Weekend Economists: What Goes Up....June 1-3, 2012

[Demeter]

73. The Career of Reaganite Barney Frank

PERSONALLY, I NEVER LIKED HIM, FOR THE EXACT REASON THAT HE THOUGHT HE WAS A WHEELER-DEALER, WHEN WE NEEDED STATESMEN AND POINT MEN AND FIGHTERS....MEN AND WOMEN OF PRINCIPLE.

http://www.nakedcapitalism.com/2012/05/barney-frank-is-a-neoliberal-not-a-liberal.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Most Democrats think that they belong to the party of the little guy, the party that attempts to constrain Wall Street. Sometimes a Democrat won’t fight hard enough, or, like Obama, will make political calculations that shave off the better angels of their nature. This myth says that Reagan deregulated, and Bush led us into the financial crisis. In fact, that’s a fairy tale. It was Jimmy Carter who began the deregulation of the financial services industry, who got rid of usury caps, and Bill Clinton that deregulated derivatives and ended Glass-Steagall. The rush headlong into madness has been fully bipartisan, from the get-go. It’s not a surprise that as both Republicans and Democrats shed their liberal wings, in favor of neoliberalism, financial instability increased.

The career of Barney Frank casts a large shadow upon the Democratic approach to financial matters, as he perfectly epitomizes how they behaved throughout this time period. Frank was elected in 1981, as a quintessential Reagan-era Democrat. He is frequently misunderstood, and cast as a liberal. In another era, he would have been such. But he was first and foremost interested in cutting deals, and to that end, his ideology ended up as that of a Reagan-lite. It’s unfortunate, because by the time he had real power in 2008, he had no firm basis upon which to make decisions for the broad public, and ended up consolidating wealth into the hands of a smaller and smaller number of people...Frank is and was no liberal. He’s a bank-friendly Democrat who is believes in neoliberal ideas, but wants to ensure that there is some housing for the poor...

Frank consistently doesn’t believe in pressuring politicians, even though studies show that direct action techniques (especially in the environmental sector) are effective at moving policy changes. This shouldn’t be a surprise, as Frank is first and foremost a political insider. Activism, especially liberal activism, is simply irritating to someone like that...Being an effective politician is a skill, and Frank was operationally competent at running the Financial Services Committee. He could run the floor of the House like no one else, give a magnificent quip, and ensure that every amendment in the committee passed with the vote tallies he wanted. He didn’t do any oversight, as far as I can tell, and was entirely reactive to what other officials wanted from Congress. He wasn’t a leader in any sense, more an incredibly talented follower. I suspect that early in his Congressional career, Frank realized that the big banks, Fannie and Freddie, and the Federal Reserve were the “adults” in the room, and that he wanted to be “serious” about policy-making with the adults. So he eventually became more and more bank-friendly, until the capstone in his career was passing the $700 billion TARP...

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