Jeffrey Toobin has a lovely profile of Representative Barney Frank that will also enlighten you about housing policy and these difficult economic times. One section is a mini-update on the status of the TARP:
It appears that Frank failed to achieve three of his four initial objectives. The Treasury Department eventually did make direct investments in financial-services firms, but the bill includes few meaningful restrictions on executive compensation, and the oversight provision will likely have only a modest influence on how the bailout money is distributed and spent.
One of Frank's primary goals for the bailout—providing assistance to homeowners to avoid foreclosures—remains unrealized, even though the Treasury Department has already allocated half of the seven hundred billion dollars. On November 20th, Frank wrote a letter to Paulson, “to urge you in the strongest possible terms to use [bailout] funds to support significant steps that can help stem the tidal wave of foreclosures threatening the stability of our financial system and our economy.” He has held committee hearings to praise banks like J. P. Morgan Chase and Bank of America, which have instituted programs to modify the terms of some mortgages. He has urged support for a proposal by Sheila Bair, the chairman of the Federal Deposit Insurance Corporation, to enable homeowners to renegotiate mortgages and, potentially, prevent an estimated one and a half million foreclosures this year.
Frank defends the bailout legislation. “Sure, this sucks,” he told me, “but if it wasn't for what we did, it would suck worse. We were looking at the possibility of a global economic collapse, and that didn't happen. We are better off than if we hadn't passed it.” I asked him whether he thought his efforts to force the Administration to modify the bailout, especially on foreclosures, were having any effect. “Jack Newfield, while writing for the Voice under Lindsay, said he didn't have any governmental power—he had the power to make the dinner parties of the Lindsay-administration officials unpleasant,” Frank replied. “That was his pressure point. That's part of it. You know, no one, almost no one, is totally indifferent to public opinion. So you have hearings to pressure people. People don't like to be embarrassed. You have hearings to send messages. So they can have an impact. Sometimes they're a waste of time. And you can get too diffused. But I think these hearings had some impact.” At the moment, Frank can claim that he played a significant role in creating a tenuous lifeline for banks and other institutions (many of which have yet to resume normal lending), while encouraging the federal government to provide some assistance to terrified homeowners (which may not happen).
It's going to be very interesting to see the role Frank plays in the forthcoming debate over stimulus legislation, not to mention the return to regulations he forecast the last time we spoke.
-- Tim Fernholz
