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Tuesday, April 17, 2012

Barney Frank Interview

A few snippets focused on economic issues from a much longer interview of Barney Frank:

In Conversation: Barney Frank, by Jason Zengerle, New York Magazine (full interview here): ...So do you look across the aisle and still see people who share your faith in governance? A few. But they are mostly so intimidated by the fear of losing a primary that they can’t do much. ...
Olympia Snowe decided it wasn’t worth it. What do you think of her decision not to run for reelection for her Senate seat in Maine? It was confirmation of the death grip the right wing has on the Republican Party. Olympia was obviously just facing this terrible dilemma where she, to stave off a primary challenge and be able to function within her party, had to move further and further to the right. But it was never far enough.
Did you find her a useful centrist to have in Washington? Decreasingly. She was a key vote for us on financial reform, but there was a price for her support. The CBO told us that we were going to need $20 billion to pay for the bill. Chris Dodd and I agreed to assess the large financial institutions for that, but we needed two Republicans to get to 60 votes in the Senate. Olympia Snowe, Susan Collins, and Scott Brown told us that they wouldn’t vote for the bill unless we took that $20 billion assessment off the backs of the financial institutions and instead put it on the taxpayer. That was just crazy, but that’s what we did. ...
Dodd-Frank gets kicked around a lot by both liberals and conservatives. ... No legislation can be perfect, but is there an ideal version of the bill that exists in your head? The biggest thing I would have changed was how you paid for it­—that $20 billion that’s now on the taxpayers, not the banks. But we needed those Republican votes. I would also have toughened up the derivatives stuff a little bit. ...
Remember, I was in the minority from 1995 to 2006. They were in charge. ... Now, in 2005, I tried to work with Mike Oxley to get some reform. It became an internal Republican fight. Oxley said the problem was that George Bush gave him the one-finger salute, and that’s what killed it.
I became chairman of the committee in 2007. The first thing we did was pass tough legislation restricting Fannie and Freddie. It’s as a result of that legislation that they were put into a conservatorship and haven’t lost any money [on new business] since 2008. Now, the Republicans have been in power in the House since January of 2011. They have not even moved a bill to a full committee decision. They talk about Fannie and Freddie when they’re out of power. When they’re in power, they do nothing. ...
I read a prediction you made not long after Obama was elected about how 2010 would be a good year for the Democrats. I underestimated the depths of the recession. The mortgage crisis was worsened because critical decisions were made during the transition between Bush and Obama. TARP was basically being administered by Hank Paulson as the last man home in a lame-duck presidency. I tried to get them to use the TARP to put some leverage on the banks to do more about mortgages, and Paulson at first ­resisted—he just wanted to get the money out. And after he got the first chunk of money out, he said, “All right, I’ll tell you what, I’ll ask for a second chunk, and I’ll use some of that as leverage on mortgages, but I’m not going to do that unless Obama asks for it.” This is now December, so we tried to get the Obama people to ask him, and they wouldn’t do it. During the critical period when the TARP was being administered, there was a vacuum of political leadership. At one point, Obama said, “Well, we only have one president at a time.” I said I was afraid that overstated the number of presidents. We had no president. ...
What are government’s prospects in the next decade..., what do you see as the role of government ten years from now? I think it depends. If we can substantially reduce America’s worldwide military expenditures, I think the prospects are good. That will free up resources to allow us to start bringing down the level of debt or reducing the rate at which debt is accumulating, and free up funds.
I think people, particularly young people, want things done about climate change, I think they want things done about excessive inequality. I think there’s a very positive role for government, and I think the public wants it. I think we’ve seen that test with the tea party. The people who want to dismantle government came to power in the House. Now it’s blowing up in their face. ...
You were talking about the Republicans and not being able to work with them. But isn’t your ultimate beef with the voters, since it’s the voters who reward that behavior? I’m glad you said that, you’re very smart. These days, in developed countries, everybody says you need a private sector to create wealth, you need a public sector to create rules by which wealth is created. Sensible people understand that. The tension between left and right has been where you draw that line, but it’s been a contest between people who see maybe a 20 percent overlap. Let me read this to you. [Picks up copy of Friedrich von Hayek’s The Road to Serfdom.] “In no system that could be rationally defended would the state just do nothing.” ­[Closes book.] ...
For the first time in American history, we have people in power now who reject that idea. If they knew it was Hayek, they might think, Well, maybe. But they reject the public sector. That’s why we can’t work together. ...[more]...

    Posted by on Tuesday, April 17, 2012 at 07:46 AM in Economics, Politics | Permalink  Comments (18)


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