"We're the Adults in the Room"

Barney Frank, Chair of the House Banking Committee, seems to have surprised a few people with his pragmatism. These are the people who weren't listening when Barney was fighting for sense and sensibility in an atmosphere of extremism and runaway greed. He has always been practical, it's just that anything less than total surrender to corporate/conservative ideology was viciously attacked as "dangerous liberal insanity" that was going to wreck the country. So stupid people, ignorant people, bankers, and Republicans (or is that redundant?) have been pleasantly surprised to find that the fire-breathing liberal/radical/Commie who they thought was going to nationalize the financial system as if he were Hugo Chavez and this was Venezuela is instead a realist with a sound grasp of banking policy and a shrewd sense of just how much he can get away with.

Shows how wrong you can be when you start believing your own propaganda. Or FoxNews.

But sometimes Barney can be too conciliatory. Last week, despite the continuing increase in foreclosures around the country, he removed from the FM support bill a $4Bil program to help banks cope with the foreclosure flood brought about by their own unethical machinations because Republicans objected that it was - say it with me, now - "too expensive" and Bush - here he goes again - threatened to veto it. Maxine Waters - a *STAR* - made him put it back.

But for all his success, Barney hasn't managed to get what he really wants and we really need: some climbing down off the high horse by Corporate America.

After Democrats won the midterm elections in 2006, Frank said he hoped to forge a "grand bargain" with the business community to trade some regulatory reforms in exchange for business support for progressive goals such as healthcare and rules making it easier for workers to unionize.

In an interview, Frank said he was disappointed that the business community "really didn't seem to be responsive" to his offer, but was optimistic that a successful rescue plan would give corporate leaders greater confidence that the Democrats were serious partners going forward.

The complex negotiations have spotlighted Frank's work with Treasury Secretary Henry Paulson, a relationship that Frank has cultivated.

"I think we are now credible partners for them," Frank said. "They now understand that when I said I was going to work with you, I wasn't talking through my hat."

Barney's not naive but I have to wonder if he understands that his own party is half the problem? The conservative DLC leadership is putting ZERO pressure on business to conciliate labor, treat its workers better, or come up with a health care plan that doesn't put all the expense on the employee. So why should they respond? They're paying Blue Dogs to make sure they don't have to and the Dem presidential candidate just made a pilgrimage to Wall Street (Harold Ford set it up; his Wall Street contacts are the reason he was given charge of the DLC) to reassure them that if he wins in November, the investor class has nothing to worry about, nothing to be afraid of. He's on their side.

Corporate America is like a fractious 2-yr-old: it can only see its own needs and it screams when they aren't met immediately. You have to control it with firmness and consistency. If you give in all the time, it will just holler that much louder when you have the gall to refuse it. Or ignore you and go right on doing what it's doing.

If he wants business to "respond" to a deal they'd hate, a deal Obama and the rest of the DLC/BD Alliance is telling them they can safely ignore, Barney needs to think about how to get his own party out of his way.

Comments

[CMike]

Let's get real here. If you want to help the mortgagors who can not make their payments this is what you do. You rescind the IRS rule that declares as income to the mortgagor any balance left on a mortgage if they walk away from a non-recourse loan. Most first mortgages are non-recourse loans, the borrower can return the property to the lender and walk away from the debt.

Then the government can establish a Loss Mitigation department which has the legal authority to impose some solutions on the far flung absentee mortgage holders. Folks facing foreclosure can get out of their mortgage and become fair market value renters in their homes. The mortgage holders can hold on to their property until the market turns around...in a few years and in the mean time receive some income.

Fannie and Freddie did not write variable rate mortgages as far as I know. Anyone facing foreclosure on one of the loans the GSE's were involved in are folks who can not make the fixed monthly payment they agreed to when they took out the loan or folks who do not want to make the payment because they bought the residence in the last four or five years and now they are upside down in the mortgage, i.e. the mortgage is for more than the residence is worth. (Of course, there are some borrowers who can pay the monthly payment on the first mortgage but cannot get their second mortgage, their non-Fannie or Freddie loan, extended on the original terms. Are you proposing we bail-out these people, the people who took all the equity out of their homes?)

Sounds to me like Rep. Frank is coming up with a trickle down solution for mortgagors. The lender is rescued and maybe there is some benefit to the borrower. I think Frank should be explaining the costs and naming the beneficiaries with a bit more clarity.

Just because Frank is a Democrat in good standing with those to the immediate left of the center is no reason to put up with his "trust me" any more than there is to put up with Ben Bernanke's "trust me."

[mick arran]

Some of that - a version of what you call Loss Mitigation, for example - was proposed in the original bill and nixed by the usual cabal of GOP and DLC/Blue Dogs solidly opposing it. No chance of evading a Bush veto, Barney removed the offending section. He removed several offending sections, all of which would have been better for the situation than what's left but none of them would have gotten past the conservative opposition in his own party. If Barney is doing "trickle-down" - and I think your description is justified - he's doing it because that's all he could get past the conservative bloc that has successfully tied up the Congress for the past year-and-a-half. They're the ones at whom you should be directing your ire.

As far as I know, you're right, the FM's didn't write variable mortgages. In their case, that's not the problem. The problem is that the financial scumbags who did have put the economy into a tailspin. The FM's write mortgages for marginal, barely viable borrowers who are the first to be crushed by an economic turndown because they have few resources to call on when something goes wrong, and many of them will be (have been) among the first to lose their jobs or have their hours cut back in this Recession. So they can't pay because they no longer have an income or because food and other necessary expenses have skyrocketed while their incomes are stagnant or have been cut.

The FM's aren't the cause. They are, however, dealing with the fallout from this mess and its effect on the weakest among us.

[mick arran]

I should say I'm a little unclear about just which version of which bill we're talking about here. It's either what's left of Barney's bill after the conservative bloc disemboweled it or it is, as the WaPo claims, Bush's bill. Whichever it is, there isn't much in it at this point for homeowners (mortgagees) to cheer about.