Barney Frank is a congressman who has represented Massachusetts fourth congressional district since 1981. He is well known for defending Bill Clinton against impeachment where a documentary was made out of his efforts going by the pun, “Lets Get Frank” (Toobin, 2009). His most recent accolade as the Chairman of the Financial Services committee after the Democratic majority win in 2007 has placed him in the cross hairs of many who would like to shift blame on the Democrats for the failing economy in the United States especially the housing market.
Frank is a fierce supporter for the increase of low income housing and other rental properties in the United States (Toobin, 2009). In 2007 he used his influence as Chair of the Financial Services Committee to push through congress the housing trust fund bill. About the same time Fannie Mae and Freddie Mac- the Federal National Mortgage Association and the Federal Home Mortgage Corporation- were experiencing huge financial problems due to the mounting bad debt that they had acquired on their portfolios.
In the eventual collapse of the housing market Barney Frank found his committee and himself at the receiving end of a barrage of criticism for allegedly presiding on the greatest housing market collapse in history. He is however credited with pushing for key reforms and bills (Weisburg, 2009) most notably concerning housing and the auto industry. Christopher Dodd is the long standing congressman of Connecticut who now serves as the Chairman of the Senate Banking committee.
In his time as Chair of this committee considerable criticism has been placed on him not the least of which involves various allegedly improper deals that saw him obtain below market rates from Country Wide Financial for his personal properties. This came quick after he approved a program to assist sub-prime lenders of which Countrywide Financial would have benefited. In recent times he is pushing the so called Dodd bill which proposes to regulate the banking sector in the United States.
The bills highlights are the consumer protection mechanisms that would see that consumers are well equipped to make rational decisions on mortgages, credit cards and other financial products. The more visible highlight of the bill is the end of government bail-outs which have raised immense criticisms in the recent past. The overhaul of Wall Street’s financial regulation that will result after the changes of the Dodd bill is far reaching and should feature in the radar of many. Top on the concerns should be the state of the mortgage market.
Reportedly 94% of Americans maintain good levels of credit and are prompt on their mortgage payments. It is only a mere 6% whose awful credit worthiness has led to calls from all over congress to bail-out home owners. Barney Frank has been quoted so many times in criticisms of the Bush Administrations policy of increasing home ownership in the late 90’s. In various references to these plans certain key regulatory bills were thrown out of congress at the time in order to the ‘ownership society’ proposed by the Bush Administration to be realized.
It was around this time that government lending firms Fannie Mae and Freddie Mac begun picking up the toxic debt securities that had already become a stable diet for many Wall Street firms such as J. P. Morgan Chase. Proper regulation of the financial markets is the solution that Dodd proposes to stem the kind of reckless behaviors witnessed in the markets before the crash of 08’. The trend of the debate on financial regulation is undoubtedly unsettling many due to its immense repercussions on current and future home owners.
Owning a home remains the single largest purchase for majority of Americans and thus the housing market forms an integral part of the financial services industry. However the Dodd bill also proposes to encroach on the lucrative derivatives business that many look to blame for the bad loans being given out in early 2008 and 2007 to sub-prime borrowers. The Senate Banking committee is therefore at the very centre of a massive restructuring of the very foundation of the financial system in the United States of America.
Top amongst concerns are the views that the so called ‘too big to fail’ institutions have outlived their usefulness (Hitt &Damina). The top six banks in the United States account for 60% of the GDP in assets. The Banking committee is receiving calls to limit the size of banks to $100 billion; a move that critics argue will see the bankruptcy of competitiveness in the banking sector from a global standpoint. Critics point to the fact that of the top ten banks in the world only two are from the US and these do not even occupy the top five slots (Kuhnhenn).
Understandably of the Dodd bill incorporates these views then many believe that huge companies would be unable to obtain large lending facilities from the US banks and this would in turn adversely affect the economy. Whilst some ire is confined to the elite concerns of bank regulation and control on the trade of derivatives which are a veritable cash cow for most of the top six banks as it is, the bulk of attention is focused on the still ailing housing market.
Barney Frank’s efforts in creating a housing trust are seen as only a drop in an ocean as far as the toxic debt contained in many small institutions around the US. Further to this many homeowners who have practiced financial discipline are insulted by their taxpayers dollars being used to incessantly bail-out individuals who buy what they cannot afford forget that half the bailout money has already been spent and little has actually gone to the aid of homeowners.
In recent news appearances Dodd has consistently moved to link Wall Street and republicans in trying to rouse the sentiments of majority of voters who are mostly opposed to any sort of bailout plan. There exists a deep seated resentment amongst the majority of Americans concerning the tendency of tax payer dollars to find themselves in private bank account via bail out programs. Even Barney Frank’s home owner bail out plans are receiving less support (Hagerty)from both democrats and republicans as the ire of American voters increases in the days leading to the Dodd bill vote in the Senate.
These recent events and actors will see ongoing skepticism on debt markets continue with a huge effect on the already weakening dollars. Already long term government debt is posting lower rates than short term debt showing the markets sentiments on the on going ruckus in congress and the public domain concerning the various attempts by the government to try and work something out of the financial turmoil that the US is trying to get away from. Works Cited
Financial Reforms Summary retrieved from http://banking. senate. gov/public/_files/FinancialReformSummary231510FINAL. pdf Toobin, Jeffrey. Barney’s Greatest Adventure. The most outspoken man in the house gets some real power. The New Yorker: 2009 retrieved from http://www. newyorker. com/reporting/2009/01/12/090112fa_fact_toobin? currentPage=all Weisberg, Stuart, E. Barney Frank: the story of America’s only left-handed, gay, Jewish congressman. University of Massachusetts Press: 2009
Kuhnhenn, Jim. From the left a push to get tougher on Wall St. Associated Press. Hitt, Greg, Paletta, Damina, Senate Ends Financial Bill Standoff. Retrieved from http://online. wsj. com/article/SB10001424052748704423504575212100556624606. html? KEYWORDS=Christopher+Dodd Hagerty R. James. Political Tide Turns Against aggressive Mortgage-Modifications. Retrieved from http://blogs. wsj. com/developments/2010/04/14/political-tide-turns-against-aggressive-mortgage-modifications/? KEYWORDS=Barney+Frank