Barney Frank Responds to Gretchen Morgenson

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Rep. Barney Frank (D-MA), senior Democrat on the House Financial Services Committee and co-author of the Dodd-Frank bill, took issue with parts of our interview with Gretchen Morgenson, financial columnist for The New York Times and co-author of Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon. Below is Rep. Frank’s letter, along with a response from Ms. Morgenson.

From Gretchen Morgenson:

It is only natural that Mr. Frank would want to defend the legislation bearing his name. But the small examples he uses as proof that the law was tough on big banks are far outweighed by other aspects of the law that favor big banks. These include the resolution authority under Dodd-Frank, which puts large institutions through a special unwinding process when they get into trouble. Small banks, by contrast, will be allowed simply to fail. Before a large institution can be placed into resolution, a throng of financial regulators, including the Treasury Secretary, must sign off on that decision. This sets up the potential for special treatment as far as large, politically well-connected banks are concerned; who couldn’t foresee a powerful bank being saved, not resolved, largely because it has friends in high places in Washington?

This special resolution authority is not only unfair, it sends a pernicious signal to the market about large and intertwined institutions. Subject as they will be to a newly codified resolution authority, these institutions and their lenders can expect to be rescued if they get into trouble. This perception delivers lucrative advantages to these institutions; the main one is lower borrowing costs, the result of investors’ assumptions that the giants are less risky because they will be in line for government assistance if they totter. Think Fannie Mae and Freddie Mac, both of which assured taxpayers throughout the 1990s and early 2000s that they would never cost us a dime.

Dodd-Frank also allows even the largest banks to buy troubled institutions in times of crisis, thereby letting them grow in size and potential peril. A section of the law lets large institutions, even those subject to limits on concentration of assets, to buy failing banks if regulators approve the deals. I cannot imagine a regulator saying no to such a deal when the next crisis hits.

According to a Bloomberg analysis, financial institutions have grown only larger since the financial crisis. The top 10 banks in the U.S. held 77 percent of the nation’s bank assets, compared with 55 percent in 2002. Bloomberg projects that too-big-to-fail institutions will increase by 40 percent over the next dozen years.

In essence, Dodd-Frank entrenched too-big-to-fail institutions into the system rather than eliminating them and the risks they pose. Tom Hoenig, the former president of the Federal Reserve Bank of Kansas City (and someone willing to speak truth to power) has said as much on Dodd-Frank. Here is an excellent Q&A with American Banker where he outlines his concerns and his opinion that the law was a missed opportunity regarding too-big-to-fail institutions.

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  • Sergio

    This is great ! I love to hear both sides of an argument. I hope to see more of this in the future.

  • Anonymous

    I agree with Sergio, this is great.  I would like to hear/read a point-by-point rebuttle from Ms. Morgenson on the points Mr. Frank raised rather than address them in summary as “…the small examples he uses…”   Likewise, please invite Mr. Frank to respond to Ms. Morgenson’s points.  As to Mr. Dodd in this, I am so hurt that upon leaving the Senate he became part of the revolving door blight of congress-lobbyist-congress-lobbyist cha cha cha.  Ouch, gag me with a schmitar.

  • Julogue1

    There aren’t a whole lot of  Barney Franks around, without people like him, would any reform get through?   

  • Tom Larsen

    PLEASE DON”T invite Mr Frank on your show.  Complexity is the harbor of the scoundrel.
    Every nasty bill this corrupt Congress passes has token niceties attached to it. Mr Frank uses this as a fig leaf and exposes his naked complicity.

    Mr Dorgan VOTED for Dodd Frank, also referring to “some good stuff in it”.(FIGures.)
    Paul Wellstone also spoke prophetically against the Modernization bill in that same debate.
    Please see:

    My warm reflection on Mr Wellstone , suggests to me he would have voted against Dodd Frank & even would filibuster against the sham.

  • Judyking

    The positions Morgenson says should have been in Dodd-Frank were there before the lobbyists and all those that Reed says were converted to the view that regulations (like the previously done-away-with Glass-Stegall)  had to go.  So, maybe Barney and Byron should have held out for the perfect bill for Dodd-Frank, but while there is a ton of blame to go to those from both parties in Congress and the Senate who watered down the bill, let’s stop blaming and start getting smarter, more principled  people into the Congress.  Get lobbying restricted.  Get the $$ out of elections and revolving-door crony capitalism – tell your Congressional Representatives and Senators to pass the Anti-Congressional- Insider Trading  law and re-introduce Glass-Stegall.  Invite Barney and Gretchen to discuss what needs to be done now to prevent another collapse. 

  • Tpreyer

    Mr. Frank seems to want us to believe that the issues not a part of Glass-Stegall could not have been corrected at the time of re-enactment?  As for Glass-Steagall working, in my 60 years I have seen very few bank failures.  Since it was “modernized” we have had hundreds……which was more successful.  God help us.

  • mikehira

    Please do invite Mr. Frank on your show. Like it or not, financial reform is complex. Glass-Steagall was simple, but it had no jurisdiction over the investment banks which were at the heart of the meltdown. The investment banks had no public deposits, and so were not covered by the FDIC. In 2008, the failure of a large investment bank would have impacted the public sector, something that Glass-Steagall did not anticipate. To quote H. L. Mencken,”For every complex problem there is an answer that is clear, simple, and wrong.”

  • Anonymous

    The beauty of  Glass-Stegall was that it allowed commercial and investment banks to do only certain things, “Banks, you may only do X.”   Current regulation prohibits specific actions, allowing work arounds.   The self selected people of Wall Street whose desire is riches are smart enough to find ways around prohibitive regulation, instead, they should only be allowed to do specific actions.

