JUDY WOODRUFF: Now to our interview with 16-term Congressman Barney Frank.
The Massachusetts Democrat announced this week he wouldn’t seek re-election next year, after more than four decades in politics. Frank began his career in the Massachusetts state legislature, and was elected to the U.S. House of Representatives in 1980. He served as chairman of the House Financial Services Committee from 2007 to early this year, where he helped push through the $700 billion bailout of U.S. financial institutions. He also co-wrote last year’s law to impose new regulations on Wall Street, along with former Democratic Sen. Christopher Dodd.
And Rep. Barney Frank joins us now.
Thank you for being here.
REP. BARNEY FRANK, D-Mass.: I’m glad to be here.
JUDY WOODRUFF: You said, in making your announcement, that part of the decision was because of the reapportionment of your Boston district. And you also talked about the political atmosphere being such that you think it’s hard, if not impossible, for Congress to get anything done.
Can Congress be productive anymore?
REP. BARNEY FRANK: I hope so. But, actually — and that’s an accurate quote, but let me say what I meant by it.
I think the ability to effect public policy from inside the Congress is now constrained by the political atmosphere. I don’t intend to walk away from my advocacy of the kind of public policy I think is important. I do think, at this point, where I can be more useful is in trying to change the political atmosphere, in trying to help mobilize the kind of political pressure that is needed, because, essentially, what we have is the American people, under the American Constitution, have used their freedom to elect one set of people in 2008 and a different set in 2010.
Most countries don’t have that. They don’t have these overlapping electoral terms. And so I intend to do more from the outside. Now, I’m more comfortable as an inside player. I think I’m a better legislator and candidate. But I think advocacy is important.
Having said that, Judy, there is an extraordinary situation now where I do think we have a chance to make some progress by the fact that inertia is now a progressive force. Up until now, it’s been very frustrating for those of us who want to see some constructive activity, because you had a very conservative Republican majority that was ready to say no to everything.
But they have kind of been boxed. Here’s the situation. If Congress doesn’t act at all in 2012, all of the Bush tax cuts will expire. Everybody’s taxes will go up. Similarly, sequestration will go into effect, and there will be substantial reductions in spending, but the military will take a bigger hit than domestic.
What that means is this. Those of us who would like to see not everybody’s taxes go up, but tax increases on the wealthy, and those of us who want to see some cuts in the military, inertia is now on our side. If our conservative friends continue to say, we’re not going to do anything until you come to us, then they will have bad results.
So I think, in this peculiar circumstances of 2012, with sequestration pending and the Bush tax cuts expiring both at the end of 2012, we have a chance to get some good results. And one reason I decided not to run again is, I don’t want to spend my time campaigning, when there is a chance to get leverage there. But, in general, we need to get some electoral change.
JUDY WOODRUFF: Well, let me ask you about that. Should the American people continue to have faith in a Congress which, as you describe and so many others say, is dysfunctional?
REP. BARNEY FRANK: Well, by the way, Judy, where do you think this Congress came from? You would be surprised how few members of the House of Representatives parachuted in through the dome. Everybody there was elected by, guess who, the American people.
When you say the American people have lost faith, are you telling me the American people have no faith in the results of their own electoral activity? Because the Congress consists — and here’s the — you know, if you want to blame somebody, I guess you can blame James Madison.
In America, unlike England, unlike Israel, unlike Japan, other democracies, we have elections that have staggered terms. So you have a president elected by the American people in 2008 and then a Congress elected by the American people in 2010 diametrically opposed to him. And the people are a part of this equation.
So, no, people shouldn’t lose faith. They should understand that now, in 2012, I guess, they have a chance to cast the tie-breaker. Again, they voted one way in 2008, and they voted another way in 2010. Now everybody is on the ballot in 2012, at least all the House and the president. And if the public has a more consistent mandate, that will make a big difference.
JUDY WOODRUFF: Well, let’s talk about Barney Franks’ legacy, or at least part of it, the Dodd-Frank financial regulatory — law, now law. Clearly, it has its detractors. It has people who say it’s the right way to go.
But, Barney Frank, for you, how do you see — what do you think that, for ordinary Americans, this law can make the most difference?
REP. BARNEY FRANK: Well, first, we did a great breakthrough.
