Rep. Barney Frank's work to help resolve housing crisis
The House Financial Services Committee, which he chairs, is nearing completion on a housing stimulus package.
When Rep. Barney Frank took over as chair of the House Financial Services Committee in 2007, he offered a "grand bargain" between business and liberal Democrats. But few captains of industry and finance rushed to take him up on it.
Yet the subprime mortgage debacle and turmoil in the financial markets have put the 14-term Massachusetts Democrat into the inner circle of those trying to resolve the crisis.
"We are at a very important potential inflection point in American public policy," said Representative Frank, speaking at a Monitor breakfast on Thursday. "Today there is a consensus that underregulation is not just a factor, but the single biggest cause of the fix we are in today. There are not effective constraints against irresponsible risk-taking built into the market."
He says that the legacy of the Reagan years – and carrying into the Clinton years – was the assumption that the No. 1 goal of government is growth, and that if you achieved growth, you didn't need to worry about much else, including soaring inequality.
But the business community, Frank says, is learning that there's a political price to pay for the resentment of many Americans who see the current system as fundamentally unfair. He adds that voters will punish lawmakers who support new free-trade agreements or immigration reform.
"In this century, 5 percent of the American people have seen a rise in their real incomes; 95 percent have either stagnated or dropped," he added. "The refusal of the business community to deal with this is the reason that Lou Dobbs is the most prominent economic spokesman in America."
To deal with a fairness gap, Frank wants Congress to strengthen unions, raise the minimum wage, expand access to health insurance, let the Bush tax cuts expire, and significantly increase aid to higher education, especially to community colleges.