  • Sninegar

    Yours is an excellent summary and suggestion. I’m so pleased to hear Bill Moyers again bring attention to these issues – the history, highlighting the ongoing self-interested acts of political and business leaders – and for bringing other credible voices into the discussion. I’m also very interested to hear what effective actions we can take to get back on track.

  • Yvonne Hall

    Bill:  You should have Barney Frank on your program.  Whether you agree or not, at least he is a responsible enough legislator to respond to issues within his area of responsibility in congress.  I would be very interested in his response to these issues.  He could be an asset to the dialogue.

  • Yvonne Hall

    I’ agree with Judyking’s last lines.  Let’s invite Barney & Gretchen to discuss what needs to be done now to prevent another collapse…

  • Annie

    “…According to a Bloomberg analysis, financial institutions have grown only larger since the financial crisis. The top 10 banks in the U.S. held 77 percent of the nation’s bank assets, compared with 55 percent in 2002. Bloomberg projects that too-big-to-fail institutions will increase by 40 percent over the next dozen years….”
    So if 10 banks have 77% of the nation’s bank assets, and this will increase by 40%
     over the next 12 years – then that means that 10 banks will *have* 117% of the nation’s bank assets.

    Where is the that “17” on top of 100% supposed to come from?  Colonizing Mars?

  • Anonymous

    From the start of the financial crisis in the Fall of 2007 through 2009, my TV was tuned almost exclusively to C-SPAN, and if I didn’t watch every single hearing on the crisis, including the committee hearings, I saw almost every one.

    The Dodd-Frank bill is far from perfect, and the process that created it was gruesome to watch, but Morgenson seems unaware of more than the mechanics of creating the bill.  First, even in its current state, Republicans oppose it and the Consumer Financial Protection Agency.  Had the Republicans been in control of either chamber during 2008-2010, there would have been no bill at all, let alone a revived Glass-Steagall.  That said, even with 535 Democrats, it would have been impossible to reinstate Glass-Steagall or, even better, to break up the big banks which is the only certain way to prevent “too big to fail”.  Conservatives would have blasted the airways with talk of killing finance and financial competition in the U.S.  The media would have amplified their shouts.  Public opinion polls would have shown massive opposition.  (Don’t believe me? Look at how the Conservatives have distorted “Obamacare” with the complicity of the media.)

    In addition, we do live in a global financial market.  Breaking up our big banks wouldn’t prevent a future crisis of the same or similar dimensions.  If we have learned but one thing from the Great Depression, the Great Recession, and the Euro crisis, it is that it is hard to prevent financial crises from crossing borders.

    As for the bill itself.  Democrats accepted cartloads of Republican amendments watering down various sections in the stated hope that such abasement would produce some Republican votes. The strategy failed.  And while I suspect that Dodd was far less amenable to reform and regulation than Frank, both were pros in their respective domains and no doubt had to deal with Democratic as well as Republican political needs in framing the result.  Democracy in action is not pretty, efficient, or ideal.

    Watching those hearings, listening to endless babbling by Senators and Representatives who have probably  never read a financial statement in their entire lives, made me long to require that any candidate for public office in the State or Federal government first pass the equivalent of an SAT in American history, economics, and statistics (as well as Introduction to the Internet 101).  The level of sheer ignorance on display, in addition to petty party politics, was both sickening and frightening. 

    I ended those two years of C-SPAN addiction with an enormous amount of respect for Frank’s intelligence, wit, intolerance for idiocy, and political acumen.  His decision not to run again deprives the House of one of its best members. (And, no, I am not a Mass. resident.  But I suspect Frank has chosen not to run because he thinks the House will stay in Republican hands, and he couldn’t bear the idea of another two years as Ranking Member under Bachus – one of the dimmest bulbs in the House.) Dodd was another matter.  He dragged out his hearings to give Republicans plenty of time to turn public opinion and, ultimately, weaken the Democratic Senate majority.  (When we lost Kennedy, we lost any hope of strong health care reform.)

    When fact and philosophy collide, Conservatives like Morgenson and Stockman rewrite history.  Morgenson, in Reckless Endangerment, lays almost all the blame for the financial crisis on the GSEs, esp. CEO Johnson, a Conservative trope that was endlessly flogged during the hearings on the financial crisis.  (Listening to Republicans on the various committees during those two years, one would have learned that the big banks were forced by government regulations and political – read Democratic – pressure to make unsafe loans to unworthy people and bundle them into bizarre financial instruments.) And both, the lessons of the Great Depression and Great Recession notwithstanding, insist that if we had just allowed AIG, Citi, Bear- Stearns, Washington Mutual, B of A, and the auto companies to fail, we would now be in the midst of an enormous economic boom.  Shades of Coolidge and Hoover.  (I do believe Stockman even echoed one of the famous quotes of the time about how the crisis would get all the rot out of the financial system.)

    I admire you Mr. Moyers, but I do wonder about your choice of gurus for understanding the financial crisis.  Where is Paul Krugman?  Or Jeffrey Sachs?  If I could, I would put you in a room with a bed, microwave, a TV and the C-SPAN archives and force you to watch every one of those hearings before doing another program on the subject.

  • mikehira

    Maybe she meant 40% of 77%; but that would add up to 107.8%. The 40% just refers to expected growth of the big banks, but it does not mean that this growth is at the expense of small banks. She just wants you to assume that.

  • DrSara

    It is disheartening to observe to basically ‘good’ reformers bickering. Is this why GOP talking pts seem to seize the public imagination and complex discussions appear like frittering ?
    Hopefully tweaking regulation will not make the perfect enemy of the good and rational public officials from both parties will stop snorting the crack of ‘financial innovation, market efficiency, and superpac tantalus.

  • Len_bliss

    Not needed! The statement, though unclear for some, is the number of institutions would increase to 14, 40% more than 10. Reread the article.

  • Len_bliss

    Never assume, ask!

  • Len_bliss

    Correctly stated.

