Lifetime Achievement: Barney Frank

Strange as it may sound, the man most directly responsible for the launch of Rep. Barney Frank's legendary 32-year career in Congress was Pope John Paul II.

In 1980, the Pope issued a directive barring priests from holding public office, a move that forced the retirement of Father Robert Drinan from his House seat representing Massachusetts' 3rd District.

It also gave Frank, then a member of the state legislature, an opportunity to seek national office. It was an unexpected break for Frank, who until that time had assumed that his role in politics would be mostly behind the scenes.

Rep. Barney Frank (Image: Bloomberg News)

"I was an accidental congressman," he says. "I didn't know I was going to go to Congress. I'm not one of these kids who thought I could always do this."

But Frank went to Capitol Hill, and went on to become one of the most prominent members of the House, carving a legacy that depends largely on the political ideology of the beholder.

To the left, Frank is a liberal hero—a gay rights champion fiercely devoted to economic and social fairness, and a skillful legislator who successfully passed a landmark bill in 2010 designed to tame Wall Street.

To the right, he is a villain, an intractable defender of Fannie Mae and Freddie Mac who irresponsibly pushed banks to give mortgages to poor people who couldn't pay them back—and in so doing helped cause the financial crisis.

What both sides agree on is that Frank is one of the smartest members of Congress, whose sharp wit, tenacity, and ability to guide legislation through to enactment will leave a mark on the financial services industry long after he retires at the end of his current term.

As chairman of the House Financial Services Committee between 2007 and 2011, Frank played a key role in the Wall Street Reform and Consumer Protection Act, better known as Dodd-Frank, and in helping to pass the Troubled Asset Relief Program, which most experts agree saved the financial system.

That may well be enough to secure his place in history, but his record is both far deeper and more complicated than that, covering other vital issues such as reform of Fannie and Freddie, the expansion of affordable housing and contributions to lesser known but still important banking bills.

While bankers have not always agreed with Frank's actions, they have seldom seen his equal on Capitol Hill.

"On a scale of 1 to 10, he's a 10," says Jamie Dimon, the chairman and CEO of JPMorgan Chase. "In terms of knowledge, brains, understanding—he's way up there."

Frank's career is full of contradictions.

He's a liberal icon known for his fiery partisanship—but has time and again proved able to work closely with bankers and with Republicans, including former Rep. Mike Oxley and former Treasury Secretary Henry Paulson, on highly contentious issues.

He worries a lot about poverty and pushes against economic disparities, yet he also is a defender of the free market.  

And while he has had a successful career, he lacks one of the most distinguishing characteristics of politicians—an all-driving need to be loved by the public.

Frank has a razor-sharp tongue in public and private. He famously told a constituent in 2009, after she compared President Obama to Hitler, "Ma'am, trying to have a conversation with you would be like trying to argue with a dining-room table. I have no interest in doing it."

His quick wit and blunt approach—and his willingness to say things other politicians won't—have been key to his success. 

"I'm unconventional," he acknowledges. "I'm gay, I'm Jewish, my diction is imperfect, I have a slight lisp. I grew up in an area with a very pronounced regional speech pattern and moved to an area with another one so I have an amalgam of Northern New Jersey-Massachusetts."

But he happens to be, as he says, "good with words," which served him well on the campaign stump but perhaps even better in negotiations with his peers.

"The luckiest thing for me was I got into a line of work that plays to my strengths and not my weaknesses," he says.

"I'm not a great candidate. I'm a better inside politician than outside politician."

But his forthrightness and independence make it hard for some people who have worked closely with him to distinguish the difference.

"The guy you see on TV is the same guy," says Dimon. "He's direct, thoughtful, responsive. He's tough… He means what he says and he says what he means. It's a great virtue because you know when he says something he actually believes it."

Paulson calls Frank "a pleasure to work with," citing his discipline but also his willingness to compromise. "He likes to get difficult things done," Paulson says. "He's very clear and straightforward. When you have a deal with him, he sticks to it. He keeps confidences."

One of Frank's closest collaborators in Congress was Oxley, who chaired the House Financial Services Committee from 2001 to 2007 while Frank was the ranking Democrat for the last four of those years.

Although Oxley had enough Republican votes to approve most pieces of legislation, he says he went out of his way to work with Frank, who responded by delivering Democratic votes on key financial services priorities.

The two cooperated on bills of critical importance to banks, including the extension of the Fair Credit Reporting Act, which blocked states from enacting laws that defined how banks could use, share and report data on a customer's financial information.

Oxley called their relationship, which was unusual then and would be virtually unheard of now, a "model" for Congress.

