Barney Frank At The Chamber of Commerce

As the chairman of the House Banking Committee, Rep. Barney Frank is one of the most important public figures in the country. Frank kept folks at home updated on the fiscal crisis with a speech before the Greater Boston Chamber of Commerce.

Frank pushing to get himself out there locally. He has spoken recently to Wayne Woodlief of the Boston Herald, Ross Kerber of The Boston Globe and the editorial board of the South Coast Standard Times. He’s doing exactly what a local figure should do when he or she feels their getting a raw deal on a big story. I am not surprised that he gave some of his most provocative comments to the New Bedford-based Standard Times. Frank is facing reelection next week, and the southern part of the district is voter rich.

Events like a chamber breakfast give an elected official an opportunity to reach leaders in the area’s business and not-for-profit community.

Introduced by the chief marketing officer of Bank of America, Anne Finucane, Frank took time to separate the heroes from the villains in the current fiscal unraveling. He started off his remarks calling on other banks to follow the example of Bank of America in writing down more than 600,000 borrowers.

The major targets of Frank’s comments were the financial professionals who profited obscenely by way of trafficking in mortgage-backed securities during the years of the real estate boom, walked away with huge bonuses and left the country holding the bag. “Diversification turned out to be a disaster,” he said. “Spreading around is spreading the poison.”

He contrasted those who originated mortgages with those who those who purchased them even within the same company. Citicorp, he said, recently merged the two units and put the mortgage-originators in charged. The mortgage-originators, who were playing with the company’s own money, were more careful while the other group was more reckless, Frank said.

Frank mocked the thinking behind the securities, i.e. that the value of real estate would only go up, saying it would be like “somebody went into the business of selling life insurance to vampires,” securitized the life insurance policy and “now the vampires are dying.”

He also painted a picture of where his committee’s work is going, and it means a major change for the financial services industry. “We are now going to regulate the securitization activities of all financial services,” Frank said.

My sense is that Boston’s cognoscenti received Frank well. I don’t expect him to have a problem next Tuesday. More interesting will be to see how those who make their livings engaged in the trading of various securities react to Frank’s call for additional regulation.

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