Mention the name Barney Frank and you’re bound to get a strong reaction—people either love him or they love to hate him. The outspoken, liberal Democrat from Massachusetts is revered by some as a brilliant champion for the underdog and despised by others as the driving force behind the financial reform that crippled Wall Street.
Recently retired after 16 terms in Congress, Frank is in the process of launching a new phase of his career, one that the 72-year-old says will be less demanding—and more profitable—than the time he spent politicking on Capitol Hill. I met up with him in Phoenix, where he had just finished the last leg of a speech circuit, and we sat down to talk about his thoughts on the reverse mortgage program as a longtime advocate for affordable housing.
Whether you love him or hate him, it’s hard to deny that Frank’s story is impressive. Born to a working-class family in Bayonne, New Jersey, Barnett Frank graduated from Harvard College and was elected to the Massachusetts House of Representatives, where he served while attending Harvard Law. In 1980 Frank was elected to the U.S. House of Representatives, winning re-election 12 times during his 22-year tenure with at least 67 percent of the vote.
A fierce debater, Frank is known for his quick wit and sharp tongue, earning him the nickname “saber tooth” by former President George W. Bush. His biting, combustible remarks during House debates have produced several YouTube hits, prompting The New York Times to call him the “master of the one-liner” and leading to a published collection of his colorful commentary titled Frank Talk: The Wit and Wisdom of Barney Frank.
Frank is straightforward and unapologetic, and he’s often called out in the press for his crankiness and impatience. The man is simply not afraid to say what he thinks, and he saves very little time for niceties (a fact that was not lost on me during our interview). But even those who dislike Frank’s brisk demeanor or disagree with his politics can’t help but respect him for his work ethic and intelligence. In an annual survey of Capitol Hill staffers by Washingtonian magazine, he was repeatedly voted brainiest, funniest, most eloquent and biggest workhorse by his peers.
As the first openly gay member of Congress, Frank is passionate about his support of gay rights and other minority causes, and was crucial to the passage of antidiscrimination legislation. “I’m a left-handed gay Jew,” he famously said. “I’ve never felt, automatically, a member of any majority.”
Frank served as chairman of the House Committee on Financial Services from 2007 to 2011 and was a critical part of the nation’s $700 billion bailout of financial institutions. But much of his career was spent advocating for affordable housing.
He was instrumental in aiding the passage of housing reform and anti-predatory lending acts, and he was one of few in Congress who urged the Treasury to help troubled homeowners modify the terms of their mortgages, pushing the American Housing Rescue and Foreclosure Prevention Act to protect homeowners from foreclosure. The law, which passed in 2008, is one of the more notable accomplishments of Frank’s career and led some to deem him the “smartest man in housing.”
But Frank also has his critics, and they would wholeheartedly disagree with that praise. They claim that by promoting policies to boost affordable housing, Frank and other Democrats contributed to the subprime mortgage crisis by enabling Fannie Mae and Freddie Mac to back exceedingly risky loans. They assert that he failed to foresee the trouble that lay ahead for Fannie and Freddie, and point to an unfortunate comment he made to The New York Times in 2003 denying that these government agencies were headed toward any sort of crisis.
True to form, Frank responded to his critics with sarcastic humor, noting that the idea that he had the power to stop the housing crisis was “flattering in a bizarre way” and pointing out that his minority status in the House prevented him from passing any sort of meaningful legislation that would have put a stop to it. In a press release issued in response to these claims, Frank said, “If that had been true, I would have used that power to block the impeachment of Bill Clinton in the House, the war in Iraq, large tax cuts for the very wealthy, the intrusion into the sad case of Terri Schiavo, and appropriations bills that badly underfunded important social priorities.”
Frank’s most impactful legacy is likely to be his role in leading the crackdown against Wall Street. A staunch supporter of financial reform, Frank and former Connecticut Senator Chris Dodd co-wrote the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law in 2010 and is just now beginning to take effect on Wall Street. Intended to regulate the financial markets and tighten lending standards, this sweeping legislation has ignited criticism from members of the financial sector who claim the bill’s stringent regulatory standards unfairly stifle business. Frank defends the bill, stating that without it, things would be worse. “The problem in politics is this: You don’t get any credit for disaster averted,” Frank said in an interview with 60 Minutes, adding that you can’t go to the voters and say, “Boy, things really suck. But you know what? If it wasn’t for me, they would suck worse.”