  • Len_bliss

    There are far too many regulations. There are also too many delays given to making an impact in a positive way. The real issue is that perception is reality. The perception is that Obama wants business and America to fail. The only way we can guarantee that everything is fair as Obama decrees and we all certainly desire is to do what improves our perceived vision of betterment. We must, any entity must, generate confidence. The certain way to generate confidence is to create stability and predictability. Over 50 years of observing our American way of life I conclude that confidence has been slipping for a long time. Under Reagan and a lesser degree under Clinton, we all saw an optimism that the perceived confidence was , in fact, increasing. The overall confidence of the American people is never going to improve until they perceive, or see, a positive increase in stability and predictability. 
    Regulations, the tax code, even interest rates seem to most Americans as random and overly complex. Why should it take over 10 years and $500 million to process paperwork to build a $500 million nuclear reactor. The design is identical to dozens of reactors already in service. Ultimately the reactor is built at the expense of twice the construction costs. As in other countries we could have streamline approval processes in place to expedite building of projects that reduce our dependence on foreign energy sources.
    The full potential of uranium as a fuel is estimated to be about 500 million years to supply the entire planet with energy.

  • leftofcenter

    Sorry, but I’ve never been a Barney Frank supporter for several reasons. One key reason on many issues (two illegal and immoral wars, holding Israel accountable for its actions and others), he’s consistently been just another loyal Democrat who does what Pelosi and Hoyer tell him to.
    What good has the Dodd/Frank Act done? I go to my bank and see a big sign that says my FDIC protections has been significantly cut. Why? Because it’s this close to being bankrupt. Meanwhile Dodd is making a nice lobbyist salary as head of the MPAA.

    After Frank leaves office, he will write a book to protect himself.

  • Nripo

    When in doubt trust Gretchen, especially when a politcian is on the other side, and double especially when it’s Barney Frank!

  • fedupwithpoliticians

    Those Wall Street banks are too big to fail and they should NOT be connected into any insurance fund backed by the United States government. If there is anything that screams from the 2008 collapse is that the government is in collusion with the banks and none of them learned anything from the last Great Depression. Greenspan’s, Rubin’s, Summer’s and other’s apologies for their naivete have done nothing to pay for the damage that was created for the profit of the few. History shows us that Washington DC doesn’t have its heart in regulation. They thwarted those that tried to regulate the S&L’s in the 1980’s, credit defaults swaps in 1998, and threw Glass Steagall overboard so Clinton’s budget director (Rubin) could merge CitiGroup.  Those were all “Inside Jobs”. Break up the big banks. They are too big to fail and successfully use the “I don’t know what my people are doing or where the money went” defense in the courts to avoid responsibility.

  • fedupwithpoliticians

    Look at this from the FDIC web site. On July 21, 2010, the
    President signed the Dodd-Frank Wall Street Reform and Consumer
    Protection Act (Dodd-Frank Act) into law. The Dodd-Frank Act
    established a minimum designated reserve ratio (DRR) of 1.35 percent of
    estimated insured deposits, mandates that the FDIC adopt a restoration
    plan should the fund balance fall below 1.35 percent, and provide
    dividends to the industry should the fund balance exceed 1.50 percent. If there is a public lack of confidence in the banks, and a run on the banks, the first 1.35% of insured deposits can be covered by the insurance fund. Their restoration plan won’t have time to react to that. Is this another appearance of regulation that will be too quickly overwhelmed by the problem when it happens?

  • Bruce Kline

    How about something called “too complicated to fail”.  I know it is popular to talk about how stupid the American people are, or are becoming, but we ought to have some kind of jargon eliminator or “too complicated to exist” … like when financial instruments called deriviatives are out there that no one seems to be able to or be willing to honestly say what derivatives are … then why do we need them, and why do we want to create a class of people running 40% of the economy that apparently are not as smart as they think they are, raking in money, spreading out to politicians like candy to babies, and still as arrogant as ever??

    These people having prioirity over people who really do something in the world, they can ruin millions of their lives, and there is nothing much to pick up the pieces or contructing the country on the other side.  This needs to change dractically and all I see is it a little more cautiously moving in the same direction it was before, just spending more money and misinforming people even more.  This is a mockery of the American government.

  • mikehira

    The phrase “too-big-to-fail institutions will increase by 40 percent” could refer to the number of institutions or their size. If it refers to the number then it disproves Morgenson’s claim that banking will become more concentrated. So the phrase only makes sense if it refers to their size.

  • mikehira

    What kind of bank would advertise that its FDIC protection was being cut? That would guarentee a run on its deposits. When a bank becomes insolvent, the FDIC moves in quickly to take over the bank and protect its depositors. Dodd-Frank actually increased FDIC protection by making the 250K limit permanent.

  • David Kennedy

    Let’s remember, Bill Clinton did away with Glass Steagall!  JFK was going to do away with Federal Reserve notes.  They’re all full of their talking points.  How about enforcing the rule of law when the bills are on the books.  Jon Corizine is a case in point.  Alot of innocent investors got slammed….the administration will let him walk.  He’s a democrat.  They spit on the rule of law.  Both parties.  They’re all crooks….except Ron Paul.  You can cut down on regulation if you enforce the rule of law.  Let’s fix the laws….then sharpen the legal gullitine.

