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.
Anyway, here’s a smattering of press statements picked at random:
New York Times: Barney Frank, a Top Liberal, Won’t Seek Re-election
“U.S. Rep. Barney Frank, a prominent 16-term liberal Democrat from Massachusetts and arch-enemy of political conservatives nationwide, announced Monday that he does not intend to seek re-election in 2012.” CNN PoliticsBarney Frank: A passionate liberal who mattered, John Nichols, The Nation
Yet, 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. Let’s take this comment, which cuts to the core of how Frank sees the economy.
“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.”
This is absurd. The government creates enormous amounts of wealth, from the telecommunications industry to the computer to the internet, to infrastructure like the national highway system. If you’re driving across any number of bridges or traveling over airports, that’s wealth. That’s value. And it’s government-created. The Reconstruction Finance Corporation lent out a total of $55 billion in the 1930s and 1940s, it was a government-bank that financed infrastructure all over the country. Liberals govern like wealth can be created in both the public and private sector, and destroyed in both areas as well. Neoliberals like Frank put their faith in the private sector.
There’s more. Here’s Barney Frank on activism:
And I believe very strongly people on the left are too prone to do things that are emotionally satisfying and not politically useful. I have a rule, and it’s true of Occupy, it’s true of the gay-rights movement: If you care deeply about a cause, and you are engaged in an activity on behalf of that cause that is great fun and makes you feel good and warm and enthusiastic, you’re probably not helping, because you’re out there with your friends and political work is much tougher and harder. I’m going to write about the history of the LGBT movement, partly to make the point that, in America at least, it’s the way you do progressive causes….
Pride Weekend was very important early on, because people didn’t know who we were, the hiddenness was a problem. Today, Pride has no political role. It’s a fun thing for people.
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.
From 1981 until this year, Frank served on the committee tasked with housing and banking, which was once called the Banking Committee and eventually morphed into the Financial Services Committee. He rose to Chairman in 2007 when the Democrats took over, and presided over the passage of the bailout, and then the crafting of the Dodd-Frank financial reform package. His primary skill, and a magnificent skill it was, was managing the politics of that committee. Here’s how he did it.
Every so often you’re going to have to ask them to vote for something that wouldn’t be politically in their interest. To get them to be willing to do that, partly it’s because they have the solidarity with the party, but you want them to have this vested interest in you being good to them. And it’s not so much threatening them. Occasionally you do that, but that’s very occasional when you want it to be a good relationship. What you do is you are their servant, you are their constituent.
It’s very simple. Whenever anybody, any Democrat who’s on the committee, asks me to do something, if at all possible, I’d do it. I’d go to their districts, I’d show up at their fund-raisers, I had my picture taken with people who wanted to have their pictures taken with me, I’d support their amendments, I’d get little things for them.
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.
Let’s be clear, though, Barney may have had sympathies for housing projects, but he was no liberal. And he shouldn’t be remembered as such.