Banking on Barney Frank

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Part of the problem, from the advocates' perspective, is that Frank can only be as good as the committee itself. "Fundamentally, he's doing the best he can," says Linda Sherry, the director of national priorities at Consumer Action. "The committee is badly partisan," she notes, saying that the divide makes it incredibly hard to get anything done.

Indeed, the House Financial Services Committee is famous as a plum assignment, not because it gives members an opportunity to wrestle with fascinating issues of public policy, but because it gives them a perch from which to fundraise from the lucrative industry they are charged with overseeing. Few legislators join the Financial Services Committee because they want to whack banks for screwing over consumers. One reason, in fact, that the committee is so conservative is that Democrats have placed some of their more endangered Blue Dog members on it so these legislators can raise more money to stay in office—people like Melissa Bean, a relatively new Democrat from Illinois who represents a Republican-leaning district. Since taking office in 2004, Bean has raised more than $1.3 million from the financial services and real estate industries overseen by her committee.

According to consumer advocates, Frank often has trouble corralling his own party members to support measures that would benefit consumers over banks, much less getting Republicans on board. The credit card bill is a good example. In mid-March, Rep. Carolyn Maloney (D-N.Y.), the chairwoman of the Subcommittee on Financial Institutions and Consumer Credit, held a hearing on the Credit Card Holder's Bill of Rights. Consumer groups arranged for several people to testify about their troubles with the credit card companies, and some flew in from out of town. But when they arrived on Capitol Hill to testify, they were presented with privacy waivers that would have allowed congressional staffers to turn over the financial information of these witnesses to the credit card companies they were testifying against. It's not unusual for congressional witnesses to sign waivers, but usually the waivers simply allow congressional staffers to review financial records and other documents as a way of vetting the witnesses before they testify. The waivers presented to the credit card witnesses were designed broadly to give the credit card issuers freedom to discuss the witnesses' entire financial history publicly, and basically discredit them with it.

The waiver created something of a row. Consumers and their advocates objected to the waivers, while Republicans refused to let the witnesses testify without them. In the end, Frank and Maloney decided to bump the consumer witnesses off the panel and continue with the proceedings, with promises to work out the waiver issue at a later date. ("You don’t want to lose on a procedural issue," explains Frank.) Meanwhile, the credit card executives got to hold court without publicly facing people who have been deeply affected by their business practices. (The consumers have been rescheduled to appear on Thursday.) The hearing flap demonstrated the banks' power in Congress, and what Frank has to grapple with, even to advance the weakest of consumer protection bills.

Frank agrees that his committee has some fairly conservative Democrats, whose defections on key consumer measures make it all but impossible to pass anything. He says it's not the campaign contributions that are the problem, though, but the votes. He says that the conservative Democrats hear a lot from the many real estate agents and mortgage brokers in their districts, and they listen to them because they can deliver big voting blocks come election time.

Most of the consumer advocates understand these dynamics. Under the circumstances, they still give Frank high marks for oversight, among other things. After all, when the Republicans ran the committee, they never held any hearings at all on credit card abuses. They also give Frank kudos for his relentless criticism of the Bush administration's anti-regulatory approach to the financial markets, which they believe has been useful in changing attitudes not just among Republicans but Democrats regarding the limits of the free market.

And in the end, at least one consumer advocate suggests that if Congress isn't doing more on consumer issues, part of the blame lies with the advocates themselves. NACA's Rheingold says that he's frequently heard Frank tell consumer groups that many of the members of his committee "don't care what you have to say." Rheingold says that so long as there are no electoral consequences to voting against consumers, the banks are going to prevail, and he notes of Frank, "I'm not sure it's his fault."

On that point, Frank concurs. He, too, is critical of the consumer advocates, who he says do a lot to help draft legislation and get the language right, but then fail to help get the bills passed. As a result, they get out-lobbied by the mortgage brokers and others from the financial sector, who flex considerable political muscle. Frank says he has been extremely frustrated with the inability of the consumer groups to "mobilize their troops" on bills he would like to see pass, such as one reining in overdraft fees at banks that was blocked late last year by community bankers, who flew in hundreds of members to lobby on the Hill. "I was looking for help we weren't able to get," he says. Frank says it's encouraging that SEIU has gotten interested in the banking issues, because the powerful union has the potential to bring some more muscle to the consumer issues, but so far he hasn't seen much in the way of results. "They just assume if the chairman is for you, the speaker is for you, then that's enough."

Photo of Congressman Barney Frank (D-Mass.) by flickr user Payton Chung used under a Creative Commons license.

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Stephanie Mencimer is a reporter in Mother Jones' Washington, D.C., bureau and the author of Blocking the Courthouse Door: How the Republican Party and Its Corporate Allies Are Taking Away Your Right to Sue (Free Press, 2006).

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