  • Karen E. Ray

    I’m so thankful for your return to PBS, Bill. The comments of Ms Morgenson alarmed me, but there’s always the rebuttal position to which I’m thankful Rep. Frank supplied in his letter and the superb comments of LCaution. Being a veteran public school teacher of 37 years, retired in 2010, I’m well aware of how complex “large institutions” are and how ineffective the suggested “simple fixes” are by both the public and politicians, because neither understand as deeply as needed. Appalled by the many “gaffes” and inaccuracies in the statements of the GOP contenders this summer, I, too, have longed for a competency test to qualify candidates to run for political office, as does LCaution. Being a lifetime member of the National Education Association, also little-understood by the public, I’m  aware as well of the democratic structure of committees in governance and decision-making and the vital importance of negotiations. I do not understand important principles and the language of banking, so I thank your show, its guests, Barney Frank, and all these comments for their help. Using a “big picture” view, I agree with LCaution that the Dodd-Frank bill is probably the best that could be negotiated currently, due to in my opinion the obstructionist attitude and agenda of the GOP in Congress with their record-breaking number of filibusters, debt ceiling debacle, self-serving pledge-signing, unwillingness to compromise, and holding their re-elections above doing their duty of oath in office.  I read the interview article of Tom Hoenig, as Morgenson suggested, and wondered why he’s so critical now of the Dodd-Frank bill, when he remained so silent during the Bush administration’s creation of this destruction. I think Pres. Obama has done a remarkable job handling our financial crisis and has tried over and over to negotiate with the GOP for the betterment of our nation to no avail. I applaud Rep. Frank for what he was able to achieve in Dodd-Frank, knowing that the only way it can be improved in future negotiations is to replace the obstructionists in Congress with lawmakers who pledge allegiance to their oath-of-office instead of Grover Norquist and Citizens United. Our economics are globally linked, and Pres. Obama has regained global respect for our nation. He needs to be re-elected to work with a Congress willing to fully serve the People in order to improve upon and finish the work he proposed, but was obstructed from completing.  

  • Anonymous

    If that were my bank, I would move everything to a different one, better yet a local member owned credit union.

  • Gaston1r

    I have seen Mr. Frank on TV… he is a bully of the worst kind.  Any attempt at a reasonable discussion or a point that he disagrees with is interrupted or shouted down.  In my opinion his is a major prat of the problem and responsible for the failure of the banks and the “macs”.

  • M And M

    I think that Gretchen Morgenson perspective is what would be good for the American People.  What a reform bill should include that would best protect the American people, the American Economy and consequently the global economy from having the same financial metltdown. 

    What I hear LCaution stating is a different perspective, which is what was politically feasible, i.e. that the Dodd-Frank bill was the best politically viable  legislation possible.

    I believe that government is meant to meet the needs of its people in as efficiently and humanely way as possible.  So why is it that the Dodd-Frank bill falls so far short in meeting the needs of the American people by allowing some of the very same conditions and abuses that caused the financial crisis  to continue?  I do not believe that our current financial system is neither efficient nor humane in its dealings with a vast majority of the American people.

    As far as Barney Franks letter, it seems like the same self serving political mumbo jumbo, where a few crumbs are thrown to the people while the big banks continue to get the whole pie.  A much more informative letter would have included an explanation of why after a near collapse of the financial markets this is the best they could do?  What kind of pressure do politicians and political parties get from lobbyist for wall street? 

    I believe the reason he may not want to answer these questions truthfully is because it would show that along with just about every republican and the republican national party, there are many if not a vast majority of democrats and in particular the leaders of the democratic party that are beholden to big money and in this case Wall Street.  If  Barney Frank would be willing to talk about this then I would love to see him on Bill Moyers.  However, if he is just going to spout the we did the best we could, blah blah blah then it would be a waste of time because I can see that on any main stream media outlet.

  • Dennisgrizzle

    Thank You Gretchen for doing your job and bringing to light this distructive game.   A game is broken when it is exposed, keep up the good work.  This gives me hope that indeed our country and our world can be something we can all be proud of. 

  • Julia_coriaty

    I watched this weeks Bill Moyers & Company and find the information very relevant.  Mr. Reed must surely have padded his bank accounts and is most likely a billionaire so this must give him the ‘courage’ to speak out now.  What can he lose, but at least he did speak finally speak out to enlighten America after the facts.  I truly do not believe he was part of the deception for greed only, but I know he and his family will benefit monetarily now and in the future.
    The big revelation was Mr. Dorgan and his foresight.  I wonder how many politicians also felt the same as he did at the time, but did not have the courage to speak out.  Maybe they had too much to lose financially.
    Now the question is what and how can we get America’s integrity back?  We certainly cannot trust Washington to do the right thing and merely voting incumbents out will only open the door to others who will use the job to pad their pockets.  Perhaps you will have shows that will try to come up with methods or trends we can take to slowly extricate our country from this predicament.  I think ‘Occupy Wall Street’ movement should be look up to you for guidance.  I think Washington and all politicians should be made to watch your programs.  I am 100% America and for this wonderful country, but fear where they are taking us in the future. Thank you Mr. Moyers.

  • Aengus

    The answer starts with; “I have no recollection of that day or conversation”. Watergate favorite response.

  • Aengus

    Paul Wellstone. The last true advocate for the American people and idealism.

  • Bruce Kline

    > even in its current state, Republicans oppose it and the Consumer Financial Protection Agency.
    That is one major problem, Republicans oppose everything except what the money tells them to do, period.  Republicans function like institutional terrorists … in fact it is even worse because most terrorists in the world at least have some ideology, but these folks will use the facts and arguments in support of something today and then turn it around and use it to support what seems like an opposing view tomorrow, they are shameless and just want to do what they want to do, and can do so because of the lack of sophistication of the people they govern.  No wonder they oppose so heartily any consumer protection group that will act in the behalf of citizens who are not smart enough and are not getting support enough to get any better.  Repulicans are also terrorists in the sense that they are strangling the humanity out of the system – neuroscience shows the ways in which human beings are permanently hurt by stress, noise, chaos, an environment in which they do not have understanding or predictability – all this while the Republicans hype up the predictability of regulations and taxes by the government on them.