In light of the exhausting controversy he seems to inspire, it would be no surprise if the former congressman wanted to retire to a quiet life in his vacation home on the coast of Maine. But Frank seems to have grander plans. He retained famed Hollywood agent Ari Emanuel to search out new projects, and recently made his Broadway debut in the Pulitzer Prize-winning musical Fiorello!, in which he played an outspoken senator. It was an ironic role for Frank, who in January publicly announced his desire to fill John Kerry’s Senate seat during the interim in order to participate in fiscal cliff talks, but he was passed up for the job. During our interview, Frank laughed at the irony. “I can now say, like they say in commercials, ‘I’m not a senator, I just play one,’” he said.
Whether he’s on stage or, more likely, making guest appearances on cable TV shows to comment on the political drama of the moment, there’s no doubt that we haven’t heard the last of Barney Frank.
Barney Frank sits down to talk with The Reverse Review.
JG // When you announced your retirement, many people in the reverse mortgage industry lamented the loss of a great champion of the HECM program. Why have you been such a supporter of the product?
BF // It’s sensible, it’s logical. I like things that break through artificial barriers. Sometimes people say, “Well, you have to be this or that; either you own your house or you sell your house.” This is an example of how you can get the best of both worlds. You continue to own your house, and you have all the physical and psychological pleasures of being the owner of the house that you live in and being the boss of that house, but you also have the financial benefits. It’s a perfectly sensible way to deal with life cycle and economic needs. And so that’s why it makes perfect sense to me.
JG // A November audit revealed that the FHA’s Mutual Mortgage Insurance Fund was negative $16.3 billion. Any thoughts on what should be done to address this issue?
BF // Yeah, we voted for them to [audit the fund]. Look, that reflects past practices. Within the last few years, when I was recruiting in a bipartisan way, we passed some legislation, for example: Until a few years ago, the FHA did not have the right to bar lenders from participating. They would have a situation where lenders would be abusive, and they couldn’t say, “You can’t come back again.” So maybe the guy could slip on by them. We gave them the power to do that, and we gave them the power to adjust the premiums… This is the federal government we’re talking about, and I think given the terrible problem that happened in the housing market in general, [the fund’s negative status] is not a sign of total wrongdoing. I think [the HECM program] is reputable.
JG // One proposed solution that would directly impact the reverse mortgage industry is the elimination of the standard fixed-rate HECM, which was the most popular product because it enabled seniors to get the largest lump-sum payout…
BF // That relates to a very important problem: the Senate filibuster. It really is a serious flaw in our democracy that because of the filibuster one senator can impose all kinds of restrictions. I don’t see any sign that [the fixed-rate HECM] was a major contributor to the [fund’s depletion].
JG // Are you concerned about the FHA’s current exposure to the housing market?
BF // Sure, but that means that we’d have to remedy things. Although, again, I think the problem reflects more the past rather than current and future [situations]. If those deficiencies were getting bigger and bigger, I’d be more worried. I think if you look at Fannie Mae and Freddie Mac, they cost us a lot of money, but all the cost [was from] pre-2008 activity. I think the business the FHA has done in the last few years is pretty sound.
JG // The FHA is coordinating with the industry to find a solid solution for reverse borrowers who can’t pay their taxes and insurance. One proposed solution is establishing set-asides up-front to pay for taxes and insurance. Do you think that’s a sound solution?
BF // I haven’t looked at it that specifically, but yeah, I think it is important. People need to understand that there are no magic bullets. There is a danger that people who are not even economically sophisticated but just economically literate [will] get a large amount of money all at once and won’t be equipped to handle it. So I do think [there should be] ways to work with them on that. That’s one reason not to allow the person who gets them the deal to be the one who invests it.
JG // You were involved in establishing rules against cross-selling and lowering the fees associated with the product. In the last 17 years there have been a lot of tweaks to the program. What do you think of its evolution?
