Frank was in the U.S. House of Representatives for 32 years. In Congress, he was the controversial Democratic leader on the House Financial Services Committee and was a co-sponsor of the eponymous 2010 Dodd-Frank act, which brought sweeping reform to the financial industry. Now 74 and married, when he’s not on TV or relaxing on the coast of Maine, he’s giving paid speeches and teaching at the Kennedy School of Government at Harvard.
David A. Kaplan recently talked to Frank for Reuters in mid town Manhattan. During a wide-ranging exchange, in his characteristic Bayonne-meets-Boston mumble, Frank discussed the 2016 presidential election and his fear of Chris Christie; his prediction on a Supreme Court ruling on same-sex marriage; the future of Dodd-Frank; his disappointment over President Obama; his distaste for Jon Stewart; and why, no, he didn’t cause the 2008 financial crisis. Edited excerpts:
REUTERS: What do you make of Congress last weekend watering down Dodd-Frank, your signature bill?
FRANK: One small piece of the law was affected, but it’s mostly good news because of the furious response, which shows that financial reform continues to be a major public concern.
Q: Would you encourage President Obama to consider not signing the bill?
A: Yes.
Q: And thereby shutting down the government?
A: He could say, “Send me the same bill without the provision [affecting Dodd-Frank].” Any shutdown would be brief.
Q: Did supporters of changing Dodd-Frank, even a little, miscalculate politically?
A: Yes, Republicans misread public opinion. So did the Senate Democratic leadership and the White House.
Q: And the banks themselves—the ones affected by Dodd-Frank?
A: They’re not concerned with public opinion.
Q: What will Republicans do in terms of further rollback since they’ll soon be in control of Congress?
A: Given the response we just saw, it will be difficult for them to make any major changes in the face of what I am now confident will be very loud public disapproval.
Q: Senator Elizabeth Warren (D-Mass.) was most vocal in opposing the current bill. How do you think she comes out?
A: She showed she’s a force to be reckoned with.
Q: Do you miss not being part of the legislative action?
A: I wouldn’t want to have had to be involved in complex negotiations. But I was glad to speak out last week.
Q: Are you happy with how Dodd-Frank has been implemented so far?
A: Yes, with one exception. There’s been one chip-away, but it came a coalition of left and right, with the support of lenders, realtors, homebuilders and in particular, advocacy groups. I wanted to say that no mortgage loans could be made and then 100-percent securitized without risk-retention; people refer to that metaphorically as “skin in the game.” But to get the bill through, we had to give in to create a special category of super-safe loans that didn’t have to be risk-retained. I also was disappointed the Republicans under funded the Commodity Futures Trading Commission and the SEC, but that hasn’t really done any harm. Ideally, I’d have liked to merge the SEC and the CFTC.
THE SCOURGE OF POLITICS
Q: What do you think of the midterms?
A: I’m discouraged by more than simply the God-awful turnout. The root of our problem is people who are frustrated we haven’t produced for them economically. You get into a vicious cycle in which people are disappointed in government because it hasn’t delivered, so they then get mad at government and vote for people who dislike government, which makes it even less likely that government will do anything for them.
Q: What’s the fix?
A: There are two things we should do to free up money. One, and I’m sorry the President appears to be back-pedaling on this, is cut military spending. And the time has also come for Democrats to look at the environmental issue. Part of that community makes two mistakes. They take a morally superior tone. It’s possible to support laws on climate change, but still understand it will have a negative impact on some people and figure out how to compensate them. Not every environmental issue has the same moral importance.
Q: So, better turnout next time isn’t the solution?
A: We have to persuade white guys that we really do care about their economic interests.
Q: Do the midterms portend badly for Democrats in 2016?
A: Not so much. We have a temporary advantage in that the Republicans are so badly split that they’re going to have a hard time putting together a ticket that gets unified support. They’re going to have the same problem [Mitt] Romney had.
GAY RIGHTS
Q: Has the velocity of change gay rights surprised you?
A: It’s astonishing. I filed the first gay rights bill in Massachusetts history in 1972. And at any time these past 40 years, if you’d asked me to say, “Where’s it going to be three years later?” I’d have been wrong.
Q: Is that speed a function of the progressivity of the American people?
A: Absolutely. If it hadn’t been for gender equity and race, we wouldn’t have gotten started. But once we did, the reason [for progress] is simple: We’re much less different. Almost every straight person has gay and lesbian friends, relatives, etc. When we all started saying who we were, people realized it didn’t make any difference. Reality beat the prejudice.
Q: Will the U.S. Supreme Court rule on same-sex marriage?
