Members of The New England Council – including bankers, banking lawyers and investment specialists – were recently treated to an hour-long talk by arguably the most important national player connected to their industry.
U.S. Rep. Barney Frank, the Newton Democrat who will head the U.S. House Financial Services Committee starting in January – the first time a Democrat has done so in a dozen years – was clear with the regional chamber of commerce executives about what his priorities will be when he takes the helm of the committee that oversees financial services including banking, housing, insurance and securities. He made the comments at Putnam Investments’ headquarters in Boston’s Post Office Square on Dec. 15.
Known as a consumer advocate, Frank nonetheless insisted that users of regulated services must be sensible.
“If no one has lied to you, no one has coerced you – don’t come to me,” he said. “I spend enough energy trying to protect people from each other. I have none left to protect them from themselves.”
Frank noted that in the past five years, the percent of the national income that goes toward “corporate profits” has risen – from 8 percent to 14 percent – and the amount going toward wages has fallen, from 66 percent to 63 percent.
Those who have made money in recent years are going to be asked to help, he added – for example, in increasing the supply of affordable housing.
“We have a need for housing at the lower end that doesn’t pay for itself,” he said. “I want to help the banks and others make a lot of money, but I want to take part of it – a very small part – and help poor people.”
Frank also said he plans to pursue regulations that would change the loan limits allowed by government-backed mortgage purchasers and insurers Fannie Mae and Freddie Mac, and the Federal Housing Administration, from a flat U.S. rate to one determined by regional housing prices.
Answering a question about another type of government-backed loan, Frank replied that “the interest rate on guaranteed student loans will be reduced.”
The loans “are, after all, guaranteed,” he said, adding that reducing them is “one of Nancy Pelosi’s ‘Six for ’06′”: the Democratic priorities the incoming House speaker has said she hopes to accomplish in the first 100 legislative hours of next year. (Some Democrats are struggling with the agenda item to cut the interest rate in half on federally subsidized student loans, because of the expense, according to a Dec. 1 report in National Review Online).
Frank said his goal is to “help people who get hurt by the economy’s natural tendency to grow in ways more unequal than equal.”
Next year, he said, he’ll be pursuing a meeting of the minds “between people concerned with growth and people concerned with equity.”
James T. Brett, president and chief executive officer of The New England Council, said Frank’s remarks were “very well received by the industry.”
Members were especially pleased, he said, with Frank’s expressed support for extending the Terrorism Risk Insurance Act beyond its original expiration date and his praise for the affordable housing initiatives of the Federal Home Loan Bank of Boston and the Massachusetts Housing Finance agency.
Frank’s appointment as House Financial Services Committee chairman “is great news for Massachusetts’ and New England’s financial services community,” Brett said.