BF // I think it was a good idea. Like any program there’s the potential for abuse, particularly because some of the people involved are older and vulnerable, and I think we’ve made substantial progress. I’ve worked closely with Peter Bell. I think he’s been very responsible and I’ve facilitated some meetings. I was kind of a mediator to some extent between the AARP and Peter [as a representative for] the industry, and I think there’s been a lot of constructive work on it. Specifically, the AARP wasn’t trying to end the program; they were trying to improve it, and I think that worked.
JG // What do you think the industry should be doing to build more allies for the program on Capitol Hill?
BF // Well, I think that you have the beneficiaries talk about it. The problem is the media likes to talk about the bad news. I think you should have them talk about the good news, have them talk to some people who have benefited. Encourage the people who have benefited to just go out and see their members of the House and Senate and tell them that. And see if you can get the media people to cover it… People misunderstand: Campaign contributions are important—folks will need money anytime they are engaged in a contest—but the most effective thing you can do to influence members of the House and Senate is to have constituents of theirs who have had particular experiences go and talk to them about it. It would help if members of the House and Senate could hear from people who could say, “By the way, I just want to tell you this saved my house. This has been great for me.” Or it doesn’t have to be the people themselves, if their children or other relatives would say this. Make sure people don’t hear only from the minority with bad-news cases; have them hear more about the good-news cases.
JG // Moving on to Dodd-Frank, you once said that if you were writing the bill all by yourself it would have turned out a bit differently. In retrospect, what would you have changed?
BF // First of all, I would have had the financial institutions pay the cost of it. That was $20 million we were going to assess on them. Secondly, I would have improved the anti-pre-emption language, that is, we made some progress. The Bush administration promulgated rules that kept state banking regulators from being able to do consumer things. We ran into a political problem there. I would have wanted to strengthen the restrictions against pre-emption. State regulation for consumer or other reasons should only be pre-empted if it directly conflicts with federal policy and makes banking impossible.
I would have toughened up the derivative situation some. We lost a couple of things on derivatives… I wanted it to be that if you really did a significant business [with derivatives] and were going to be affecting other companies, that would be a problem. I lost to a member who said, “No, only if you’re affecting the whole system.” But I think we got enough of that, so that’s not going to be major. In an ideal world I would have married the CFTC and the SEC.
Also, I had not noticed some of the things the Senate put in there about the confirmation power—the provision that said the CFPB powers can’t be exercised until there’s a confirmation. That was something the Senate did, I am now more aware of that… I understand the Senate wanted to protect the confirmation power, but when you have the filibuster that just doesn’t work, like with Corker, that filibuster with Galante. So, I would have given the CFPB the power to go into effect right away.
I wouldn’t have exempted auto dealers from the consumer bureau, and I would have liked to have made the SEC and the CFTC self-financing… The problem is the Republicans have crippled the derivative regulation to a great extent by substantially underfunding the Commodities Futures Trading Commission, and that slowed things down.
JG // There are critics out there who say that Dodd-Frank will stifle liquidity in the markets. How would you respond to them?
BF // OK. The day the bill passed in the House-Senate conference committee, the Dow Jones industrial average was 9,700. That was about two years and eight months ago. I just saw it hit 14,010. So the stock market, which of course was a major target of [Dodd-Frank], has now increased by well over 40 percent in two and a half years. I think that’s a pretty good argument. There really isn’t any sign [that it’s hurt liquidity]… By the way, in March of 2009, when we first began working on the bill, the Dow was 6,500, so it’s gone up about 120 percent. And the market today is up about 40 points; the Dow and the others are doing well too, led by significant improvement in financial companies.
JG // Initially you supported Elizabeth Warren for the CFPB directorship. What do you think of Cordray’s tenure so far?
BF // He’s excellent. I think he’s great. In fact, it worked out well. In February of 2011, I said to President Obama at this democratic issues conference that he should appoint Elizabeth to head the bureau and it would be win-win—either she would be confirmed or they would filibuster her, make her a hero and she could be a senator. And he said, “Do you think she wants to run for the Senate?” And I said, “Well, I think she wants your job, but you gotta start somewhere.” I think it worked out well. Cordray’s been excellent. It’s incredible now that they’re threatening to filibuster him. I think that it’s just hostility.
