The Wall Street Journal

  • NOVEMBER 30, 2011

The Congressman from Fannie Mae retires.

  • It is a newspaper truism that what is good for journalism is bad for the country, and vice versa. Let’s just say that regarding the pending retirement of Congressman Barney Frank, we’re delighted to make the professional sacrifice.

Few House Members have made a bigger legislative mark, and arguably no one so expensively. Mr. Frank deserves to be forever remembered—and we’ll help everyone remember him—as the nation’s leading protector of Fannie Mae and Freddie Mac before their fall. For years Barney helped block meaningful reform of the mortgage giants while pushing an “affordable housing” agenda that helped to enlarge the subprime mortgage industry.

“I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision],” Mr. Frank said on September 25, 2003, in one of his many legendary rhetorical hits. “I want to roll the dice a little bit more in this situation towards subsidized housing.” The dice came up snake-eyes for the housing market and U.S. economy.

Democracy can be unfair, and for his sins Mr. Frank was rewarded with the chairmanship of the Financial Services Committee in 2009 and an opening to remake the U.S. financial industry. It was like asking Charlie Sheen to teach an anger management class. The result was Dodd-Frank, which didn’t solve the “too big to fail” problem but did make banks even more subject to the wishes of Washington. The crony capitalism exemplified by Fannie and Freddie became more broadly embedded in U.S. financial markets.

First elected to Congress in 1980 after a state legislative career, Mr. Frank is a political lifer. So though he is 71 years old, it’s intriguing that he is choosing to step down now. Nancy Pelosi kept her job as Democratic leader after 2010 in part by telling her colleagues that she and her fellow liberals could retake the House in 2012.

Mr. Frank said yesterday that he had planned to run for one more term, but that his state’s redistricting plan means he’d face thousands of new voters. He won in 2010 with only 54% of the vote, his lowest margin since 1980, and his retirement may suggest flagging Democratic confidence in their ability to win back the majority. Barney isn’t one to give up easily if he saw a quick way back to the chairmanship.

Mr. Frank’s career has exemplified the leftward drift of the Democratic Party over the last half century. Hostile to U.S. military power and favoring European levels of taxation and social spending, the Frank Democrats revealed their priorities in all their effervescence during the 2009-2010 Congress. The voters responded by electing 63 more House Republicans, the largest gain by either party since 1948.

Liberals who regret Mr. Frank’s departure needn’t worry too much. The next Democrat in line to run Financial Services is California’s Maxine Waters, whose main contribution to Dodd-Frank was requiring racial-preference officers at each of the regional Federal Reserve banks. Journalists may not miss Mr. Frank after all.


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