Opponents of tougher financial services regulation are likely celebrating (and supporters of the same probably are mourning) the news that Massachusetts Democrat Barney Frank will announce his planned retirement from the House of Representatives this afternoon. Frank, who has represented Massachusetts' Fourth Congressional District since 1981, is of course co-author of one of the most important pieces of financial services legislation in the past 80 years, the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Only the outspoken Frank will be able to explain the specific reasons for his decision, but it is likely due to a combination of factors, not to mention the current sour environment in Washington, D.C. He reportedly was pessimistic about his prospects for reelection to the House in what would be a new district incorporating a more conservative community. His was reelected to his current seat in 2010 only after a very difficult race in which he ultimately won over Republican Sean Bielat, 53 percent to 43 percent.
Following the Republicans regaining control of the House in the 2010 elections, Frank became the House's Financial Services Committee's top-ranking minority member, after serving as chairman of the committee.
Although Frank's liberal politics and outspoken representation of the Democratic party policy gained him both fans and detractors, his advocacy of financial services industry reform was challenged in part because of the active role he had played in support of Fannie Mae and Freddie Mac -- agencies whose role in lending to unqualified homebuyers contributed to the subprime mortgage and subsequent global financial crisis.
However, critic or supporter, there is no question that Frank has driven significant change and innovation within the financial services industry. In identifying him earlier this year as one of banking's Top 10 Innovators of the Decade, our colleague Justin Grant suggested that "if the nearly 70 years it took for the industry to effectively overturn the Glass-Steagall Act serve as any indication, Frank's influence undoubtedly will be felt throughout the industry for decades to come." He also quoted Frank as saying, "The bad mortgages, risky securitizations -- I can't tell you that it's going to prevent new problems. But if you look at all the causes of problems in the past, we made them much less likely to occur."
It's unlikely that Frank will fade into the woodwork after he leaves Congress, but the debate in Washington about how the financial services industry should be regulated certainly will take on a different tone following his departure.