Elizabeth Warren likes to tell the story about how when she first met with Barney Frank about the financial reform issue, he told her, in no uncertain terms, that the banks would win on the issue of establishing a Consumer Financial Protection Bureau and that she had no hope of getting the CFPB as part of the law. She tells the story not to embarrass Barney -- who was very supportive of Elizabeth in her fight to get the CFPB in place -- but to rally people who feel like there is no hope of beating the banks on anything. However, the story does, in fact, carry a lesson about Barney: he is intimately familiar with what the big banks want and don't want, and is not inclined to take on the bankers unless people as strong as Elizabeth refuse to take no for an answer.
The latest example is that Barney has jumped on board with the big banks and their credit card company subsidiaries on the debit card "swipe fee" issue. He has been saying he would be happy to work with Republicans in Congress to roll back the related new Federal Reserve regulations.
Now, I love Barney Frank, and he is a good guy on most issues, but this is pure craziness. The basic question is: Politically or policywise, why would you want to help the big banks in opposition to Main Street businesses? On one side, you have six big banks that already own assets equal to 64 percent of our country's GDP. They own 80 percent of the debit card market, and the swipe fees they charge, by their own admission, are almost pure profit. On the other side you have retail stores, restaurants, hairdressers, cabbies - representatives of Main Street businesses who have lacked the ability to bargain with these behemoth credit card companies. Is there any question policywise as to who it would be better to help? What about politically -- which side do you think is more popular with the American public?
Here's the other thing that is nuts about what Frank is doing: Why would you want to give the Republicans the political cover and opportunity to re-open the financial reform bill just passed? Does Barney really think Republicans would stop with debit cards if Congress were to start debating financial reform again? Thinking about all the changes banking lobbyists would make in John Boehner's conference room if the financial reform legislation passed last year were re-opened is enough to make my head spin. (A little "tweaking" of derivatives regulations here, a little amendment or two to the CFPB there... Oh, and don't forget the legal bailout we need so that we can foreclose on people faster.) I can see the whole bloody scenario pass in front of my eyes, with Republicans just telling the media, "Well, even Barney Frank said we should fix a few of these things."
I think that Democratic members of Congress who have been in Washington a long time sometimes forget what is really at stake in issues like this. They have old friends -- former staffers in many cases -- who have gone on to work for the banks talking to them at fundraisers about little tweaks they want to make on this issue or that issue, and they forget what matters to the American public. Members of Congress -- even the good ones sometimes -- get to think it is just a battle between lobbyists, and they forget what really matters. I got involved in this swipe fee issue, helping retailers and consumer groups that care about the issue, because it is a $15 billion battle in which the money either will go straight into the pockets of the big banks or back into the Main Street economy. It is easy for me to pick sides, and it should be easy for Barney Frank as well.