How Wall Street Bought Barney Frank
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Ironically enough, Stewart’s considerable personal fortune is derived from the murky world of international energy privatization, which Enron dominated until its demise. Her husband, Mark Kantor, worked in that field as an international project finance attorney at the law firm Milbank Tweed during the nineties. Milbank Tweed worked closely with Enron on numerous energy deals and off-balance-sheet financings, to the extent that the University of Calfornia filed suit against the firm in 1999. Kantor himself worked on at least one Enron-owned project, a Turkish power plant named Trakya Elektrik.
Indeed, the derivatives market reforms passed by the House this month look like they were written by an Enron attorney; the legislation exempts “end users,” a classification that loops in speculative financial engineers like Enron.
Two other Frank staffers passed through the Wall Street-D.C. revolving door in 2007 and 2008, but in opposite directions. His special counsel, James W Segel, lobbied for the Investment Company Institute, a mutual fund lobby, for ten years before joining Frank’s staff. Board members of ICI include representatives of Goldman Sachs and JP Morgan.
Michael Paese, Frank’s deputy staff director at the financial services committee until 2007, is now a registered lobbyist for Goldman Sachs. He has been lobbying Congress on issues related to financial reform for the past year. At least two other top Frank donors, Mitchell Feuer and Michael Berman, also lobby for Goldman Sachs.
Indeed, Frank’s ties to Wall Street are in evidence whenever he goes on television to articulate his vision for dealing with the financial industry. Bailouts help individuals, not companies, he told 60 Minutes, before accusing the host of attacking welfare and wanting to see people starve. After we bail the banks out, then we can tax them, he told Ed Schultz, who was criticizing the bailouts in a manner that Frank found “condescending.”
He may have a silver tongue, but Frank’s quips over the past year have sounded less than persuasive and more like the defensive posturing of a liberal beholden to Wall Street’s big money.
Can he be a good friend to both sides?
Last Wednesday, Rep. Melissa Bean and a coalition of New Democrats held up the financial reform process in order to win key concessions for Wall Street. Frank criticized her opposition, pointing to the influence of big banks, and entered a meeting with Bean and other leaders of the House.
Frank emerged, after about an hour, remarking that “the differences have been narrowed, and I think you’re getting something that both sides can live with.”
What were the two sides, exactly? Presumably, Frank counted himself among the reformers. But how could someone so dependent on Wall Street for fundraising dollars present any meaningful opposition to the financial industry’s agenda? Any tug-of-war inside that chamber would have consisted of everyone pulling in one direction, and all falling down.
The brief negotiation was certainly successful. Bean got what she wanted on derivatives regulation and federal preemption of state law. Frank got to pass a historic financial reform bill, all the while retaining his power as one of Wall Street’s chosen in Congress. The political theater was reminiscent of the great bailout negotiations of 2008, in which Frank and his liberal friends conceded hundreds of billions of dollars to the sinking Street.
The truly remarkable thing about the Barney Frank phenomenon is that liberal advocacy groups continued to treat the Congressman as an ally during the financial reform process. Public Citizen issued a press release that criticized parts of the bill, but thanked Frank for his work. Marcy Wheeler of Firedoglake called him a “good progressive,” fighting the good fight against banking interests. ActBlue, the progressive political action committee, is Frank’s biggest donor this cycle.