"He was always constructive—he never cheap-shotted me once," Oxley says. "His word was his bond. We had a lot of mutual respect."


Frank and the GSEs

It's easy to find prominent conservatives who blame Frank for the housing crisis. The Wall Street Journal lambasted him in a September 2008 editorial as "Fannie Mae's Patron Saint," laying out why the demise of the government-sponsored enterprises was his fault. 

The argument goes like this: The Bush administration fought for years to rein in Fannie and Freddie, while Frank and his allies blocked such efforts and relentlessly pushed the GSEs to buy up subprime loans. He also, they say, championed policies that encouraged banks to lower underwriting standards and ignored signs of the impending housing crisis.

It's a view that has gained considerable traction, fanned by Fox News and other conservative media outlets. (On the taxi ride back to the airport after my interview with Frank at his office in Newton, Mass., the driver insists to me that the crisis occurred because "Barney twisted the arms of banks to make those loans.")

The problem with this narrative is that it ignores several important facts.

For one, Frank was in the Democratic minority in the House until 2007. Despite claims to the contrary by his critics, he was not in a position to delay or block GSE reform. 

For another, Frank opposed a Bush administration effort to expand the GSEs' affordable housing goals—and it was this effort that effectively encouraged the companies to buy more Wall Street subprime mortgage-backed securities and count them as helping low- and moderate-income families.

Frank also tried several times, even while in the minority, to pass a bill that would have restricted subprime lending—hardly the actions of a man trying to "twist the arms" of bankers into making more such loans. 

But perhaps the strongest proof that the conservative line on Frank is flawed is that the two Republicans who were arguably closest to the GSE fight—Oxley and Paulson—don't accept it.

In 2005, Frank worked with Oxley to pass a GSE reform bill and voted for it in committee before objecting to a final version that made changes to a proposed affordable housing fund. The bill passed the House anyway by a large margin.

Oxley saw Frank as a key ally during that time, and was stunned when the bill was killed by the Bush administration and Senate Republicans.

"Barney helped work to get a solid bipartisan majority," Oxley recalls. "We got stopped by [Fed Chairman Alan] Greenspan and the Bush administration."

Paulson didn't enter the fray until 2006, but he worked quickly with Frank to strike a deal on GSE reform in December of that year—one month before Frank formally took the reins of the House Financial Services committee. The GSE bill was the first legislation passed by the panel when Frank became chairman.

"During the later months of 2006 and 2007 and early 2008, when I was at Treasury, there were some Democrats that were pushing very hard for Fannie and Freddie to do more in the subprime area, to loosen their standards," Paulson says.

"Barney wasn't one of those."

Paulson again worked closely with Frank in 2008 to add provisions to the bill, including the authorization of emergency powers that Treasury would later use when the government seized the GSEs and put them into conservatorship.

"I found him to be very reasonable when we were having the discussion on legislation," Paulson says. "I didn't sense he was doing anything to carry water for Fannie and Freddie. He was thinking about what's best for the United States of America and he knew Fannie and Freddie needed to be reformed."

The Bank Bailout

Of course, the GSE reform package enacted in 2008 was just a prelude of what was to come.

Just months later, he would work closely with the Bush administration to pass the bill creating TARP.

Frank was one of the Democratic leaders who was instrumental in winning sufficient support within his party for what lawmakers knew would be a deeply disliked program.

"The hardest part," Frank says, "was selling it to the Democrats."

But in an unusual show of cooperation, a Republican administration worked with a Democratic House and Senate to pass one of the most unpopular pieces of legislation in modern history just two months ahead of a presidential election.

To Frank, this is proof that there is a willingness to reach across the aisle to solve problems, though he can't help but suggest that it may be one-sided. Democrats "believe in governance," he says, living up to the party allegiance he has maintained even while reaching across the aisle to get legislation passed.

"When I am partisan, I am very, very partisan," he notes.

"Partisanship is bad when people get so angry over the differences that do exist that they can't cooperate when they should. I think you should be both partisan and bipartisan at the same time and not let one poison the other."

In Paulson's book, "On the Brink," the  former Treasury secretary describes getting bogged down by various constituencies as he tries to negotiate the bill that created TARP. "My team and I decided to approach Barney Frank, who understood how important it was for TARP to be approved," Paulson writes.

Frank proved to be an invaluable ally who helped break the log-jam. His quick wit also was an asset to Paulson.

"When I think back on some of the conversations, even today I start laughing," Paulson says now. He recalls the phone call he got from Frank on Sept. 29, 2008, after the first House vote on TARP failed and the Dow Jones Industrial Average slid more than 700 points for its steepest one-day drop ever. According to Paulson, Frank promised him Congress would act, explaining, "Hank, sometimes kids have to run away from home and get hungry before they come back."

