The Slatest

When Barney Frank Said It Was OK for Democrats to Deregulate Banks, He Was Getting Paid by a Bank

WASHINGTON, DC - JULY 20:  Former Rep. Barney Frank (D-MA) (L) and former Sen. Chris Dodd (D-CT) talk about their hallmark and namesake legislation, the Dodd-Frank Wall Street reform law, on the fifth anniversary of the law at the Newseum July 20, 2015 in Washington, DC. The event was hosted by Better Markets, a self-described nonpartisan, independent and nonprofit organization that promotes the public interest in the capital and commodity markets.  (Photo by Chip Somodevilla/Getty Images)
Former Rep. Barney Frank (D-MA), left, and former Sen. Chris Dodd (D-CT) talk about their hallmark and namesake legislation, the Dodd-Frank Wall Street reform law, on the fifth anniversary of the law. Chip Somodevilla/Getty Images

Donald Trump on Thursday signed into law bipartisan legislation loosening some of the key provisions of the post-financial banking rules known as Dodd-Frank. The House had passed the legislation a couple days before, but this story begins more than two months earlier, as the deregulation push was picking up steam in the Senate. Given Republicans’ narrow majority in the upper chamber, the effort would have quickly petered out if not for the support of more than a dozen moderate Democrats who signed on early.

Those Democrats argued that Dodd-Frank went too far when it came to regulating community and regional banks, and that easing a few rules would free up credit for rural areas and small businesses. And to make their case, again and again, they cited one man in specific: former Democratic Rep. Barney Frank, one of the 2010 bill’s chief authors, who argued that despite fears from the left—as well as his own opposition to a different provision in the bill, which could hurt black homebuyers—the top-line changes were of no real concern and didn’t put us any closer to another financial crisis. If Frank was OK with the rollback, their argument went, everyone else should be too. Frank agreed.

But the problem, as the Washington Post documented Thursday, was that what went largely unnoticed or unsaid as Frank was providing those Democrats cover was that he also sits on the board of a New York-based financial firm that stood to gain from the very changes he was defending:

Dodd-Frank imposed additional regulatory safeguards on banks with more than $50 billion in assets, but the rollback that passed this week, among other things, raises that threshold to $250 billion. Signature Bank has more than $40 billion in assets and can now grow significantly without automatically facing additional regulation. Frank has served on Signature’s board for three years and has received more than $1 million in payments from the bank during that time.

For Frank’s part, he acknowledged to the Post that Signature will likely benefit from the new law, but said that had nothing to do with his thinking. And the paper did find evidence to support the idea that Frank was in favor of raising the threshold to a lesser degree while he was still in Congress. Still, it stands to reason the fact he was getting paid by the bank at the same time he was going on TV to defend a bill that would help that bank was something that was relevant to the debate.