Non Socialist

Barney Frank wants credit for putting out a fire that he helped to start.

President Obama has declared an era of responsibility. But to Democrats responsibility means blaming Republicans for everything that goes wrong. 

Aside from the President himself, perhaps no Democrat is more eager to lay blame at the doorstep of conservatives than Barney Frank, Chairman of the House Financial Services Committee.

I bore witness to Frank’s song and dance routine during a talk he recently gave at Harvard University’s John F. Kennedy School of Government. A video of the forum can be found here. (http://www.hks.harvard.edu/news-events/news/articles/forum-frank-apr09 )

It is worth noting that Frank attended Harvard College in the early 1960s and later become the first Director of Student Programs at Harvard’s Institute of Politics. David Ellwood, the Dean of the Kennedy School, told an anecdote about Frank clandestinely escorting Secretary of Defense Robert McNamara away from anti-Vietnam student demonstrators threatening to riot when McNamara made a campus visit. Frank escorted McNamara to the safety of a seminar run by future Secretary of State Henry Kissinger.

However, by his own admission, Frank said, "I was in charge of making sure that didn’t happen. So, yes, I did kind o like the arsonist who puts out the fire, I got him out of a mess I was supposed to have prevented."

Somehow I don’t think he appreciated the irony of his own statement.

Not surprisingly Frank spent much of his lecture blaming conservatives and Republicans for our current economic mess. "The deregulators had their way and the consequence is the disaster we now face," he exhorted. Frank accused conservatives and Republicans of "blaming the victim."  He explained, "The argument is that the attempt by liberals to help poor people that made them make all these bad loans and that’s what caused all these problems."

Frank excoriated the Republican Congress for not passing any legislation to regulate Fannie Mae and Freddie Mac and to restrict sub-prime loans. "The conservative view is to stop helping poor people . . . No, our view is to help poor people," said the 15-term member of Congress.

Of course, what Frank doesn’t mention is that the Bush Administration did want to regulate Fannie and Freddie. In September 2003, the Bush Administration wanted to set up an agency in the Treasury Department to supervise Fannie and Freddie. 

Guess who was opposed?

Barney Frank said at the time, "These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis.  The more people exaggerate these problems, the more pressure is on these companies, the less we will see in terms of affordable housing."  (http://www.bucksright.com/bush-proposed-fannie-mae-freddie-mac-supervision-in-2003-1141 )

Of course, this is the same Barney Frank, who in July 2008 said of Fannie and Freddie, "I think this is a case where Freddie Mac and Fannie Mae are fundamentally sound. They’re not in danger of going under . . . I do think their prospects going forward are very solid." (http://digg.com/business_finance/Barney_Frank_Freddie_Mac_Fannie_Mae_fundamentally_sound ) 

Eight weeks later, Fannie and Freddie went under. 

Of course, this did not prevent the Chairman of the House Financial Services Committee from giving financial advice.  "Let me give you a stock tip," he offered.  "Go buy California bonds. There is no chance that the state of California will default." 

Could I have a show of hands of those of you who would take financial advice from Barney Frank?

Although most in the audience were sympathetic to Mr. Frank not everyone was eager to go out and buy California Bonds. 

A Harvard Law School student named Joel Pollak not only wasn’t about to buy California bonds, he wasn’t buying anything Congressman Frank had to say. Pollak and Frank had a memorable exchange some of which has been transcribed here. Needless to say, when one has been ensconced in Congress for nearly three decades, one is unaccustomed to having one’s views challenged. As the exchange goes forward Pollak is getting under Frank’s skin as it gets thinner:

POLLAK: In your account of how the sub-prime mortgage crisis came about you mention the Reagan Administration, the Bush Administration, Republicans in Congress, conservatives but it happened on your watch and I would like -.

FRANK: When was my watch, sir?

POLLAK: When you became the Chairman -

FRANK: Which was when?

POLLAK: Which was in 2007 prior to the financial crisis.  So what I would like to know is if you acknowledge any responsibility at all for what’s happened?

FRANK: Well, this is the right-wing approach.  I did become Chairman in January 2007.  I became Chairman on January 31, 2007. In March of 2007, March 28th, the committee I chair passed a very tough bill to regulate Fannie Mae and Freddie Mac.  It was the bill the Bush Administration wanted that they couldn’t get from the Republican Congress.  The Republican House passed a bill in 2005 and the Bush Administration denounced it.  So in 2007, I had been Chairman for two months. You said it happened on my watch?  Well, what happened on my watch was two months into it I got the House to pass a bill in May; committee passed it March 28^th , to regulate Fannie Mae and Freddie Mac. Now the Senate didn’t pass it until a year later but that still meant a bill that the Republicans never passed. They were in charge from 1995 to 2006. I was in the minority. That was not my watch. I was against what they did. 

Secondly, that was Fannie Mae and Freddie Mac. In January 2008, I asked the Secretary of the Treasury to take that bill and make it part of the stimulus plan. He was sympathetic but overruled by right-wing ideologues in the Bush Administration. Now, then they got the sub-prime crisis. In 2004, when the Bush Administration ordered Fannie Mae and Freddie Mac to increase the number of loans they bought from people below the median income . . . I protested.  I said that would be bad for Fannie Mae and Freddie Mac and bad for the homeowners who would not wind up as homeowners. 

In 2005, I and two other Democratic members of the Financial Services Committee . . . pushed for legislation to restrict sub-prime lending because Alan Greenspan wouldn’t use his authority. Tom DeLay, the Republican leader, vetoed that. Am I responsible when I was in the minority and tried to stop it?  No.