"In my blackest hour, I didn't think it would be possible to make me laugh but he can always make me laugh," Paulson says. "It makes a big difference when you are in a crisis, when you are in a tough situation, to have someone who on the one hand is deadly serious but on the other hand, can keep a sense of humor."

While the legacy of TARP in the mind of the public is mixed, there is no doubt that it succeeded in stabilizing the market and almost certainly saved the economy from a worse fate. Frank's willingness and ability to work with Paulson and others was a key reason the bill ultimately succeeded.

Birth of a Liberal Icon

For all his cooperation with Paulson, Oxley and other Republicans, Frank is seldom seen as bipartisan by the rest of the world.

This is mostly due to his outspoken liberal views on social issues, including gay marriage. (Frank is the first member of Congress to marry a same-sex partner.)

Frank arrived at his political views at an early age. His earliest memories of politics involve Sen. Estes Kefauver's 1950 hearings investigating organized crime. "I didn't full understand it, but I was fascinated by it," says Frank, who was 10 years old at the time.

But it was the 1955 murder of Emmett Till, a 14-year old African American who was killed after allegedly flirting with a white woman, and the Joseph McCarthy hearings that really galvanized Frank.

"I was outraged by racism, outraged about the interference with free speech," he says. "I feel strongly about ending discrimination and people being free to express themselves."

By then, Frank also had realized something that would come to shape his political career.

"I realized I was gay when I was 13, I didn't tell anybody," Frank says. "This notion that it's a choice—at 13, realizing I was gay was just devastating. I carried on, I didn't dwell on it a lot, but it was not good news."

In college, he left his native New Jersey for Harvard and studied government, political science and economics. By then, he had added economic inequality to his list of priority issues.

He planned a career in academia, but after helping Kevin White win election as Boston's mayor, he suddenly found himself serving as the new mayor's chief of staff. In 1972, Frank himself was elected to office, winning a seat in the Massachusetts legislature despite the fact that he wasn't a native of the area. And then in 1980, the Pope forced Drinan to retire from Congress, creating an opening for Frank, who from the very beginning served on the House Banking Committee (later to be known as the House Financial Services Committee).

Dodd-Frank Act

Ask Frank about his top legislative accomplishments, and he will point to the creation of a low-income housing tax credit in the 1980s, along with the work he did on third-world debt relief and reforms to the International Monetary Fund and World Bank.

But it is the bill that bears his name that ultimately will shape his legacy.

More than two years after its passage, the Dodd-Frank Act remains one of the most contentious financial services laws ever enacted.

Many conservatives dislike it, arguing it made things worse by essentially designating certain firms as too big to fail while creating a too powerful Consumer Financial Protection Bureau that will stifle innovation and restrict product choice.

Liberals also have attacked the law, arguing it should have gone further by breaking up the megabanks and otherwise taking more punitive actions against Wall Street firms.

Bankers of all stripes remain deeply skeptical of Dodd-Frank, with many seeing it as a morass of new restrictions and compliance burdens.

For all that, the law is a comprehensive attempt to tackle various problems at the root of the financial crisis.

Its ambition alone is breathtaking. In addition to creating the CFPB and establishing a wind-down process for systemically significant institutions that run into trouble in the future, Dodd-Frank forced derivatives to be cleared on exchanges, required lenders to retain credit risk for loans sold into the secondary market, and created a council of regulators tasked with detecting and heading off systemic risks.

Frank and other supporters shepherded the proposal through to enactment, overcoming industry objections, regulatory turf battles and the inevitable political posturing that a bill of this magnitude would invite. The resulting legislation is not perfect, but key parties to the economic recovery effort see it as a credible response to the crisis.

"Though it is a very large and complex bill, the main pieces fit together well," Fed Chairman Ben Bernanke says in an interview. "In particular, it achieves the key objectives of strengthening oversight of large financial institutions, closing gaps that existed in the financial oversight, creating a financial stability council, finding ways to liquidate systemically important firms and generally strengthening the financial system against further shocks. All those things were components of the bill and Frank was engaged across the range of different topics there."

Of all the provisions in the bill, Frank is perhaps proudest of the risk-retention requirement, which will force lenders to keep at least 5 percent of the credit risk of loans they sell off. "That's the single biggest thing in the law," he says.

Other pieces of the bill have done more to rankle bankers, including the regulation of debit interchange fees and the Volcker rule's ban on proprietary trading.

But none of those provisions originated from Frank. Nor were they even included in the House version of the bill.

Rather, they resulted from a fractured Senate process that allowed individual senators to add amendments on the chamber floor.

