Frank on financial reform: A rare display of “republican virtues”


It was as a skeptic that I showed up at the Radisson Plaza last weekend to listen to Barney Frank give a talk about financial reform sponsored by the Caux Round Table.

But I left impressed by the Representative’s calm, fact-based, credible presentation as well as by his optimism about enacting real change. I also left with my faith in democracy at least partially restored. In an age of unscrupulous demagogues and rising right wing extremism, it’s good to know that there are still a few sober, far-sighted individuals like Frank in positions of national power.

Frank, the chair of the House Finance and Banking Committee, is neck deep in the fight to rein in a financial system that brought the world to the brink of the worst economic collapse since the days of Herbert Hoover. A bill offering effective regulation of some of the most egregious excesses – like derivatives trading and credit default swaps – will be passed and signed into law by the end of June, he said. He also argued, persuasively, that the cause of the housing bubble was not so much the 1990s de-regulation of the financial sector – although that played a role – but the inevitable game of catch-up government oversight plays with the geniuses on Wall Street: those Masters of the Universe who stand to reap literally billions by staying just one step ahead of the most recent laws while trampling all over the boundaries of decency and common sense.

But just as important as what he said was the manner in which Frank said it. Throughout his talk, and on into his participation in a panel discussion, he spoke without bombast or hype, communicating in a straightforward, down-to-earth way a sure grasp of detail and firm handle on the big picture. Whether one agreed with everything he said or not, it was impossible to dismiss him as just another political hack or purblind ideologue.

Over the past couple of years, the right has tried to pin blame for the housing bubble on things like the 1977 Community Redevelopment Act, which banned redlining of poor (read Black) neighborhoods or Frank’s own failure to exercise due diligence over Fannie Mae or Fannie Mac.

But, as Frank pointed out, the big push to sell homes to poor people came not from liberal members of Congress but – the developer-and-finance-industry-friendly Bush White House. It was an approach Frank resisted, especially the Bush Administration call to transform all residents of subsidized rental housing into homeowners within five years.  Alas, his objections were without effect, given that the GOP controlled the House from 1996 until 2006. In 2003, the Bushies even went so far as to suppress an internal report warning of the danger posed by the unregulated sale of low-doc, no-doc, liars loan sub-prime mortgages.

“Owning a home isn’t just about coming up with a mortgage,” he said. It inevitably means funding ongoing upkeep, which in turn requires not only earning a living wage but the ability to budget and manage a household with little or no outside help.

“There are a lot of people who are just bumping along, who don’t have the skills or income needed to own a home,” he said. “For many people, it makes more sense for them to live in affordable rental housing.” Indeed, it was as an advocate for such housing that Frank made his name long before he became embroiled in financial regulation. 

Equally refreshing was Frank’s empathy for some of his GOP House colleagues. As an example of the danger that citizen anger might make the country ungovernable, he pointed out that “There are conservative Republicans who today stand to be turned out of office because they responded to the Bush Administration’s TARP bailout.” A bailout that, however sloppily constructed or poorly administered, without question saved the world from a complete credit freeze – and a new Great Depression even worse than the last one.

Ironically, the combination of qualities Frank demonstrated during his appearance – sobriety, respect for opponents and opposing viewpoints, a willingness to compromise in the interests of the common good – are precisely the kinds of “republican virtues” that are increasingly rare in the Republican Party these days.

Not that the Democratic Party is without its flaws. Far too many of its members are also in the back pocket of corporate America. Take, for example, our own Amy Klobuchar who only last week voted against an amendment that would have broken up America’s “too big to fail” banks, once again demonstrating that she stands firmly on the side of Bank of America and Citigroup and against the interests of her own constituents.

Still, it’s heartening to know that there are some politicians like Barney Frank still operating at the national level. As a libertarian conservative friend of mine sitting next to me Saturday said after listening to Frank’s remarks, “I might have to become a Democrat!”