What's So Radical

Seeing Frank speak was pretty cool. While I don't know him well, I thought he was knowledgeable, funny and articulate. He spoke for 45 minutes without notes, covering a wide range of issues, but mainly the credit crisis and the government's response - the rescue package. Then he took questions to round out the hour. Some of the things he said (paraphrased):

The problem at the root of the crisis was/is not deregulation. Critical regulation was never in place, because financial practices evolved and sped past regulators in the past eight years. The practice of securitizing debt to create new financial instruments (namely, collatoralized debt obligations) is brand new. One can argue the smartness or stupidity of the instruments, but Frank wants to regulate what types of loans can go into these instruments, making sure subprime debts are not securitized in this way.

You will be more careful about making loans if you are going to be the one who is to be repaid by the debtor. The practice of securitizing loans (chopping a lot of loans into little pieces, bundling them, and selling those security bundles to other people) perverts the time-tested practice of making loans to people you know and collecting the monthly repayment over time. Out of everything they loaned in recent history, regulated entities - banks and credit unions, for example - wrote 5% subprime loans. Loans originated by unregulated entities were 34% subprime. These unregulated entities would never have originated so many of these loans if the loans were not allowed to be cut up, repackaged, and sold as securitized debt bundles.

In reference to economic policy, he argued, "Some suggest that a rising tide will raise all boats. New Bedford is in my district, and so I know a lot about tides and boats. The economy is not a tide, and people are not boats. It may be true that tides raise boats, but the saying only makes sense in the context of the economy if you imagine people on their tippy-toes in the water as the tide has risen over the past eight years."

"Anyone who tells you they like campaigning is either a liar or a sociopath."

"Partisanship is good, otherwise you have a lot of people just milling around." He elaborated, that extreme partisanship is not good, but partisanship is good because you have to feel strongly to get involved in the nation's issues.

(I'm forgetting a third piece of legislation, but mentioning only two will still drive home the point.) In response to a question about Obama getting elected, DOMA, and Don't Ask Don't Tell, Frank shared a story. In 2006, in the lead up to the Democratic takeover in the House, some far right candidate who lost very badly made a stump speech declaring that no one wanted Barney Frank to be the head of the House Financial Services Committee, going on to say that Frank would be pursuing a radical homosexual agenda. Frank quipped, "What's so radical about wanting to be allowed to get married and join the army?"

10/27/2008: Here's the full video. Runs about an hour. A rare thing - both smart and funny!