Although many bankers dislike the reform bill, viewing it as overly punitive, Dimon says their ire is misplaced.

"I don't think [Frank] is hostile to banks at all," Dimon says. "I don't think that's the bill that he would have written if he had been left to his own devices. It's called Dodd-Frank, but there are a lot of things that are in there that other people put in there."

Frank offered to work with the GOP last year to revise the Durbin debit interchange amendment and he has asked regulators to reconsider their proposed implementation of the so-called Volcker rule, arguing it is too complicated.

Frank continues to attract criticism from within the financial services sector, of course, but many of the bankers and industry representatives who have engaged with him directly have found him willing to listen to their concerns. 

"Barney was a great student of banking," says Dan Forte, president of the Massachusetts Bankers Association. "He listened, he learned. Barney had his reputation but once you got to know him, you realized he was a big supporter of the free market. He recognized that the banking industry needed to earn a profit to succeed."

Regulators, too, found him responsive and engaged when they raised problems.

"I always found him pretty middle of the road, actually," says former FDIC Chairman Sheila Bair, a Republican appointee. "People try to paint him as far left—I never saw that on banking issues at all."

Frank's stance on recent industry issues bears that out. While many lawmakers on the left have called for bank executives to be imprisoned, he has not. And while there is a growing push to break up the big megabanks, Frank hasn't joined it.

"I can't see any evidence that size alone was the problem," he says.

This fall, Frank even defended JPMorgan Chase after New York Attorney General Eric Schneiderman said he would sue the firm for activities conducted by Bear Stearns before it was acquired.

There was no particular reason Frank had to speak up; Dimon hadn't asked him to. Frank just didn't think it was fair for New York to go after JPMorgan when it had bought Bear Stearns at the specific request of the government. Frank also preemptively suggests it would be wrong to pursue Bank of America for its purchase of Merrill Lynch, for similar reasons.

"I just thought it was wrong," Frank says. "I wouldn't want to be the secretary of Treasury a year or two from now who calls up a big financial institution and says 'Look, we've got this problem, can you take over such and such.' You've just lost all ability to do that."

It's just that kind of practical attitude that has earned Frank the respect of many large bank CEOs, regulators and fellow lawmakers.

"I'm more of a free market economist than a lot of liberals," Frank says. "My view is that ideally I would like to make it possible for the free market to make a lot of money and I would take some of it and help poor people but also have some fair rules."

Frank will retire at yearend and intends to write a book on the history of the gay rights movement. He also is planning a book on how liberals can be more effective politically. Beyond that, he says, he will "take on no responsibilities."

"I plan to run my mouth for money, both orally and in writing," he says.

But he acknowledges that he will miss the opportunity to craft public policy.

"Barney has a strong belief in the institution of Congress," his former colleague Oxley says. "He was very committed to the institution. He wants to get things done. He doesn't just want to make speeches and make points. He wants to solve problems."

Comments (16)
Excellent. This is a well written, balanced and accurate tribute, Rob. Barney Frank deserves such an assessment as well as our thanks for a life in public service. But prepare for a Tsunami of anger for daring to do this.
Posted by Lawrence Baxter | Wednesday, November 28 2012 at 1:54PM ET
In the words of John McEnroe, "You cannot be serious??!!"
Posted by jim_wells | Wednesday, November 28 2012 at 2:04PM ET
Next we'll see ABA endorsing Al Quaeda for the Nobel Peace Prize. Ugg!
Posted by SEG NSFP | Wednesday, November 28 2012 at 3:00PM ET
From seeing dozens of Barney Frank interviews, his standard operating procedure is to belittle, interrupt, and insult. I suppose that passes for intellect in some circles. Frank was hyper partisan. Sure, he was right on some issues... but only if those issues served a progressive liberal agenda. When the proper moves were more conservative ones, he fought them loudly, rudely, and blindly. Heck, he may be a decent guy to friends and family. And I'm sure he's a purring kitten when participating in a fawning career-achievement piece. But please spare us the "he was just so complicated, he was easily misunderstood" argument. We all know what Barney was. I wish him well in his now-private life... and am glad he's retired.
Posted by My 2 Cents | Thursday, November 29 2012 at 9:49AM ET
If Time magazine can have Hitler and Stalin as Man of the Year, why not Barney for Lifetime Achievement? Barney helped financially slaughter many in this country. Of course, it does lessen the credibility of the banking industry if there is not a firestorm. We shall see who the future leaders are and who the "kiss ups" are by their voice. Why not Chris Dodd for next years candidate?
Posted by frankarauscher | Thursday, November 29 2012 at 10:49AM ET
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