And by the way, if you listen to the criticisms by the Republicans and by the business people [about the CFPB], there are no specific actions taken by the [bureau] that they object to. Their objection is the same one they had before: It’s not financed… It’s not subject to appropriation, but of course neither is the Office of the Comptroller of the Currency or the FDIC or the Fed… They’re just hypocrites about it; I mean, they don’t like consumer protections. But there are no specific objections to anything it’s done. It has worked very well according to people in the industry, and Cordray has been great. I think this could be a major issue now, this filibuster.
Now remember, they are trying to filibuster him not because of any negatives about him. They are using the filibuster to try and change the law, because they don’t have the votes to change the law. But I would say there were some concerns about the pace of [Dodd-Frank’s] implementation. That was probably because of businessmen who had every incentive to resist implementation, because they were hoping that Romney would become president and it would go away. Now that Obama’s been re-elected, I think the business community has changed its position and implementation will be much quicker, because from their standpoint, [even though] they would rather have no rules, having rules that are uncertain is worse. I think by the end of the year it will be very well implemented.
JG // Looking back on your career, what would you say was the highlight?
BF // That’s hard to say. Clearly the progress on LGBT rights is very important. You know, I went from being afraid to be honest about my sexuality when I got elected in ’81, to being the first member of Congress to volunteer that I was gay in 1987 but being worried about it, to serving out my last six months married to a man. So we made good progress there. Helping thwart the effort to throw Bill Clinton out of office in ’98 was a big one, and the Financial Reform Bill was also obviously a big deal. Over time, I worked very hard to try and promote something that wasn’t understood and ironically I get attacked [by people who say], “Well, you were trying to sell houses to poor people.” Actually most of what I was trying to do [with] a few of my allies was to rent houses to poor people, and I’ve worked very hard on trying to promote affordable rental housing. We made some progress, but not as much as I’d like. That would be another major area.
And also, in ’95 when the Republicans took over, I helped block some of what they wanted to do. They wanted to end affirmative action all together. Colin Powell made a speech in which he said he’d never have been a general if it weren’t for affirmative action… And then finally, something that’s just coming to fruition now, and I worked on it and worked on it: the recognition that reducing military spending is a very necessary thing if you’re going to have deficit reduction in a socially responsible way.
JG // In reading people’s comments about you, so many mentioned your faith in the system and your belief in the government’s ability to solve problems. But when you announced your retirement, you said that you felt you could be more effective instigating change from the outside, that politics have devolved in such a way that it’s impossible to get things done. Would it be fair to say that you’ve been disillusioned?
BF // No, not at all. I still believe that, and I’m going to write a book about the importance of government and how the public sector should be a partner to the private sector. Two things: The Republicans are in power in the House. In the Senate, a minority member can have more influence. Minority members in the House don’t have a lot of influence. That’s the irony of people saying, “Oh, you Democrats, you made us lend all this money to poor people and caused the crisis.” The Republicans ran the House from ’95 to 2006. When we took over in 2007 we started to box some [of them out].
I think the media and the public’s skepticism about elected officials means that what I say [in retirement] will be viewed less skeptically… People can’t say, “Oh, you’re just saying that because you’re running for office.” Plus, the other thing is this: I’m going to be 73 years old in a month. I don’t have the energy that I had when I started or even that I had 15 years ago. I’m worn out. I think [it will be better] to conserve my energy and focus only on the things that are high-priority for me and high-profile.
JG // I read that you recently hired famous talent agent Ari Emanuel. So, what’s next for Barney Frank?
BF // I’m going to write a book about the role of government. And I get paid a lot of money now to give speeches… If I give 10 speeches this year it will be for some multiples of my congressional salary. I’m looking at doing some writing and commenting for the media, but that’s still being negotiated. And I hope to teach in the fall, probably at Harvard Law School about Congress, but nothing is definite… And then I thought, if it’s meant to be, if Fred Thompson retires, I could be a home equity spokesman. But I’d rather have the Law & Order job.