Act of Congress chapter 8-10

Chapter Eight: A Rich Variety of Humanity

Barney Frank's Legislative Ambitions (2009)

• Barney Frank aimed to pass an ambitious regulatory reform bill through the House quickly.

• He saw the House as the main legislative body and viewed the Senate as an "appeal body" for interest groups.

• Frank expressed disdain for the Senate, calling it a "dysfunctional body".

Legislative Focus: Accountability and Reform

• Frank wanted to revive previously passed House bills that failed in the Senate, notably credit card and mortgage regulations.

• He was motivated by the political fallout of bank bailouts under TARP, aiming to show Congress cared about average citizens.

• The proposed bills were designed to impose costs on banks, which Frank argued were "good public policy" and necessary to signal accountability.

Waiting for the White House

• Frank had to pause legislative efforts to wait for the administration's input on regulatory reform.

• The administration’s first draft arrived in June 2009, followed by legislative language over the summer, delaying progress.

The Pecora Commission: A Historical Parallel

• Some in Congress pushed for a modern-day equivalent of the Pecora Commission, which investigated the Great Depression.

• Frank saw this push for investigation as a distraction from necessary regulatory reforms already well-understood.

• Frank recommended reading Mark Zandi’s "Financial Shock" to understand the crisis.

Internal Politics within the Democratic Party

• Frank faced internal pressure from liberal members regarding the pace and direction of reform, as seen in debates with Speaker Nancy Pelosi.

• Many liberals believed the government was being too lenient on banks.

• Frank emphasized the need to cultivate relationships and maintain engagement with Democratic members of his committee.

The Financial Services Committee Dynamics

• Frank's committee comprised a mix of senior members, including Paul Kanjorski, Maxine Waters, Carolyn Maloney, Luis Gutierrez, and Mel Watt, each with differing levels of influence and political leanings.

• Frank noted the complexities of managing relationships, especially with members like Waters and Maloney, who had their own agendas and challenges.

The Effects of Gerrymandering

• Many House districts were drawn to safely secure seats for one party, contributing to partisan warfare and ideological rigidity.

• Gerrymandering allowed elected officials to escape electoral pressures, leading to less collaboration across party lines.

The Makeup of the Committee

• The Financial Services Committee included a diverse group of members, ranging from informed newcomers to those less engaged with the intricacies of financial reform.

• Newer members, often entering politics with impressive credentials, struggled to gain traction amidst entrenched party dynamics.

• Frank cultivated a few close allies on the committee, furthering his legislative objectives.

Frank's Leadership Style

• Frank combined a deep understanding of financial issues with a practical approach to cultivating relationships within the party.

• He engaged deeply in fundraising, understanding political egos, and often prioritized legislative efficacy over public opinion.

The Consumer Financial Protection Agency

• The proposal for an independent Consumer Financial Protection Agency (CFPA) emerged from discussions with Elizabeth Warren, who became a staunch advocate for consumer protection.

• Frank eventually came to support this idea firmly, believing it would help address public concerns and strengthen legislative proposals.

Chapter Nine: Politics First

Pre-empting Crisis

• Frank was deeply concerned with how to address the political landscape while awaiting legislative language from the Obama administration.

• The release of a white paper in June 2009 ignited debates about regulatory reform and academic analysis of public and party reactions.

Engaging with Liberals

• Frank's relationship with liberal Democrats was strained as he sought to navigate their criticisms while maintaining a pragmatic approach to reform legislation.

• He aimed to show a commitment to consumer protection while addressing the complexities of financial legislation.

Resistance from Republican Members

• There was notable pushback against proposed changes, showcasing a split between moderate Republicans and more rigidly ideological caucus members.

• Frank engaged in ongoing discussions and negotiations to bring reluctant members on board, leading to considerable intra-party dialogue.

Lobbying Efforts

• Intense lobbying from banking interests impacted the dynamics within Congress, influencing members' decisions concerning reform.

• Frank observed the shifting power dynamics between various banking factions and argued against the oversimplified portrayal of an all-powerful Wall Street.

Final Thoughts

• Frank positioned himself as a knowledgeable leader on financial issues, advocating for consumer protections while managing the complex politics within Congress.

• He understood the delicate balance between necessary political maneuvers and the legislative goals he sought to achieve.