Blog - Frank and His Wall Street Buds

Given how extreme the failure of Wall Street was that caused the 2008 crisis, the financial reform bill passed by Congress last year, Dodd-Frank, is pretty weak tea. It’s riddled with giant loopholes, defers many of the biggest decisions to the same regulatory agencies who failed us in the first place, and, most significantly, allows the banks that needed a $4.6 trillion bailout because they were “too big to fail” to become even bigger. Dodd-Frank was largely an exercise in passing a bill for the sake of appearing to have done something. Unfortunately, Congress seem to have fooled a lot of people out there, especially those who work for popular newspapers, into believing that they have fixed the problems.

Case in point. The New York Times’ Deal Book blog reported last week on a several-thousand-dollar-per-ticket Wall Street fundraiser held by Rep. Barney Frank [D, MA-4], after whom the financial reform bill is partially named, with guests from Chase, Goldman Sachs, and others. The reporter calls the bankers in attendance Frank’s “longtime foes,” noting that Frank recently authored a “sweeping crackdown on the financial industry.” However, the legislative and campaign-finance records suggest that Frank and Wall Street are in state of symbiosis, with bankers providing a majority of the funds for Franks’ biennial campaigns, and Frank suppressing anti-Wall Street sentiment in Congress and funneling it into mild legislation. Corporations and special interest groups don’t give their foes in Congress money for their re-election campaigns. This should be plainly obvious. But the fact that Frank has his name on the legislative response to the financial crisis seems to be making the NYT reporter assume there must be something contentious happening when Frank and Wall Street folks meet up. If only…

Fact is, Wall Street has invested heavily in Frank over the years, likely because they know that if a different Democrat ever took over the chairmanship of the House Financial Services Committee they would almost certainly face much more of a threat. Bill Allison at the Sunlight Foundation, who brought my attention to the NYT post in the first place, goes over the extent to which Frank’s congressional career has been funded by Wall Street:

Frank’s “longtime foes” are among the top donors to his campaigns over the years—among industries, Securities and Investments Houses, Real Estate, Insurance and Commercial Bankers rank one, two, three and five, respectively (lawyers and lobbyists come in at number four). Among individual firms, Frank foes in his top twenty career donors include the likes of FMR Corp., J.P. Morgan Chase and Co., Bank of America and State Street Corp. And the sponsor—one of the most vocal advocates on Dodd-Frank, is also among Frank’s most generous career supporters. (Huge thanks to the Center for Responsive Politics for these numbers.)

Frank voted in favor of TARP and has continued to support the status quo on Wall Street ever since. His recent fundraiser on Wall Street was not some sort of awkward meeting between foes as the NYT would have you believe; it was just the latest installment in a long history of tightening between a for-profit industry and the politician with power of setting the rules.