A: Yes, next year. Of course they’ll say yes. Unless [Justice] Ruth Ginsburg dies. But then they’ll still say yes because it will be a 4-to-4 tie. Based on his prior votes [in other gay rights case], I’m sure [Justice Anthony] Kennedy is going to vote to uphold same-sex marriage.
Q: So, you predict 5-to-4?
A: Yes. Potentially 6-to-3, if [Chief Justice John] Roberts joins, but I doubt it. I was struck by what they did recently—their refusal to act. [Without comment, the Court let stand lower-court rulings that upheld a constitutional right to same-sex marriage.] There’s a perfect sports analogy. They gave same-sex marriage an intentional walk. They weren’t going to let us hit a home run, but they weren’t going to try and get us out.
THE RACE FOR THE WHITE HOUSE: 2016
Q: Would you support Hillary [Clinton]?
A: Pretty enthusiastically. I have slight differences with her on foreign policy—she’s more hawkish. But the reality’s going to force Democrats into a less intervention position. And you have an appealing candidate. So I’m supporting her and I’d urge others not to run against her.
Q: Think there’s a chance others will?
A: No, especially because it doesn’t look like we have the luxury of a fight. After the midterms, it’s particularly hard for anybody who’s thinking about running against her from the left.
Q: Who will the Republicans nominate?
A: They have a terrible problem. You have Jeb Bush on the one hand who has real problems on the right. You have Rand Paul or even a [Marco] Rubio who have a certain implausibility. God is not that much of a Democrat for Ted Cruz to get nominated.
THE GOP AS LEADERS
Q: Will the GOP behave differently now that it controls both houses of Congress?
A: The real problem is House-versus-Senate. You’re going to see great dysfunction. The House Republicans are a very right-wing group, They understand they’re going to have a hard time getting anything done, so they’re preemptively blaming Obama for their own failure to get together.
Q: Is current congressional dysfunction unique in U.S. history?
A: You have to go back to the Civil War. Things were not ground down under George W. Bush, [Bill] Clinton, George H.W. Bush, [Ronald] Reagan, or [Jimmy] Carter. It starts in 2011. In 2009 and ’10, we passed financial reform and health care. We repealed “Don’t ask, don’t tell.” We did women’s pay equity. Go back to W. You got No Child Left Behind, the prescription drug program. Under Clinton, even when Republicans were impeaching him, he was still working on a budget deal.
Q: What will break the fever?
A: If the Republicans lose badly in ’16. The Democrats take back the Senate, win the presidency, and make gains in the House…Usually when a party goes far to the extreme, as the Republicans did in ’64 with Goldwater, or the Democrats in ’72 with McGovern—they’re punished at the polls. What was unique in 2010 was Republicans went to the right, but so did the country. It was anger over the things we had to do to respond to the financial crisis. So the Republicans didn’t get penalized.
Q: Which ’16 Republican candidate would worry you most?
A: Chris Christie maybe, although that bridge scandal was bad. But he’ll have terrible trouble getting the nomination, because there’s this perception of him being more moderate.
Q: More so than Jeb Bush?
A: If I thought Bush, I would have told you Bush.
Q: He’s articulate and thoughtful, and from an important state electorally.
A: And he’s a Bush. And his brother went out very unpopular. There’s a sense of establishmentism. Christie conveys a sense of being an outsider.
Q: If Hillary doesn’t run, would Senator Warren be interested?
A: Of course she’d be. Who’s got an ambition in life to be a Triple-A shortstop?
OBAMA
Q: You’ve praised Obama at times, even though you initially supported Clinton in 2008. What are the lessons from his presidency?
A: He misunderstood partisanship in its best sense. I was worried when he said in 2008 he was going to be post-partisan, It gave me post-partisan depression…His mistake was to think you can talk your way out of things and undervalue the reality of genuine disagreement. You win the right to cooperate only by being tough to start with. He skipped that part.
Q: Is his failure related to race?
A: Obviously he got elected. And I don’t think that’s why Tea Party members of Congress were so bad. But the whole birther thing was clearly based on race. And by the way, any sense that race is not a big factor in America is totally refuted by Ebola. If Ebola had broken out in Israel or Ireland, rather than with black people in Africa, it would be treated very differently here.
THE FINANCIAL CRISIS OF 2008
Q: In prior financial epochs like Enron and the S&Ls, people went to jail. Why not this time?
A: The abuses in many cases weren’t yet illegal—ethically awful, but not illegal.
Q: Was the Justice Department too timid?
A: I think so. But liberals have to remember that an essential element of due process is you shouldn’t be convicted on behavior that’s ambiguously criminal. Part of it, though, was early on [prosecutors] were worried about the fragility of the economy, and those other things—Enron, Tyco, World Com—didn’t occur when the economy was on the brink.
Q: Why would a fragile economy deter prosecutions?