    The Dodd/Frank bill may be a work of art or something to show off to demonstrate that our lawmakers are trying … but I doubt it will ever be used to do anything, and if it is there will be loopholes found that are known about right now … the laws and the lawmakers are just s diversionary show from what is really happening in America.

  • Russell Starling

    Disgusting  G R E E D !  All Found Involved should’ve been placed in a High -Security Prison at Wall Streets @  the Big Banks’ Dime . Average Joes in America are sick of the games of those Greedy B******S  — Sad Fact!

  • fedupwithpoliticians

    When you have Mr. Frank on your show, ask him why the citigroup merger was done in 1998, the Commodity Futures Modernization Act was slipped into a far larger appropriations bill during the lame-duck
    fall 2000 session of Congress, and no law was written until July 2010 to regulate the large banks that Washington insiders created at Wall Street’s request.

  • Humpy579

    I really wish the press would become a investgative press again instead of just reporting the news as all the channels do. Why must we wait for a catastophe happen and then find out the whys it happened after the fact. Just like the government our press needs to get back ionto the dirt and not care that their boss is friends with the politicians or heads of businesses.

  • CharlieOFD

    Job creation and consumer friendly competition would result in ending the too big to fail phenomena. I saw first hand how executives in banking drove down costs and enacted efficiencies only to line their own pockets and frustrate customers with technology.
    The ratio of executive pay vs the average employee is too large to continue. I believe in Japan that ratio is fixed by law. We should regulate it here also.
    Level the playing field.

  • BoFo

    I would take Ms. Morgensen’s word over Barney Frank’s any day of the week.

  • Muirhouse

    I am curious if there is any sentiment about all this from the small banks, sentiment of the kind that might have them speaking out in their own behalf?

  • SparkyJP

    Too big to fail is too big to exist. Bank lobbyists wrote the bill and Dodd & Frank stuck their name on it. Too big to fail = kleptocracy.     

  • nervous

    Dodd Frank needs to be thrown out and regulation started over.  Odd that both have fled the scene of their crimes.

    In conjunction the Supreme Court ruling in Citizens United must be reversed along with any and all regulation and ruling that extends protections under the Amendments and/or the Bill of Rights need to be reversed. Corporations are not human beings and if it requires an admendment to clarify this, then one should be forth coming. 

    Taking this step in conjunction with campaign finance reform that actually reforms would help restore some protections to the citizen of this putative democracy.

    The frightening thing is that the same people are financing both sides in the up coming election. They’ve stolen enough to buy both sides so that they win in any result. 

  • George Ulicny

    I vastly admire Ms.  Morgenson who is not only a good writer – loved her book – but has the guts to take on the powerful.  A bill authored by two guys at the epicenter of the housing meltdown ?   Forgetaboutit !!

  • Drwilder

    Too big to fail means too big to regulate so they (the big banks)  should be broken up just like Standard Oil in the early 1900’s.

  • Johnson William P

    Gee, What is so alarming? Dah, special interest support electing people into office which hasn’t did their own budget in years. Yes, these people hire cpa’s and specialist to invest for them or advise where they’ll get the biggest bang for their buck.  As long as they see a capital gain they are happy. Once in office who advises them to help our nation and protect our people from the downward trends toward recession and they are still protecting their interest at home. The law makers passing the legislation nullifying the oversight and control of the financial institutions stating the previous laws hampered growth were wrong in what they did. The same people are still there and would never admit they had error  in their actions to save face of the party.
    The little people are working 2 and 3 jobs make a living and to support an institution they believe in and those they elected to protect their interest. People have little time to really study and get to know what those elected stand for. Only those in the top 5% income bracket are considered for public office on the national level. I reckon hobnobbing is still alive today at its “Best”. That part would never be to big to fail but will always take a toll on the little guy. 
    I found this program by Mr Moyer and the article by Ms Morgenson quite informative and re-enforces what I’ve believed for some time; We need a shake-up on Capitol Hill. I feel those elected should have to take a leave of absence every 7th year and work directly under the legislation they’ve supported. That might open their eyes. This was probably one of the best productions I’ve had the pleasure of seeing in a long time. Keep up the good work and Thanks.

  • kingbingo909

    Sadly, the super-rich play the super-greedy in Washington  like well-tuned Flamenco guitars, and, when the dance floor finally clears after the next big crash, (think 1929) someone will have to sweep up all the worthless paper off the floor, turn off the lights,  and urge the American people to never forget such a spectacle of  human depravity, and to elect the new candidate: paid-for by the old party. 

  • HHH

    This is the way of doing business now. It’s not what their telling you that you need to worry about, it’s what their NOT telling you that you need to worry about. This tactic is used throughout our government and our major news medias. The old saying, “What you don’t know doesn’t hurt you” is far from the truth.

  • Dan

    I love capitalism.  I hate crony capitalism.   It irked me that the narrative regarding Occupy Wall Street seemed to paint all OWS people as entirely anti-capitalist. 

    Regarding Barney Frank,  I would be interested to know how much money the banking lobby paid him.

    Lastly,  I simply do not understand those who would put the entire country at risk so that they could make billions as opposed to millions by tearing down relevant regulations to do so.   That is greed.

  • aurora

    no, there’s still Bernie Sanders

  • JLuke

    I have always admired Barney Frank, but he really needs to put up or shut up at this point.  Here he is quitting the House at the worst possible time while defending a terribly weak law, just because it has his name on it. 
    There is a new breeze blowing on the latest house  of cards, and there just is no time for failure and quitting.  We MUST put people into Congress who really care and have the brains to fix what Bubba and Greenspan created.  Lets begin by forcing Congress to disclose which members are taking advantage of the “perfectly legal” insider trading allowance, which would put any private citizen in jail.  This should be done by executive order (which Obama will not issue unless Occupy makes him), through one of the supposed federal agencies — maybe the FCC? or in the interest of national security, the Dept. of Homeland Security?  If Congress will not regulate itself, we need to get its culpable members out. Occupy has its work cut out this spring.