Until the bill was signed by the president, if you had a problem with the financial institution, if you, as a consumer, felt you had been unfairly treated, your recourse was to the very regulators that are in charge of the financial institutions, who inevitably are going to have a bias towards them.
So we set up — we passed the strongest single piece of consumer legislation in American history, the Independent Consumer Financial Protection Bureau, that Elizabeth Warren helped design. And I’m very proud — and she gives me credit, which I will take — for being the major proponent of that, along with her. And so that’s a very important piece.
Secondly, we took a number of actions that are going to prevent the kind — not prevent, but severely diminish the likelihood of another crash. People are not going to be able to make loans and then walk away from the loans. They’re going to have to have some responsibility for the loans they made.
Derivatives, which were such a terrible instrument when they were totally unregulated, will now be regulated. We made illegal the granting of mortgages by anybody to people who shouldn’t be getting the mortgages. And, finally, with regard, again, back to individuals, we significantly increased the responsibility that investors have to people.
We said that if are you going to be advising people, if are you going to be — you have a fiduciary responsibility, meaning you have to take their interests into account. So it will both protect individuals through the Consumer Bureau and investment protections…
JUDY WOODRUFF: Right. Right.
REP. BARNEY FRANK: … and lessen the chance of another meltdown.
JUDY WOODRUFF: We only have a few minutes left, so I’m going to ask you a couple of questions and just ask you for brief answers.
The housing crisis, something very important to you, still more than a quarter of American mortgages — Americans who live in a house and have a mortgage are underwater. What is the most important thing that you think needs to be done about…
REP. BARNEY FRANK: Well, Judy, you know, I know you have a limited time. A brief answer to the housing crisis is, frankly, going to be hard to — hard to do.
What — one of the things I want to do is of course increase the extent to which we — rental housing for lower-income people, so that we don’t push people, inappropriate home ownership. With regard to the people who are now underwater, I’m somewhat frustrated.
We did get legislation through that gave the Obama administration the power to help people who are unemployed. They didn’t use it nearly as much. And that would have been done well. Essentially, what we need to do is to use all the power the federal government has to try to put some pressure on the financial institutions to be more flexible.
But, beyond that, I have to tell you, Judy, it is really too complicated for a short answer.
JUDY WOODRUFF: I can appreciate that.
But — and another huge question, the European debt crisis, how worried are you, as somebody who follows this closely, about the effect that could have on the United States?
REP. BARNEY FRANK: Well, I am worried. And here is the point.
In the last quarter of 2009 and the first quarter of 2010, our economy was getting much better. We were making significant improvement. Unemployment was coming down. And then the Greek crisis hit. And then we started moving up again, and there were good domestic economic numbers. Our economic policies coming out of that terrible recession that President Obama inherited are getting better.
But once again, the major threat is not anything that’s happening here, but the carryover from the European crisis. So, I was very pleased to see the Federal Reserve — and I think Ben Bernanke does an excellent job — step up the way they did and work with the other central banks and give a kind of a boost.
I support what the Obama administration is doing, trying hard to get Europe to deal with it, because, if the Europeans can control their situation, if they can prevent the kind of serious meltdown, then I think you’re going to see continued significant progress here in America, not to the point where we would like to be, but a significant uptrend.
But it is the case, look, the world is interconnected. And if there is a terrible crisis in Europe, yes, it will have negative effects here in America. I will say this, though. Under our legislation, we have an ability to shelter ourselves more than we had before. But the worse the crisis is, the less we’re going to be able to deal with that.
JUDY WOODRUFF: All right, final — final question today.
The House Democratic leader, Nancy Pelosi, had some fond memories of you. And one of those was, she said she remembers getting fashion advice from you, that you once said to her — you looked at her suit and said, “Throw that away.”
I guess my question is, how often do you give out this kind of advice and how often do your friends follow it?
REP. BARNEY FRANK: Well, I don’t give it out very often, but I reject the notion that you have to be a practitioner to give good advice.
REP. BARNEY FRANK: I will tell you, I’m a lousy cook, but I think I’m a pretty good judge of a good meal.
JUDY WOODRUFF: Barney Frank, representative from the state of Massachusetts, thank you very much for talking with us.
REP. BARNEY FRANK: Thank you, Judy.