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Barney Frank: The Man Behind the Law

Outrage over Wall Street's failures inspired the most sweeping financial overhaul since the Great Depression. Barney Frank, the man whose name is on the bill, only wishes he had gone further.

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From the decriminalization of small amounts of marijuana to gay marriage, Barney Frank has been at the forefront of liberal causes throughout his three decades as a member of the U.S. House of Representatives. But when his time representing Massachusetts' fourth congressional district is up, Frank likely will be remembered for two things: his colorful personality, and the co-authoring of the most dramatic rewrite of the laws governing the nation's financial system since the Great Depression.

The Dodd-Frank Wall Street Reform and Consumer Protection Act forces nearly all financial services firms to rethink how they do business, from which stocks they trade to how they disclose terms to clients. And 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.

The 70-year-old Harvard Law School graduate played a pivotal role in preventing the global financial market from tumbling over the brink. Frank, who presided over the powerful House Financial Services Committee as the 2008 Wall Street collapse unfolded, helped craft the unprecedented banking sector bailouts. Stripped of his committee chairmanship following the Republican takeover of the House last fall, the Capitol Hill powerbroker now says the Democrats did enough with the Dodd-Frank Act during their time controlling both houses of Congress to thwart a similar crisis.

Back From the Brink

"We came very close -- according to Bush administration officials -- to a situation as bad, if not worse than the Great Depression," Frank says. "We had two things to do: First, deal with the crisis; but then do whatever we could to make it less likely it would happen again."

Despite a push by Republicans earlier this year to neuter the Dodd-Frank Act by slashing funding for the regulatory bodies tasked with making rules to enforce the new law, Frank says the bill is now equipped to work as planned. In April the nation's commodities and securities regulators were given modest budget increases, which should aid their implementation of the Dodd-Frank Act.

Frank says the GOP ultimately backed down on its threat to slash funds for the Securities and Exchange Commission and Commodity Futures Trading Commission because that stance was unpopular with voters. "A budget cut was their side attack on the rules. They couldn't deal with it head on, so they tried it this way," he says, noting that Republicans have since shifted their focus to delaying derivatives reform until 2012.

House Republicans introduced a bill this spring that would delay new derivatives rules for 18 months. Although that legislation has little chance of becoming law since it's unlikely Senate Democrats or President Obama would support it, Frank says the tactic is a dangerous move for the GOP.

"They're making a great mistake politically to put off any new regulation of derivatives," Frank contends. "That's going to be very unpopular when you look at the people's concerns about speculation."

While Frank is mostly pleased with how the bill turned out, he acknowledges that it hasn't been sold effectively enough to the general public. And he wishes the law were tougher on derivatives. But for the most part, Frank says, the Dodd-Frank law is as tough as it needs to be.

"The bad mortgages, risky securitizations -- I can't tell you that it's going to prevent new problems," Frank admits. "But if you look at all the causes of problems in the past, we made them much less likely to occur."

Barney Frank: The Man Behind the Law

Outrage over Wall Street's failures inspired the most sweeping financial overhaul since the Great Depression. Barney Frank, the man whose name is on the bill, only wishes he had gone further.

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