    Barney, we hardly knew ye…..

  • Highlander

    Washington D.C.  & Wall St. – 2 rat’s nests of corruption. Weapons of mass destruction destroying America!

    Our enemies told us they would destroy us economically AND IT’S WORKING!

  • David F., N.A.

    I’m glad Morgenson picked up on Frank’s bs misdirections.  Not 0nce did
    he mention anything about why Glass-Steagall was written.   One of the
    main reasons it was written was to keep insurance casinos from merging
    with our banks, and then using our savings to payoff on their bad bets.
    If this partition was in place, our banks wouldn’t have to worry about
    these derivative regulations.  Plus, like Morgenson had said, Dodd-Frank
    gave the American people a little bit of icing while it gave the banks
    all the cake.

    And I have a pretty good idea why Congress is making these bills so
    complex. Remember how Gore try to get a recount in Florida, 12 years
    ago?  Remember how Florida’s law stated that a recount was in order? 
    But then do you remember how Team Bush found one ambiguous sentence to
    justify stopping the recount?  Well, I think, the bills written today
    will make it a whole lot easier for our courts to decide what they mean.
    It’s a good thing the Bush adminstration didn’t try to stack our courts
    with conservative judges, or should I say multinational corporation

  • Jgar6842

    I’m reminded of the late 19th Century in the US when the J.P. Morgans and other Captains of Finance jokingly bragged about the buying and selling of our Congress. Some things don’t seem to change much. Also, maybe instead of a “yea and nay” tote board to keep track of votes on bills, the board should simply show $ signs indicating how much money from lobby, corporatiom,union, etc. each Congressman is expecting to recieve for their vote on a particular issue.     

  • David F., N.A.

    Here is an excellent clip from ’05.  It shows Franks lack of knowledge, or out right lies, about the mortgage bubble: And here’s a clip of him trying to lie his way out, after the bubble had popped:This is the kind of scum we get when we vote Democrat.  Can we really afford another 4 years with a conservaDem or conservative in the White House.  Occupy DC!

  • Anonymous

    Barney Frank is one of the most likable and entertaining personalities in government, but I cannot help but wonder if his bill was not a going away present to his friends in big banks.

    As for Dodd and his below market rate loans attained from Countrywide…enough said.   Take the money and run.

  • Eclectic Obsvr

    I don’t think Ms Morgenson’s response is a reply to the corrections.  Her problem is that she gets too many things wrong.  I would like to see her and Frank on the same show.

    I would love to see the two of them, a Wall Street defender and Paul Volcker all on the same show.

  • Turntherascalsout

    Once again Mr. Frank offers a self serving and specious defense of his actions. It appears that what’s happened since is irrevelant in his mind.  I’m surprised he didn’t simply dismiss Ms. Morgenson by asking what planet she was living on!

    The timing is interesting.  How much more good could have been done if the administration and the Democratic majorities in Congress had made financial the principal initiative in the wake of the collapse caused by the banks and faciltated by the repeal of the Glass-Steagall Act during the Clinton adminsitartion.   Instead we got an 18 month debate over a health care bill a critical element of which could be overrturned by the Supreme Court not to mention the millions of additional ratepayers provided the insurance industry.

  • desmond

    Where are Chris Dodd and Barney Frank now ? Retired to what, lobbying  and on behalf of whom ?

  • empi

    In other words, its better than what we had and in the climate in Washington, that is a win

  • SparkyJP

    Glass-Steagall kept the insurance companies. investment banks. and depository banks separate; so it absolutely did have  jurisdiction over the investment banks. The problem is when they are combined, the possibility of the bank making risky investments with depositors money. The complexity of financial reform is trying to sell the American people a paper tiger while giving banks everything they want.

  • Anonymous

    Mr Frank is correct in that AIG style derivatives would have remained unregulated. Please do not forget the impact of the 1998 Commodities Futures Modernization Act which, in essence, deregulated and internationalized derivatives trading. While poor underwriting standards played a significant role, the vast majority of the financial damage we incurred as a nation came in the form of trillions of dollars worth of unregulated derivatives trading.

    It’s also worth noting that a number criticisms Ms Morgensen makes in re Dodd-Frank were attempted to be added to the bill but those amendments were struck down by certain members of congress. Perhaps Ms Morgensen would be better served to criticize the congress critters who cut those provisions from the bill.

  • mikehira

    The Glass-Steagall Act of 1933 created the FDIC for member banks of the Federal Reserve. The restriction on their activities was to protect the FDIC fund from being abused. Investment banks were not part of the Federal Reserve and were not allowed to participate in FDIC, so Glass-Steagall made no rules for investment banks. Glass-Steagall put restrictions on how member banks could interact with investment banks, so investment banks were affected indirectly.
    When the five big investment banks, Bear Sterns, Lehman Brothers, Merrill Lynch, Morgan Stanley and Goldman Sachs, got in trouble in 2008, none were member banks of the Fed so Glass-Steagle would not have applied to them.

  • hourglass1

    excellent journalism … 

    no one is in jail … and america ruins american lives for pot smoking … what a country

  • Radcabasa

    The G-S act ,at the  basis, has one very important idea. Separate banking from Investment. This is now known to be the basis of the disaster that happened. The Industry was able to make a bank,with government protection,the cash cow for their investments.  This is really the idea that all of the Congressmen,Senators,Rubin,Clinton etc. agreed to.

    They still can take investors money,treasury bonds etc, and gamble with the knowledge that if they lose the government will take the fall.

    Without going any further in the examination this is a very simple and clear fact.

    Also,the statement too big to fail is a obvious reason why they should not be allowed to be too big, Unfortunately they have convinced the politicians that they are too big to fail but that they are not too big.

