Barney Frank has it all under control

Good grief. I caught this interview on CNBC on March 24th. It's of Barney Frank and Chris Dodd talking about their financial reform agenda following their meeting with the President.

Frank's comments are particularly shocking. Fairly early in the video, he says that we've "dealt with" all of the problems that led to the collapse of the likes of AIG and Lehman. Oh really? How have we dealt with them, Mr. Frank? If any new regulations or government powers have been implemented, please cite them.

Then, about 80% of the way through the video, he says that we'll only pay down bank debts (in future bailouts) that threaten a "total spiraling downward" (i.e., a systemic meltdown of the financial system). Mr Frank, isn't systemic risk what we need to prevent by implementing too-big-to-fail measures and Mr. Volcker's ideas regarding the segregation of high-risk, non-banking activities? The whole idea is that we need to refocus banking and Wall Street on "boring" customer-focused activities, rather than high-risk proprietary activities, so that we don't create enormous risks in the first place.

I have to say, I feel like absolutely nothing has been learned, and that the American people are in very poor hands.

Video: Dodd, Frank meet with Obama over financial regulation
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Barney Frank is a Wimp, Part 2

Congressman Barney Frank continued to provide more obvious evidence that he is wimping out in performing his duty as Chair of the Financial Services Committee today on ABC’s “This Week.” He continued his campaign of setting expectations at a low level with his metaphorical discussion of “collateral benefit;” i.e., how we’re all going to have to get accustomed to the notion of some people becoming unjustly enriched by the policies that Washington will put in place to the solve the financial crisis. Furthermore, he ranted about how he wants to protect the jobs of public servants in his own district, and how he wants to cure society’s ills (e.g., the unfair distribution of income) with the economic stimulus plan.

Barney Frank is quite simply an irresponsible buffoon, and his attitudes and positions are inexcusable. When you accept a committee chair position, as he has done, that position should be your primary area of focus, especially when that area is in crisis. Instead of furthering his social agenda, he needs to worry about fixing the banking crisis and restoring credit.

Banking is the foundation upon which our economy is built. Trying to build a “great new society” on top of the shambles of our current economy would be like trying to build a skyscraper on top of Jello. Problems must be prioritized and addressed in their proper order. We need to reliquefy the banks by auctioning off their toxic assets AND by providing them with some new form of debt relief that would eliminate their many billions of dollars in exposure to derivatives losses. Without doing both of these things, the banking crisis cannot be solved, nor the broader economic crisis. There’s no point entertaining the notion of curing society's ills (as the Democrats seem compelled to want to do) without a healthy economy. We need to prioritize.

Frank’s “performance” on "This Week" can be seen here:
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Barney Frank is a Wimp

In an interview tonight (January 29, 2009) on Nightly Business Report, Congressman Barney Frank, Chairman of the Financial Services Committee, compared solving the credit crisis to fighting a war. He said that in a war, you have the concept of collateral damage: innocent people being inadvertently harmed in the crossfire. On the other hand, he warned that to solve the financial crisis, the public is going to have to get used to the concept of collateral benefit: undeserving people being unjustly enriched by the policies implemented to solve the crisis.

Maybe Barney Frank wants to roll over and concede defeat, but I certainly don’t. Going back to the war metaphor, can you imagine if FDR had said, “Gee, that Hitler guy is one bad ass dude. Fighting him is going to be really hard. I guess we’re going to have to get used to the idea of Europe being under his domination.” Are you kidding me?! Are we really so afraid to tackle a problem head-on and to deal with it appropriately, and in a way that is fair and just to the public?

We have to find the root causes of the crisis and solve them with minimal damage to the public. Credit derivatives are one big part of the problem. If the banks were so poorly managed that they let business unit heads and rogue derivatives traders expose them to countless billions of dollars in losses to hedge funds, why shouldn’t the public have the right to nullify those transactions and send the hedge funds packing? There is a concept under the law called “unjust enrichment,” whereby transactions that are blatantly unfair can be overturned. That’s clearly the case here, and we’ve got to use that concept to nullify these derivatives transactions.

Merrill Lynch reported a $15 billion loss in Q4, mostly related to derivatives losses, and their new parent company, BofA, promptly went to the government for a handout and got one. We have got to be out of our minds for letting that happen, and for letting someone like Barney Frank, who is clearly absent a spine and any measure of ingenuity, represent us.