CNBC INTERVIEW WITH REP. BARNEY FRANK (D-MA), CHAIRMAN OF THE HOUSE FINANCIAL SERVICES COMMITTEE
SUBJECT: THE LEGISLATIVE AGENDA FOR THE HOUSE FINANCIAL SERVICES COMMITTEE INTERVIEWERS: BILL GRIFFETH, SUE HERERA, DENNIS KNEALE AND MICHELLE CARUSO-CABRERA
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MR. GRIFFETH: We move to another part of the Capitol, where Chairman Barney Frank has finished his news conference laying out his legislative agenda for the month of March. And he joins us now in front of our camera there. Chairman Frank, always a great pleasure. Thank you for joining us today, sir.
REP. FRANK: You're welcome.
MR. GRIFFETH: You had a lot to talk about, and we have many things we want to bring up here. I -- one thing that intrigues us -- the two banks you itemize that are -- want to give back the TARP money -- is that -- what do you make of that? I mean, is that beginning a trend or --
REP. FRANK: I'm pleased.
MR. GRIFFETH: Yeah?
REP. FRANK: Well, I hope it is. Look, it means that there's been some stability. I don't think either one of them are suicidal. So it shows that things are beginning to stabilize, at least for them. It means that we recovered some taxpayer money, dollar for dollar. There's some worry about leakage. And it also shows, I think, that we're being appropriately tough as the public has the right to ask us to be. They're giving this money back because we are finally getting to the point where we are imposing conditions that they don't want to live with.
And so I'm very pleased that in the bill the we passed, we made this possible. And the more money that comes back into the Treasury, the less is out there at risk, and the better I like it, especially since, as I said, I'm assuming that neither one would have done that if they weren't feeling that things had stabilized some --
MS. HERERA: Well, do you think, sir, that it's that they're stable, or that they don't like what some are calling the punitive nature of the requirements that go along with taking TARP money? Which do you think is a better --
REP. FRANK: Well, it's both. It's both. I would say -- I don't know the run -- people who run that bank, but it would be pretty irresponsible of them to say, "You know what? I want my golf tournament, so therefore I'm going to risk my stability." So I am assuming that if they weren't stable, they wouldn't give the money back. I think if they had to choose between the stability and soundness of the bank and a golf tournament, they'd pick the stability and soundness of the bank.
MR. GRIFFETH: Another tantalizing headline that came out of your news conference, sir, was, you would like to push for prosecution of people who caused this crisis. Can you flesh that out for us? Who are you thinking about here?
REP. FRANK: I have no specific people in mind. Obviously we've known some of these things, like Madoff. And I did talk about both civil and criminal. Clearly people did things they shouldn't have done. There were irresponsible actions. The public has a right to know that this is being looked at. This is not all God's fault.
MR. GRIFFETH: Are you talking CEOs or, I mean --
REP. FRANK: I want the prosecutors to look at this. In some cases, it may be CEOs. In other cases, it may be other people. It may be the institution. It may be that there was not so much individual culpability but an institutional culpability, and we want money to come back. So we're going to ask the Securities and Exchange Commission and the attorney general of the U.S. and the bank regulators to come in and tell us what their plans are to look over this and see. And there will be a combination of individual culpability, civil responsibility, whatever.
MR. KNEALE: Congressman Frank, if you had to guess, in this whole mortgage mess, what percentage was created by predatory lending practices and criminals at the banks and what percentage was contributed by personal irresponsibility and "I took on a loan and I didn't read the fine print," how's that split go between the banking side and the consumer side?
REP. FRANK: Well, your question, as I understood it, was prefaced by "If I had to guess." And I don't. (Laughter.) And the reason I won't is, it's not operational. If I thought it was 20 percent or 30 percent, I want people to go after it.
I also want -- and this is the most important thing that we can do, as the legislative body; we are not the prosecutors or the administrative agency -- we're going to make it illegal to do that in the future.
So it was some combination of individual borrowers being irresponsible and of a lack of regulation of the lenders. And we're going to go after both of them in the sense that we're going to pass rules that wouldn't allow either or both of them -- and they both have to be together -- to do this. That's our job, it's to stop it from happening in the future.
MR. GRIFFETH: All right. And then let me --
MS. CARUSO-CABRERA: Representative Frank --
REP. FRANK: Yeah, I've got to end this pretty soon. I've got to get to the floor.
MS. CARUSO-CABRERA: The Wall Street Journal says that there is a deep divide among Democrats and a lot of Democrats are resisting President Obama's desire to lower the deductions, especially when it comes to mortgages, for wealthy Americans. Is there a divide among Democrats? And do you think that deduction survives or not?
REP. FRANK: I have not really focused on it. As you know, it wasn't a subject of the press conference. It hasn't -- something I -- nobody's mentioned it to me, but --
MS. CARUSO-CABRERA: Nobody's mentioned the reduction in deduction of the mortgages?
REP. FRANK: No, I -- because, one, that goes to the Tax Committee, so it's not within the jurisdiction of this committee. So it just -- I've been busy with other things. And as I said, it wasn't something I talked about there and I'm not --
MS. CARUSO-CABRERA: Chairman Frank --
REP. FRANK: I'm sorry, but I do have to go to the floor. We're --
MS. CARUSO-CABRERA: Could I ask you one question on Citigroup?
REP. FRANK: No, I'm sorry. We don't have -- no. We don't have more time. I'm sorry.
MS. CARUSO-CABRERA: Oh, I'm sorry. Well, we'll have you back.
MR. GRIFFETH: Okay.
REP. FRANK: I've tried to explain -- well, I explained in advance I had limited time.
MS. CARUSO-CABRERA: I know.
REP. FRANK: And I know you never pay attention to that. But time I'm going to end it. (Laughter.)
MS. CARUSO-CABRERA: Well, we just love having you as a guest.
MR. KNEALE: We could have -- you could have answered one more question in all that time he was being so polite.
MR. GRIFFETH: Thank you, sir. Have a good night. Chairman Barney Frank.