The Times' special Deal Book section on Thursday featured a Q&A with Rep. Barney Frank by Times contributing writer Cyrus Sanati, "Rep. Barney Frank's To-Do List for Changing [1]Wall Street [1]."
Wall Street is bracing for a regulatory tsunami to make its way up from Washington. Lawmakers are considering sweeping changes to the Depression-era securities laws and regulatory agencies that failed to prevent the economic downturn.
As these new proposals gain momentum, Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, will have a central role in influencing the size and scope of these new regulations.
That's the lead-in to an extremely friendly interview (described as "edited and condensed excerpts from the discussion") with the liberal Democrat Frank, who heads up the House Financial Services Committee and will have a hand in creating new regulations and laws on executive compensation.
Not one of Sanati's 10 questions were critical of Frank, and none delved into his controversial ties and strong defense in the past of the corruption-plagued Fannie Mae and Freddie Mac, the government-sponsored mortgage lending companies, in their quest to ease up requirements for mortgage loans in the name of "affordable housing," which many experts think contributed to the mortgage crisis.
Sanati even asked Frank a question about Fannie and Freddie, but ignored Frank's previous support of the entities, captured by the Times itself in September [2]2003 [2]. At a hearing, Frank lecturedthat "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 there is on these companies, the less we will see in terms of affordable housing."
Oops.
But Sanati ignored all that and painted Franks as some kind of Freddie and Fannie reformer:
Sanati: Subprime mortgages played a large part in the downturn, as well as the need for the government to rescue the mortgage financing giants Freddie Mac and Fannie Mae. In an op-ed in the Financial Times in 2007, you said, "The subprime crisis demonstrates the serious negative economic and social consequences that result from too little regulation." What have you done since to tighten regulation of that market?
In Frank's answer, Sanati let the congressman get away with passing the buck to the Bush administration:
Frank: We passed shortly thereafter a bill that would prevent the type of subprime mortgages that went bad. Unfortunately, it never passed the Senate. I am returning to that now. Earlier in 2007 we passed legislation to improve the regulation of Freddie Mac and Fannie Mae, but the Senate didn't get on to passing it until July 2008 and by that time it was too late. The problem was with George Bush in power. It was hard to get the approval we needed for the degree of regulation that we thought was necessary.
Saturday Night Live mocked Frank in a skit that aired on the network on the night of October 4, 2008, specifically fixing blame on Frank for part of the banking crisis. But the official online version of the skit was later controversially redacted by NBC [3]in a way that removed all mention of Frank. Bizarrely, Sanati brought up another Frank impression on SNL - one featuring a Frank impressionist chairing the Big 3 auto hearings, which aired on November 22, 2008 and didn't attract nearly as much attention as the banking skit. Sanati even pushed the Big 3 skit as proof of Frank's popularity.
Sanati: Many Americans have been following your committee's hearings - so much so that even "Saturday Night Live" did a skit about them, featuring you grilling the Big Three automakers. How do you think they did in impersonating you?
Frank: I am impressed with Fred Armisen's range given that he impersonates me and Barack Obama, so I guess that's, um, sort of interesting. The only time I was upset was when they had someone doing me that was really fat.