank, may find it easier to weaken regulations the banking industry sees as too intrusive, said Jaret Seiberg, a senior policy analyst with the Washington Research Group at Guggenheim Partners.
“Frank was probably the most articulate defender of the law in the House,” Seiberg wrote in a note yesterday to clients. “His removal from the debate should make it incrementally more likely” that changes to the law could be made.
Writing and Teaching
One of the first openly gay members of Congress, Frank has served in the House since 1981, representing a district that includes Boston suburbs Newton and Brookline and stretches out to cities including Taunton and Fall River. He said he plans to write, teach and lecture, and would not be retiring from commenting on public policy.
Representative Maxine Waters, a California Democrat, is next in line by seniority to take Frank’s position on the committee. Among others down the list are Carolyn Maloney of New York, Mel Watt of North Carolina and Gregory Meeks of New York. All three lawmakers were among the final negotiators for what would become the Dodd-Frank Act.
Seiberg said in his note to clients that Waters “at times is very hostile to the banks so this is a situation worth watching.”
House Minority Leader Nancy Pelosi, the California Democrat who served as speaker from 2007 to 2010, said Frank’s ability to push through the regulatory overhaul “exemplified his time as Chairman of the Financial Services Committee during one of its most productive periods of legislating in recent memory.”
President Barack Obama said of Frank that it is “only thanks to his leadership” that the law made it to Obama’s desk. Dodd said in a statement that Frank was “irreplaceable.”
During the 2008 financial crisis, Frank worked with House Republicans to win passage of President George W. Bush’s $700 billion financial-market rescue package. Opposition in both parties created “significant difficulty” for the legislation, said lobbyist and Democratic strategist Steve Elmendorf. The bill wouldn’t have passed without Frank, he said.
Frank “gave the issue great credibility on the left” by “making sure it was done right,” Elmendorf said in a telephone interview.
At a press conference yesterday in Newton, Frank cited increased partisanship in Congress as a reason for his retirement. “The kind of work I felt best at is not going to be as productive for the foreseeable future,” he said.
Also contributing to his decision, Frank said, was that he would have faced a demanding re-election campaign after Massachusetts, which lost one congressional seat as a result of the census, re-shaped his district.
Paul Lindsay, a spokesman for the National Republican Congressional Campaign Committee, didn’t join in the praise for Frank’s resume. Frank “has been responsible for much of the big government agenda that Democrats have pursued,” Lindsay said.
In the runup to the financial crisis, Frank became a target of Republicans for supporting Fannie Mae and Freddie Mac, the mortgage companies that were taken into government conservatorship in 2008 after their stake in failed subprime loans pushed them to the brink of collapse. Frank defended himself yesterday, saying the Democrats weren’t in the majority from 1995 through 2006 and had little power to control legislation to rein in the firms. He acknowledged that he didn’t see the financial crisis coming and said he didn’t become concerned about the mortgage firms until 2004.
Frank’s congressional career survived a 1990 House reprimand for using his office to help a male prostitute. The House voted against more severe punishments, including expulsion, after Frank was accused of using his influence to fix parking tickets that the man had accumulated. Frank, at the time, said he “should have known better.”
While Frank has spent plenty of time sparring with Wall Street over compensation, income inequality and their trading strategies, Frank Keating, the president and chief executive officer of the American Bankers Association, said the lawmaker’s “depth of knowledge and willingness to be open to opposing viewpoints will be greatly missed.”
At an August 2009 town-hall meeting with constituents, Frank’s pugnacious debating style was on display when a questioner compared Obama’s health-care legislation to the policies of Nazi Germany.
“On what planet do you spend most of your time?” Frank said in response to the woman’s question. Her comparison was “a tribute to the First Amendment that this kind of vile, contemptible nonsense is so freely propagated,” Frank replied.
Frank will in all likelihood be succeeded by a Democrat in the House, said Delahunt, who is now a Boston-based special counsel to the firm of Eckert Seamons Cherin & Mellot LLC. Setti Warren, the mayor of Newton who ended his campaign for Senate after Elizabeth Warren entered the race, and Jesse Mermell, a Brookline selectwoman, have been mentioned as possible successors.
Still, “Congress won’t be the same without him,” Delahunt said in a telephone interview.
Reflecting the anti-war sentiment of his overwhelmingly Democratic congressional district outside Boston, Frank was one of 61 Democrats who voted in favor of ending the U.S. support for rebel forces fighting to topple Libyan dictator Muammar Qaddafi.
Frank played an important role in the 2009 passage of legislation that made attacks on people because of sexual orientation a federal hate crime. He “introduced a lot of members to this issue” and his departure will be an “enormous loss for the gay and lesbian community,” Elmendorf said.
Frank didn’t give specific plans for his next job. One profession Frank said he won’t pursue is lobbying. Displaying his characteristic wit, he said he would be temperamentally unsuited for that role.
“One of the advantages of not running for office, I won’t have to even pretend to be nice to people I don’t like,” Frank said. “Some of you think I have not been good at that, but I have been trying.”