A: Because you’d make it more fragile by crashing institutions and high-level individuals.
Q: Are you given insufficient credit for supporting free enterprise?
A: I have a fundamental philosophical view, which is we have two systems in our democratic, capitalist society: private sector and public. In the private sector, the more money you have, the more influence you have. That’s how a market economy works. If you work harder, you get more money…And that's a good thing. [But] the public sector is supposed to be one-person, one-vote. But weak campaign-finance laws allow you to buy more influence. You’re supposed to be able to buy influence in the private sector, not in the public sector.
Q: Don’t people get the government they deserve?
A: I agree absolutely. My formulation is this: politicians make a lot of mistakes, the press drives me crazy, and voters are no bargain, either. But part of the problem is unequal money.
Q: What do you mean by “voters are no bargain, either”?
A: It’s interesting that the institution the public values the least is the one in which they have the greatest input in selecting: Congress.
PRESS PROBLEMS
Q: If the press were so influential, wouldn’t Paul Tsongas have been elected president in 1992?
A: The press is very different today. It’s a major contributing factor to pro-right-wing, anti-government feeling. Because even the liberal press is anti-government. Ever watched Jon Stewart say anything good about government?
Q: He’s part of the problem?
A: Him and others. The effect is to tell people it doesn’t make any difference who they vote for. I differentiate Bill Maher from Jon Stewart. Maher’s very funny, but also has good and bad guys on the show. You say, “Oh, I agree more with this side than that side.” You come away from Stewart and especially [Stephen] Colbert, and say, “Oh, they’re all assholes.”
Q: Is your media critique that different than it would’ve been a generation ago?
A: The most active people in society live in parallel media universes, which only reinforce what they believe. That’s one reason we don’t get compromise. Because when people who represent one faction try to compromise, they’re told by supporters, “Why are you doing this?” If the response is, “We didn’t have the votes,” you hear, “Of course you have the votes. Everybody I know is for it.”
Q: Isn’t there some good in how the Web makes information more accessible?
A: Before the Internet, if you read something, except on a bathroom wall, people generally had to persuade somebody else that what they said had some plausibility. The Internet destroys that.
Q: Shouldn’t I expect my legislators to be smarter than to believe the echo chamber reflects reality?
A: You missed the point entirely. You have the people who are going to vote for you overwhelmingly threatening not to vote for you if you compromise. If you think elected officials are entirely indifferent to their voters, you’re wrong.
Q: Might there not also be – God forbid I use the phrase—a “silent majority”?
A: Not who vote in primaries.
Q: Is your press critique an argument for greater press regulation?
A: No. Quis custodiet ipsos custodes?
Q: Say again?
A: Who will guard the guardians?
Q: What do journalists not ask you that they should?
A: Good question. There’s this misperception about who did what during the financial crisis, and particularly the irony that it was conservatives pushing for subprime loans. The liberals were trying to regulate them! There’s been this great historical effort by conservatives to suggest otherwise.
Q: Trying to turn you into the bad guy?
A: Yeah. In 2007 a Wall Street Journal attacked me because we had a bill to restrict subprime loans. They said, “Don’t you want poor people to have homes? These loans are wonderful—80 percent of them are paying off.” That’s not a very good percentage.
PRIVACY IN PUBLIC
Q: Is it fair game for journalists to speculate about the sexual orientation of public figures?
A: There’s a right to privacy, not a right to hypocrisy. If you’re gay and you’re voting for anti-gay stuff, then you should be outed. Let me ask you this: If the leader of the right-to-life movement got his daughter an abortion, would you publish that?
Q: I’d have trouble. Because it’s the daughter’s privacy.
A: If [gun-control advocate] Sarah Brady had an Uzi, would you report it?
Q: Yes. That’s not within the zone of privacy.
A: Why not?
Q: It’s not about health, sexuality, finances, religion, and so forth.
A: Here’s the deal: Nobody thinks there’s a zone of privacy as to whether or not you’re heterosexual.
Q: So if someone is gay that’s not in a zone of privacy that journalism ought to respect?
A: I didn’t say you would go out [a public official]. I said it would be a good thing if he did it.
‘TOO HARD ON PEOPLE’
Q: What do you know now that you wished you’d known 30 or 40 years ago?
A: I didn’t fully understand how to integrate a democratic society with a capitalist system. I also wish I had a better sense I could be too hard on people. I’ve gotten a little gentler—being less explicit when I thought something was incredibly stupid.
Q: Do those amount to regrets?
A: Most people tell me that a lot changed when I fully came out in ’87. If you muffle your sexuality and try to have your career make up for it, I believe that infects your career.
(Reporting By David A. Kaplan. Editor: Hank Gilman)
