Barney Frank decided that introducing himself to a new set of constituents and asking for their votes was too high a price to continue wielding power. Thus with his congressional district redrawn, the Massachusetts Democrat will not seek reelection to Congress next year.
Holding a House seat for three decades is one thing. Being accountable to the voters is another. “If I were to run again I would be engaged full-fledged in a campaign, which is appropriate,” Frank said, but clearly not, in his view, desirable.
Accountability hasn’t always been Frank’s strong suit. In his retirement press conference at Newton’s city hall, the congressman expressed no regrets for his handling of Fannie Mae and Freddie Mac during his past decade of service on the House Financial Services Committee, both as chairman and ranking member.
Frank was a cheerleader for policies that helped inflate the housing bubble that burst painfully in the 2008 financial crisis. Like many politicians, he encouraged lenders to relax their credit standards with the goal of promoting home ownership. According to one report, “Frank pushed [Fannie Mae] to loosen regulations on mortgages for two- and three-family homes, even though they were defaulting at twice and five times the rate of single homes, respectively.”
The risks were obvious, but rising housing prices obscured the danger. Political activists and federal regulators were leaning on banks to approve risky loans, with government-sponsored Fannie and Freddie leading the way on subprime lending.
When new regulations were proposed, Frank accused supporters of worrying about the GSEs’ financial soundess “to the exclusion of concern about housing.” He steadfastly denied that there was anything wrong with the government-backed mortgage finance firms. Frank insisted “these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis.”
Yet Fannie and Freddie failed, racking up at least 12 million risky loans and accounting for roughly 40 percent of those still outstanding. American Enterprise Institute scholar Peter Wallison, who has been fighting a lonely battle against efforts to pin blame for the financial meltdown solely on the private sector, has estimated that American taxpayers will find themselves on the hook for $300 to $400 billion as a result.
Like Fannie and Freddie, Barney Frank was also too big to fail. Instead of losing power for his contributions to the country’s financial problems, he was allowed to co-author sweeping federal regulatory solutions. The Dodd-Frank financial reform bill, written with the man who has been dubbed “the senator from Countrywide,” may be second only to the health care law in terms of its unpopularity.
Dodd-Frank expanded the federal government’s reach into business decision-making and paved the way for future taxpayer bailouts of troubled financial institutions. Policymakers who were asleep at the switch prior to 2008 were perversely rewarded with more power. But that’s been standard operating procedure during Frank’s thirty years in Washington.
Peter Wallison concludes that if Frank had acted earlier “legislation might have been adopted in the early 2000s that could have prevented the financial crisis and saved the taxpayers from severe losses.” To be sure, that crisis had many causes that cannot all be laid at Frank’s feet. And even Frank eventually admitted “it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.”
Nevertheless, Frank spent years evading the consequences of scandals that would have ended lesser pols’ careers. Now that the prospect of mingling with the little people back in Massachusetts has apparently proved too much for him to seek another term, we should at least pause to remember Frank’s “great mistake.”