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Congressman Frank, it"s nice to see you. Thanks for being here.
REP. BARNEY FRANK (D), MASSACHUSETTS: Thanks. Rachel.
MADDOW: Can you give me your understanding of where the current negotiations are on the debt ceiling?
FRANK: Yes, I don"t know. I mean, I can be very honest with you.
There"s a lot of going back-and-forth.
Look, we have this problem. There are a substantial number of Republicans in the House who have a serious problem with reality. A large number of members of the House Republican Caucus agree with Michele Bachmann that we shouldn"t raise the debt limit, which would be of course an economic disaster, which even Ronald Reagan understood was crazy.
Another substantial chunk don"t agree with Michele Bachmann, but they are afraid of losing a primary to someone who does agree with her.
So, we have this reality problem, and I do not know what will happen.
These are people who are in the medieval term invincibly ignorant.
It is, of course, the case--and I have to keep emphasizing this. I voted already once to raise the debt limit because I think we have this obligation. But the notion that the right wingers are doing me a favor to raise the debt ceiling is simply wrong. I voted against the war in Iraq. $1 trillion. I voted against tax cuts for millionaires. I didn"t vote for Bush"s drug program which was unfunded.
So my debt limit, I got a couple trillion left to go. I am prepared in the interest of national stability to vote for it. But this notion they can extort this and tell us that old women living on $19,000 a year shouldn"t get any increase in the cost of living so they can subsidize millionaires and waste money in Afghanistan, no, that"s not going to coerce me into voting for it.
On the other hand, I do think that some of the few remaining serious Republicans understand that they will get blamed for this. So, I think there is some pressure to do that.
One other point I want to mention, Rachel, which deeply angers me, these are people, the Tea Party people, who came to be the constitutionalists, they are in the process of launching the most fundamental assault on the American Constitution, fundamental principle we have ever seen, and that was majority rule. The great breakthrough in the 18th century was self governance.
And if you read the Constitution, the assumption is majority rule in Congress. It"s majority rule in the states. In no part of the U.S. Constitution are you required to get more than a simple majority of both Houses to do anything.
There"s a 2/3 required for treaty only in the Senate. That was special with foreign powers. There"s a 2/3 requirement to amend the Constitution or to impeach someone.
But regular legislation everywhere in the Constitution takes a majority, and these people probably have no faith in democracy. They are afraid that the temporary majority won"t hold, because you need 60 percent to do this and 67 percent to do that.
Let"s be clear what that is. It"s a repudiation of the great contribution America made in the 18th century to the world, the notion of majority rule in a democracy.
MADDOW: Congressman Frank, I know that the Senate is planning on staying through the weekend to work on that proposal that you were just describing there, this "cut, cap, and balance" thing. I know that the meetings are happening day and night in Washington right now to try to come to some sort of resolve, some sort of resolution.
You understand the markets as well as anybody in Congress because you have been regulating them. Do you feel like we are out of time in terms of whether or not the markets are going to freak out and do us some real economic damage?
FRANK: Well, it"s not either or. The later it is, the worse it will be. And I have to say, I"m a little torn.
The ratings agencies have been in the last 10 years the most incompetent entities around, but they are facts. And they--the rating agencies to me are like stopped clocks. They may be right twice a day, and it this is one of those times because, clearly, if the U.S. government defaults, it doesn"t just hurt the government. The notion that governments will stand behind their debts is very important in keeping interest rates down so we can build bridges, highways and schools. And these irresponsible people are jeopardizing.
So, again, we are getting very close to the point where there will be real damage. There"s probably going to be some incremental damage coming forward. And as I said, it"s not an either or date.
But there is no question that it will be very damaging. There was an article today that the housing market will suffer because that is so much tied to interest rates. People who--small businesspeople who have been doing business who are owed money by the federal government--the federal government owes a lot of money to contractors--they won"t get paid. They in turn won"t be able to buy supplies.
It is just unimaginable, except for people who as I said are only occasionally in touch with reality.
MADDOW: Congressman, one question for you about the Dodd-Frank Act. The Wall Street reform act that bears your name, signed into law a year ago. The Consumer Financial Protection Bureau created as part of that act, is in business starting today. It"s still being fought and trying to be undermined by Republicans.
At this point, do you feel like its future is still uncertain, or do you feel like it is here for good?
FRANK: It"s here until and unless the Republicans win everything in 2012. Look, here"s what they have done, Rachel, briefly, in the last few months.
First, they tried to--they are trying to postpone any new regulations of derivatives and they specifically want to stop us from dealing with speculation that"s driving up energy prices. Secondly, they don"t want to provide the money that the Security and Exchange Commission and the Commodities Futures Trading Commission need to regulate all of these things.
Yesterday, incredibly to me, they put a bill through our committee over our objection that would take any liability away from a rating agency if they made misstatements in a prospectus. So, if you bought a stock based on what the ratings said in the prospectus, you couldn"t sue them no matter how cockamamie, to use a technical term, it was.
And today, they tried to put the bank regulators who never did anything about consumer protection, whose failure to do that was the reason for creating the consumer agency, back in charge.
So, yes, none of those are going to go anywhere in the Senate, and the president wouldn"t sign them if they did. They are hurting by not funding these entities.
So, the answer is this: these agencies will go well unless they are elected (ph).
Can I just one thing that"s very important? Because one of the things we got now is this effort to say that almost all government is bad. The notion is less government spending is automatically good.
You know, I have been in this business a while. I have never seen a tax cut put out a fire. I have never seen a tax cut fix a highway, or do medical research that we need.
Here is the danger the right-wing faces with the consumer bureau that Elizabeth Warren did such a good job with, although she was inappropriately not rewarded by the president. It"s going to be a case--here"s the deal: their argument is the big bad government is a threat to us. The Consumer Protection Bureau as most Americans understand is the government protecting them from abuse by private financial institutions.
And they are terrified that the public will see that there is value to a public institution that can prevent them from being abused by private institutions because it undercuts the whole rationale that the government is always bad, always a problem. And that"s why we are fighting so hard for it.
MADDOW: Congressman Barney Frank, Democrat of Massachusetts, ranking Democrat on the financial services committee--thank you for your time tonight, sir. I really appreciate it.
FRANK: Thank you, Rachel.
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