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The American Banker

A Frank Tenure, Previewed ;

Said LaFalce-like in agenda if not approach
June 28, 2002, Friday

BY MICHELE HELLER

DATELINE: WASHINGTON

Rep. Barney Frank staked his claim Thursday to be the House Financial Services Committee's new ranking Democrat
and defended his ability to work cooperatively with industry officials despite his liberal reputation.

In an interview, the Massachusetts congressman, a lawyer by trade, countered rumblings that he would not seek the slot
currently occupied by Rep. John LaFalce, who plans to retire at yearend. Some observers had speculated that Rep.
Frank would pass it up if party rules required him to give up his position on the House Judiciary Committee, where he is
also the second-ranking Democrat.

"The speculation is totally wrong," said Rep. Frank, an 11-term congressman and 22-year veteran of the panel and its
predecessor House Banking Committee. "I've always preferred to take" a leadership position in House Financial
Services.

Rep. LaFalce announced Wednesday that he would rather pursue "new horizons" instead of running against Rep. Louise
M. Slaughter, a fellow incumbent Democrat. A redistricting plan finalized this week put the two in the same district.

Democrats will not vote on their committee leaders until Congress reconvenes in January, but no one is expected to
oppose Rep. Frank -- the panel's second-ranking Democrat is considered by allies and foes alike to be among its
brightest and most acerbic members.

His rise would present new challenges to financial services lobbyists, who already are preparing to cope with another
major change: the departure of Phil Gramm, the ranking Republican on the Senate Banking Committee. However, at
least one lobbyist said that Rep. Frank's liberal credentials could make it easier for him to build a bipartisan consensus --
if he is so inclined.

"In my opinion, nobody can be a more bona fide liberal and supporter of progressive social change than Barney
Frank," said J. Mark Leggett, the recently retired lead lobbyist for Bank of America Corp. "Therefore, when he takes a
position in support of a bill, it makes it awfully difficult for other liberals to say, 'Oh, this is just a pro-banking industry
bill' " and vote against it.

In the interview, Rep. Frank emphasized his free-market philosophies and involvement in the committee. He said that
he was initially attracted to the panel because of its housing jurisdiction, but financial services officials say that they
respect the record he has established on pure banking topics.

"I've always been supportive of doing away with Glass-Steagall," the Depression-era law that had separated investment
and commercial banking, he said. "I've always supported taking the free-market approach. I've been pro-competitive,"
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The American Banker, June 28, 2002

as long as there is "appropriate regulation."

For example, he said that he is leaning toward supporting banks in their fight with real estate agents over whether
regulators, under the Gramm-Leach-Bliley Act, should allow banks into real estate management and brokerage.

"I'm inclined to support more competition -- i.e., allowing banks into real estate -- but it hasn't been an issue I've been
focused on," Rep. Frank said.

The National Association of Realtors gave $5,000 to his campaign in the 1999-2000 election cycle but so far has not
contributed to his 2002 race, according to the nonpartisan Center for Responsive Politics.

Rep. Frank is expected to easily win reelection this year and is not as prolific a fundraiser as other top members of the
Financial Services Committee, which, like the full House, is expected to remain in GOP hands next year. This cycle he
has received $3,000 from the American Bankers Association, $3,000 from the Credit Union National Association,
$2,000 from FleetBoston Financial Corp., and $3,000 from WorldCom Inc.

Rep. Frank said he voted against deposit insurance reform on the House floor in part because raising insurance coverage
levels is not a high priority for Massachusetts bankers, who have extra insurance through a privatized fund and are
concerned about having to pay more federal premiums. He said it was also in part to protest the Federal Deposit
Insurance Corp.'s consolidation of its Massachusetts and New York offices.

An industry official who knows Rep. Frank well echoed the lawmaker's self-portrayal.

"Barney really is a student of the committee, a real student of banking," said Daniel Forte, the president and chief
executive officer of the Massachusetts Bankers Association. "While he's a strong advocate for housing and" the
Community Reinvestment Act, "at the same time he strikes a good balance of ensuring that a lot of rules do not increase
the regulatory burden for the industry."

Edward L. Yingling, the ABA's head of government affairs, said "Barney Frank on structural banking issues has a very
solid record, including on Gramm-Leach-Bliley and interstate branching."

Rep. Frank said consumer rights and privacy -- two of Rep. LaFalce's signature issues -- are priorities for him, along
with "tweaks" that might be needed to Gramm-Leach-Bliley (he said it is too early to tell exactly what adjustments
would be needed), reforming corporate governance and auditing, and the housing and international issues that fall under
the committee's jurisdiction.

A staunch defender of Fannie Mae and Freddie Mac, he favors increasing the size of loans the two
government-sponsored enterprises can buy and opposes efforts to overhaul their regulation.

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