Now, also in 2007, after we passed a bill to regulate Fannie Mae and Freddie Mac, we passed a bill to restrict sub-prime abusive lending. The Wall Street Journal, which is one of the entities that propagates the notion that it happened under my watch, denounced me. I go back to the November editorial in The Wall Street Journal which said you are guys are killing. What about these people who won’t get housing? Well, yeah, they shouldn’t have been put in that sort of position. So no I don’t understand what you think it is I did. I did become Chairman in January 2007.  Let me ask you another question.  What is it you think I should have done on January 31, 2007 when I became Chairman that I didn’t do?

POLLAK: Well, first of all, you pushed a stimulus bill through Congress that included several provisions that you later attacked as profoundly wasteful and so on. 

FRANK: Who did?  Not me. We’re talking about the sub-prime crisis.  You’re talking about a bill in 2008.

POLLAK: And in 2008, in October, you accused critics of the stimulus plan of being racist and so on.

FRANK: No, excuse me!!! (He is now shouting at this point)

POLLAK: I’m still waiting for a very simple answer to a question.

FRANK: I’m still waiting for you to tell me what you think I should have done. 

POLLAK: No, you’re a public representative.  I’m a student.  I’m asking you how….

FRANK: Oh, that allows you to say things you don’t back up.

POLLAK: I’m asking . . . It does allow me to ask you a question. I’m waiting for you to explain how much, if any, responsibility you think . . . 

FRANK: Well, I’ll give you answer.  Well, I will take this. First of all, you are a student.  Students are entitled to full constitutional freedom of speech under the First Amendment.  You made an accusation that is wholly inaccurate. 

POLLAK: I didn’t accuse you of anything. I’m asking how much responsibility, if any.  You can say none. That’s fine.

FRANK: I think you’re being disingenuous when you said you haven’t made an accusation. You said it happened on my watch. Rarely, I’ve never heard anybody say, "Good for you. It happened under your watch." That’s accusatory. You’re entitled to be critical but I’m entitled to answer.  (Frank is again shouting.)

The answer is yes I do take responsibility for something. In 2006, the Republican appointed Chairman of the SEC, who was forced out by George W. Bush because he was too much of a regulator, Bill Donaldson tried to get control of, tried to make hedge funds register. The courts overturned him. They were right because he was bending the statute. He was right on public policy and wrong on the law. 

I immediately filed a bill in 2006 when I was still in the minority to say hedge funds should be registered. In 2007, I was approached by people who said, "No. No, you can’t do too much regulation."  And I backed off. I wish I hadn’t.

But as far as your question that the sub-prime thing happened on my watch I think it is fair to ask what you think I should have done.  You said I was critical of a stimulus bill a year later but that didn’t cause the sub-prime crisis.  My criticism of the stimulus bill?  People said, "Oh my G-d, he’s being critical. Let’s default." I mean I don’t understand.  The point is, excuse me. (again shouting) Here’s what happened under my watch.  I became Chairman on January – and this is the right-wing attack on liberals to try and stop regulation that you are repeating. On January 31^st , I became the Chairman.  On March 28^th , the Committee passed a very tough Fannie/Freddie bill which the Bush Administration liked. Later that year, in November, we passed a bill to restrict sub-prime lending. Because we did the sub-prime lending restrictions, Ben Bernanke, the Chairman of the Federal Reserve, did what Alan Greenspan refused to do and said, "O.K., I’ll do that." So I do want to ask you when you suggest that I should apologize for something or take responsibility. What is it that you think I should have done that I didn’t do?

POLLAK: Well, after spending the entire speech blaming conservatives. I happen to think of myself as a conservative and I rent and I think of myself of someone who happens to care about poor people. I’m just interested in whether you think you have any responsibility . . .

FRANK: Well, I’ve answered the question. Sir, you’re not being fully honest with me.  You clearly are implying that I do and I am asking you, I have given you my record.  Now, what is it that you think I should have done that I didn’t do? What are you implying that I left undone? It does seem to me a fair question given the way you asked your question.

POLLAK: Well, for example, I think that instead of using the TARP money to simply roll through AIG and use it to pay out other banks to which it owed other obligations you could have monitored that before you chose to give them $700 billion. 

FRANK: Well, here’s the deal. You’re totally wrong on your facts. Congress did not vote to give AIG that money. What happened, again by the way that happened in September 2008, well after the sub-prime crisis. In September of 2008, the Chairman of the Federal Reserve, Mr. Bernanke, and this is an example of the right-wing effort quite frankly to change the subject . . .

UNKNOWN FEMALE: Stop labeling him!  Stop labeling him!  Just answer the question.

FRANK: No, I am labeling him because labels are important and I think there is a systematic right-wing attack to try and divert the blame for the deregulation.

* * *

Ladies and Gentlemen, I hereby declare Joel Pollak the winner of this debate.

All Mr. Pollak was asking Mr. Frank was if he bore any responsibility for our current state of affairs and Mr. Frank would simply not answer him.  Apparently, Mr. Pollak was just too much of a one-man right-wing attack machine for Mr. Frank to overcome. 

Now, I don’t think (and I suspect Mr. Pollak doesn’t think) that Barney Frank is solely responsible for the economic straits in which we find ourselves. There is more than enough blame to go around and Republicans do bear some of the responsibility. But for Barney Frank to say, "Who did? Not me," simply shows a lack of leadership necessary in an era of responsibility.

But it appears little has changed in four decades since he attended Harvard. 

Barney Frank wants credit for putting out a fire that he helped to start.