Congressman Barney Frank Outlines His Priorities
Thursday, November 30, 2006PAUL KANGAS: If Wall Street wants some kind of legislative relief, it will have to work with Congressman Barney Frank, the incoming chairman of the House Financial Services Committee. Washington bureau chief Darren Gersh sat down with Frank today and began by asking what needs to be done to keep U.S. financial markets competitive.
REP. BARNEY FRANK (D) MASSACHUSETTS: I accept the fact that there was a problem but a diminution in the percentage of deals that are done here and the companies (INAUDIBLE). So I think the first thing to do with that is comprehensive hearings about that to see what the reasons are. Now one thing I have agreed to for some time, which is to encourage the SEC and the public company accounting oversight board to reduce the amount of information that has to be processed through Section 404 of Sarbanes-Oxley. I do think there was a new law that was passed and not surprisingly it needs adjustments. I don't think it needs statutory adjustments. I don't think anybody who is now covered should be exempted entirely but I believe that under the existing rules, the SEC and the PCAOB can make it less burdensome.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: One thing they did talk about is CEO pay. They say, look, wait until we see what the new disclosures are that the SEC is going to require. They're going to have this total figure. For the first time we'll see the total compensation figure disclosed in the coming year. Don't take action on CEO pay until we see what those numbers are. CEO pay is an issue for you. Is this something you want to wait until you see what these numbers are or do you think you want to act quickly on it?
FRANK: No, I don't think we should wait. First of all, if we listen to the people that don't do anything, we wouldn't have the numbers. Beyond that what I think we should do really I don't need to wait to see what the numbers are. I don't want to set the numbers. I don't think the government should be telling people what to pay. I think the shareholders should. The point I would make is this. With regard to CEO in particular, I do not think the boards of directors work as effective independent checks. They are not the fox guarding the hen house. They are the hens guarding the rooster. And I think the time has come to say we need the shareholders to do this. What we're proposing is not one size fits all, one uniform rule. We're saying let the people who own those companies go for it. It seems to me a distinctly non-radical idea.
GERSH: You're going to have jurisdiction over many industries in the financial services sector: insurance, banking, housing. What's your top priority?
FRANK: Affordable housing is the single biggest one. We have a terrible housing crisis in this country and I think we now understand that housing is not simply a social good, but it's an economic practice (ph). The biggest difference people will see when we take over from the Republicans is we will reverse their policy of basically letting any affordable housing stock dwindle and not building any new stock. A related issue there is the question of predatory lending. We now have data from the Home Mortgage Disclosure Act that my former colleague Joe Kennedy worked so hard to enact. And now it's pretty clear. If you are African- American or Hispanic, you have less chance of getting a mortgage. And if you get one, you have a high chance of paying more even with other factors being equal for some reason. I think that has got to be a very high priority.
GERSH: If you can, I know you talked about a grand bargain that needs to be struck in our economy going forward. Can you boil that down for our audience and explain to them what you mean when you say a grand bargain.
FRANK: What you've got is a kind of a double field now. The business community, which has been in control pointedly (ph) for a long time with its allies has blocked our efforts to do anything about equity. They've frustrated the National Labor Relations Act. You can't join a union these days. Health care is dwindling. People's pensions aren't what they used to be. Real wages have actually slipped some. The minimum wage hasn't been brought up.
On the other hand, the people who care about equity have been able to block foreign trade, foreign direct investments, et cetera. I want to say to the business community, look, help us get health care out of the workplace and have a good universal health care system. Let people join unions without being harassed (INAUDIBLE). Raise the minimum wage. Help more people get higher education partly through public spending. In return let's go do trade agreements, although with some environmental and labor protections. Let's allow foreign direct investment without restriction. That's what I want to do. I want to get the people who have been concerned about equity to support growth policies and the people who have been chafing that we aren't doing enough for growth to support policies that provide equity.
GERSH: Congressman Frank, thank you for your time.
FRANK: You're welcome.