  • Griffjim

    Obviously, the corruption ($$$$) of big banks and corporations capturing Washington regulation is killing our country. Ou se la guillotine?

  • David F., N.A.

    It’s been about 12 hours, so I guess my edited, cleaner post never made it through the screening process.  Bummer!

  • AnneLBS

    Hi David,

    I found your cleaned up version and replaced the not-so-clean version with the new and improved one. Thanks for being concerned and careful about those links!

  • Wil

    The only reason for a Republican Party, is to cut the taxes of the very wealthy. Everything else, is window dressing!

  • Daniel

    Thanks to all- especially of course to Bill Moyers for this rational discussion!

  • Dick Carpenter

    It is absolutely mind-boggling to me that Congress failed to fully regulate Wall Street so we would not have a repeat of the financial meltdown of 2008! We still have private entities “too big to fail” and we still have Wall Street enriching itself with financial activities which serve no useful purpose save for greed. where is the call to reenact Glass – Steegall, with modern day improvements?

    Congress, start working for the people! President, hold Wall street accountable to the law!

  • tobedana

    “He (Obama) needs to be re-elected”–he needs to leave and take his inexperience and “change” of face with him by Dec. 2012.  We need Ron Paul for President and I would not have brought his up if you didn’t bring up re-electing Obama.  Education should be left to the states and there should be more of a market base consensus to force for better quality and variety of schooling.  The current Mac-truck school system is running on one tire.

  • Anonymous

    Republicans reject anything from the Democrat Party. If the Democrats announced they propose eliminating all income and corporate taxes and dismantling most government agencies and programs, the Republicans would still reject it. 

  • Anonymous

    I’m afraid you are naive. Ron Paul would very quickly “Republicanize” once elected. There is no Independent Party in Congress and the POTUS doesn’t control Congress and there is only so much the POTUS can do unilaterally. 

  • Schindlingeric

    For years the elected officials have been feasting off the giant buffet that is the public. The recent Tea Party congrssmen and women are now loafing their plates. How about getting back to your jobs of working for  all of the people not just the ones that can line your pockets and buy elections

  • David F., N.A.

    Thanks Anne.

  • wakan

    Greed knows both political parties. If you look to see if there is a R or a D before you can decide if you are for it or against it, YOU are part of the problem.

  • Dberg99

    Until we close the revolving door between government regulators and the businesses they are supposed to regulate, even the best laws will not be enforced. A multi-million dollar payoff awaits regulators who play ball. 

    Until we repeal the Telecommunications Act of 1998 and start enforcing antitrust laws (they even allowed the merger of the only 2 satellite radio companies into one!), voters will  primarily be bombarded with pro-corporate propaganda masquerading as news. Even today, after the repeal of Glass-Steagall led inevitably to the meltdown, the right wing blames regulation as the cause of our financial problems, and the media pretends that  is a logical position to hold. Six media giants, with considerable revenue streams from military spending and campaign ads, control an incredible 90% of what we see, read, and hear. Democracy cannot exist in a system where voters are deliberately misinformed.

    Until money is removed from politics, democracy in America is largely a myth. We are now facing the long, uphill battle to amend the Constitution to nullify Citizens United anddeclare that money is not speech and corporations are not people (who was it that said “I’ll believe corporations are people when Texas executes one). Even when over 90% of the people agree that corporations have too much power, our almost totally unresponsive government  representatives will have to be dragged, kicking and screaming, to pass an amendment bill in Congress. After which 2/3 of the states must also approve. Daunting task. Good luck America.

  • mikehira

    This wiki might help to clarify what is needed:

    “An amendment to the “fundamental law” of the U.S. Constitution can be passed by 67% vote of the Congress and must then be ratified by 75% of the state legislatures within a specific time limit prescribed by Congress. Or, on demand of two-thirds of the state legislatures, Congress can convene a constitutional convention to propose amendments, which must also be ratified by 75% of the state legislatures.”

  • Elko John

    I like Barney, but he is part of the Ruling Elite of the Democratic Party.
    So he got the best deal he could get under our corny capitalist system,
    and then he and the minions of the Democratic Party try to sell their junk
    as being in the best interest of ”the country.”
    Big Money runs the government which is run by the 2-Party Dictatorship,
    each party being controlled by its bosses at the top.
    Never will the Democratic Party become a populist party of the people,
    willing to get the Big Money out of running the government.
    We need a Peoples’ Populist Party to represent those of the 99-Percent
    who are Mad as Hell and Don’t Want to Take it Anymore.

  • mikehira

    Can someone explain how Glass-Steagall prevents a bank from getting too big? Commercial banks can get big by just buying other commercial banks; look at Bank of America. Investment banks can grow their security business without offering public deposits; look at Goldman Sachs.

  • jan

    It seems that every time I look at a politician these days, I see someone who is, for lack of a better description, participating in a private dance for the lawmaking few where they make a couple of steps and then pose so that others may admire their grace and ability to perform the dance; sort of like a minuet.  Unfortunately, we’re a few centuries beyond the minuet at this point in time.  It is obvious to most of us that grace and ability to perform a dance that only a few can participate in does not translate into jobs and a roof over ones head or a safety net for the sick and elderly. 

    Mr. Frank is clearly demonstrating how deeply absorbed he has become in the Washington D.C. power  culture and mindset and how little he understands what we need and want. 

    He has also forgotten that sometimes you really can get too complicated (as happens a lot in D.C.) and unintentionally/accidentally add language that can be used to weaken or nullify the effects of the law by those looking for ways to avoid compliance. 

  • jan

    To clarify:  Lawmaking few includes politicians, lobbyists, and the CEOs/corporations who are funding the whole corrupt mess.

