Barney Frank, architect of post-crisis U.S. banking regulations, slams Trump's economic plan
Donald Trump's transition team says he will "dismantle" banking regulations passed after the 2008 financial crisis.
To the Democrats who passed the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010, the legislation reformed a banking system that took too many risks at the expense of its customers and the American economy. But to Trump and many Republicans, the act has been "bureaucratic red tape" that's prevented the economy from recovering.
Now Republicans are set to control Congress and the White House. And on Monday, the head of the U.S. Securities and Exchange Commission said she would be stepping down at the end of President Obama's term. The restrictions on big banks under Dodd-Frank are in serious jeopardy.
The "Frank" in that act's name belongs to Barney Frank, who was the chair of the Financial Services Committee in the U.S. House of Representatives when the legislation passed. He was one of the architects of those wide-ranging financial regulations designed to prevent another economic crisis.
He discussed what Trump's win could mean to the American banking system in an interview with As It Happens. Here's an excerpt from that interview:
Barney Frank: [Donald Trump] talks about how he's going to be the friend of the working man and the smaller elements of the economy, but the major opponents of the legislation we passed were the bigger banks. It was aimed, primarily, at them. Now, I do agree there's been a problem with some of the smaller banks. I think they have overreacted to provisions of the law which they shouldn't have had to worry about it, but since they do, they've spent too much money. So, in fact, I've supported for some time now some relaxation with regard to some of the smaller banks. But with regard to the banks being too big, if you believe the banks are too big, then you don't repeal our law. Because if you do what Mr. Trump says and you repeal the whole law, then there is nothing that either restrains the size of the banks or deals with the problems that they cause, if they're irresponsible.
Carol Off: There was a startling ad in the final days of the Trump campaign that was about the financial institutions. He said, those who control the levers of power in Washington for global special interests, they don't have your good in mind. And the images that were flashing on the screen at the time were those of very prominent Jews in the financial and banking institutions. What do you make of that?
BF: Let me say two things. First of all, that's an example of incoherence. Because when you talk about being critical of those who control the levers of financial power and then you talk about repealing the only law we have in America that restrains their capacity to harm the economy, that's what I mean by incoherent, beyond inconsistent. Secondly, I think it was insensitive at the least to anti-Semitism and I think there are currently elements within the Trump campaign who are inclined to elements of anti-Semitism and I think a little of it slipped out in that ad.
CO: What did you make of it when you woke up on November 9th and realized the change? What do you make of the changes to the political culture of your country?
BF: Well, primarily that it is an example of the worldwide anger. You in Canada have managed to avoid it, but you see it in France with Marine Le Pen; you see it in England with Brexit and with Boris Johnson, who's Trumpian in many of his aspects; you see it in Hungary, Poland, et cetera. I think there is a profound anger on the part of working people whose main asset, economically, is a willingness to work, who don't possess great skills of a sort that are increasingly in demand. There are very skilled craftsmen, for example, in much of the West, but their jobs aren't in demand any more. That people aren't highly educated, they're not technologically skillful. That they're very angry at a fact, which is that the increase in wealth that has been created in recent years has been very unfairly distributed. Now, I think they are mistaken, many of them, in their view of who's going to fix it and how to do it.
CO: The working-class Americans, principally white ones who voted for Mr. Trump, who believe this is going to change their country, how do you think things will change for them or not change for them over the course of the next four years?
BF: Well, I think they are not going to change for them very much. In some ways, what Mr. Trump is doing will change it for the worse for them. For example, he will cut taxes, as he says, primarily for wealthy people. If he repeals the Consumer Financial Protection Bureau, that would make it much worse . . . He governed by making promises to a class of people economically and he has very little to deliver on those promises to them. And, as I said, in some cases, what he plans to do is the opposite of what would be in their interests. So my own sense is, he is not going to be able to deliver. Now the question is, he's been very good at exploiting resentments. Part of it has been to blame other people, to blame immigrants, to blame various minority groups. Mr. Trump's problem in one way is the flip side of his advantage. He's in control of the whole government — or he and his party. They have the House and the Senate and the presidency. They'll have the Supreme Court, sadly, pretty soon. So he's got no excuses. If he is not able to deliver on his promises to increase the fairness of the economy for these people and to substantially increase the number of jobs and greatly speed up the growth rate in ways that benefits them, then he has some political problems.
For more on this story, listen to our full interview with Barney Frank.