  • Anonymous

    Correct Charlie, thanks to you for pointing out that if we can set a minimum wage we can theoretically set a maximum wage, based on hard caps or percentages either one.

  • Anonymous

    So if the economy is basically a confidence game it must ultimately be a Ponzi scheme. Real growth has stopped and a growth of financial fictions has replaced it. So reckoning is near. If they build any new nuclear reactors, may the first one be next door to your primary dwelling. Then your home value can depreciate for 500 million years. 

  • Anonymous

    Ron Paul is a penny ante crook who has not yet been outed.

  • Anonymous

    Nope, it is not what we should have had. Office holders have the power to restructure but are themselves too entangled in a doomed system. They played for a little time, but the worst is on the way.

  • Anonymous

    I read the American Banker interview with FED official Tom Hoenig as Morgenson suggested. He agrees that Dodd-Frank is harder on community banks and that another crisis is on the way because it is too weak to do any good. I believe those were the two major differences with Congressman Frank.

  • Santafe66

    Barney Franks response makes me think he had pals or, at the least, some skin to lose if he didn’t water down his bill to prevent the big financial institutions from going broke. His bill doesn’t go far enough! It’s wimpy, just like the polititions in Washington that voted for it and we’re stupid enough to kill glass-Stengel. Take your lumps, Barney, you fools have been taking the almighty dollar from the big, rich, contributors way too long. Time to vote you turkeys out and bring in a new crop that won’t be influenced by “Big Money” .

  • Chris

    HI, first thank you all for your work.  In a democracy you need a knowledgeable electorate.  Now more than ever if we are to reclaim our country.

    I have respect for both Rep. Frank and Ms Morgenson work.  I do feel that folks can get complacent when they are in a position for a long time, “The way things work” in both politics and journalism. Its good to shake things up from time to time.

    It would be great to see them both on a program to discuss there views.  I like the fact that Glass Steagall was short.  I see that Dodd Frank is long.  I strongly feel brevity in legislation is a good thing. Perhaps that would be a good piece of legislation.

    Thank you

  • Katlady20

    Boycott the banks.Join your local credit union.  Use their credit card.  Only have one credit card.  Use cash.  Pay off your loans so you don’t have to use a bank.  If you don’t like something, don’t use it.

  • Wondering

    I am a big fan of Barney Frank and think he is one of the most straight talking politicians in Washington. But I wonder why the bill is 2300 pages and what kinds of loop holes are made possible with 2300 pages.

  • mikehira

    I don’t know where this 2300 page figure comes from. The full text of the bill is available online; it has 848 pages. That is still a lot of pages, but this bill, with its 16 titles, covers a lot and 848 may not be unreasonable. The issue of “too big to fail” is covered in Title 2 which has 78 pages.

  • myron roggman

    Yeah, but again, and as usual, all this “let’s get” stuff takes voters to vote that way. Almost half of our population doesn’t bother to vote.

  • Matt

    I’m wondering, a month and half after this reply, why Frank hasn’t been asked onto the show. He would have made good time out of that wasted by Jonathan Haidt.

  • mikehira

    I was also wondering if Moyers has accepted Barney Franks offer to appear on his program.

  • Anonymous

    See to learn that the $350,000 Barney Frank recently received from securities and investment firms make them his biggest donors. Why do we ignore this kind of glaring conflict of interest? Stockman said, and I agree, that the only way out is to amend the constitution to reverse the supreme court’s interpretation of corporations as persons, and wanton “contributions” as free speech.

  • Linda

    I realize it isn’t your usual show format to interview 2 opposing sides at once, but this may be a good time to break that rule, as long as Rep. Frank can leave his bulldozer media style at the door. I fully appreciate that his usual style is essential when being interviewed by hostile media networks, like FOX, that seek to discredit his opinions, but in a Moyers interview, that aggressive stance wouldn’t be necessary. I’d just like to hear a respectful, normal-tone back-and-forth between these 2 people on this issue.

  • Fed Up

    Barney Frank is bought and paid for, as are many in the Congress.  It’s why krony kapitalism has taken over to the extent it has to date.  The people are fed the idea that “capitalism failed”.  there has been no true capitalism in the US since pre-Hoover.  Certainly we have not come close to real capitalism in the last 35-40 years.  the chimera that we need more regulation to fix the problem, when the current regulation goes unenforced, is a sad joke played upon the populace.

  • Oristg

     Centralization of power in whatever form it takes, — see The Tower of Babel as an early lesson — whether in politics or on Wall Street, — in the case of the meltdown of 2008 the two were in cahoots — is what creates “too big to fail”. By all accounts, — exept of course Barney Frank’s — Dodd/Frank did nothing to alleviate the centralization of power. I worked in city government for eighteen years, and every new “young fool” quickly and clearly recognized the problems and how to go about fixing them.  It was always painful to have to explain to them that every “old fool” that had the power to fix them had ridden them towards retirement too long to allow any change that may affect their retirement outcome.
     More to the point; One city manager in his last year of “service” repealed a policy that allowed a maximum annual contribution to a special investment fund, and replaced it with one that allowed employees (him) to make up for any annual shortage they (he) may have incurred.

  • Jack Hudson

    Dear Bill,   I found an interesting article by Gretchen.. where a couple of authors have written about re-classifying the gambling institutions as the FDA classifies drugs..
    How to Prevent a Financial Overdose

  • Criticaleye

    Barney Frank had a good run at public expense. I was reading the WSJ when the Fannie/Freddie scandal hit, the first one, in which they used derivatives to “smooth” their earnings.  Rather than regulating them more tightly, Barney and his team made them promise to lend more money to the underprivileged, i.e., those who would not be able to pay it back. 
        It’s great to have a show that interviews folks who understand and can explain both the crisis and the risks that remain after the phony reforms.  Let’s not waste a minute on the folks like Barney that either caused it or still don’t get it.