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Franking Privileges: Barney and the Jet Set

Photo by U.S. Department of Agriculture | CC BY 2.0

Remember good old Barney Frank, the loudmouth former legislator from Massachusetts’ 4th District? (Even after 50 years in the Bay State, he still talks Joisey.) He’s gay and proud (having first out himself privately in the late 70s and then publicly in 1987), and still sports a progressive patina that over time has become a tad tarnished.

He was a grad student at Harvard, where friends of mine met him, but ditched his dissertation to work for the Mayor of Boston. He soon entered politics as a state rep, taking a law degree from Harvard while he served his west-of-Boston suburban constituency. By 1980 he was a Congress-critter, and by the time he bowed out in 2013 he had risen to Chairman of the House Financial Services Committee (demoted by the 2010 mid-terms to Ranking Member). Unless it happened in High School, he never lost an election.

A liberal stalwart, Frank was active in the Civil Rights Movement in the 60s, and sponsored or voted for many liberal initiatives involving environmental protection, drug decriminalization, limiting military spending, telecommunications ownership and net neutrality, and of course civil and gay rights.

As we well know, Barney is the Frank of the Dodd-Frank Financial Reform Act of 2010. Co-sponsor Dodd is ex-Senator Chris Dodd of Connecticut, who has much better hair and a bigger bank account. Dodd, by the way, reneged on his vow to never, ever become a lobbyist, when upon exiting the Capitol’s revolving doors in 2010 he headed straightaway to run the Motion Picture Association of America (MPAA) for the sacrificial compensation of $1.5M per year and all the Oscars he could eat. As chair of the Senate Banking Committee, he had run interference on behalf of major corporations and financial institutions (including AIG, a company that bankrolled Dodd to the tune of $100K in 2008, and for whose executives he had sought bonuses after its near collapse and then lied about it.) Dodd should open a Waffle House.

Anyway, Dodd-Frank. Among other reforms such as the Volker Rule, it established the Consumer Financial Protection Bureau (CFPB) spearheaded by Elizabeth Warren that’s now being Trump-trolled by Mick Mullvaney impatiently awaiting Congress to disembowel his agency entirely. But Frank himself had already watered down the legislation at the time it was crafted, netting billions for the banking sector. After his exit from Capitol Hill, rather than to go on to be a bank lobbyist or an SEC bank regulator, Barney seems to have done the next best thing.

According to opensecretsorg.org, in 2010, Frank raised $4M in campaign contributions from individuals and PACs, twice what he’d raked in in the 2008 cycle and 2.5 times what the average House member raised for that election. Frank’s largest contributions came via FMR Corp., the parent company of Boston-based Fidelity Investments, an $850B financial services company. In 2010, it netted Barney—their top pick—$86K (and gave Dodd $43K). Over the course of his congressional career, FMR has directed a minimum of $113,550 into Barney’s campaigns. Beyond that, FMR has been shoveling around $3M per year to financial industry lobbyists, per Open Secrets.

As for the current gutting of Dodd-Frank that was signed into law by Trump in late May, with minimal reservations Barney seems to be all for it, as were the Democrats (16 in the Senate and 33 in the House) who voted for it. On several occasions he has backhanded worries that the financial reform reform could spark a banking meltdown. On CNBC (5/22/18) he opined the Dodd-Frank rollback “does not in any way weaken the regulations we put in there for the largest banks or that were there to prevent the kind of crisis we had ten years ago.” Aside from carping that escalating its threshold for imposing financial stress tests from $50B to $250B made it twice as high as he would have preferred, Frank’s only complaint concerns its potential for negative impact on minority homebuyers: “Racial discrimination continues to be a serious problem here and for that reason I wouldn’t have voted for the bill.”

That’s nice, Barn, but that probably won’t affect the bottom line of the bank on whose board you have served for the past three years. Signature Bank is a rapidly growing commercial and Internet bank in the New York City area that in 2017 took in $43B. Few media outlets have bothered to point out Frank’s new role or that his preferred $125B threshold for stress tests wouldn’t impact Signature for quite a while. For his troubles as an overseer, Frank is comfortably compensated—approaching $400K in 2016 and probably more since. (Also on the board and well-compensated is Alphonse D’Amato, the long-serving GOP Senator from New York, a savvy power broker who chaired the Senate Committee on Banking, Housing, and Urban Affairs and is no stranger to scandal.)

Barney isn’t all bad or even a hypocrite, as some have called him (read him defend himself here). To his credit, throughout his long tenure in Congress, it seems that Signature never gave him a dime. In fact, in 2016, only one Democratic candidate for the House received their largess (all of $8900), Patrick Murphy of Florida, who sits on the Financial Services Committee. Murphy also vied for Marco Rubio’s Senate seat, and with the DNC’s earnest support beat back Allan Grayson’s populist 2016 insurgency in the primary. Murphy ended up losing to Rubio $18M to $25M but kept his House seat.

When it aired its interview with Frank, CNBC felt un-obliged to disclose that he’s a director of a Wall Street darling that’s a defendant in a $66M lawsuit filed in Florida in 2016 by victims of a Ponzi scheme that the bank abetted. The prime defendant is William Landberg. He and his firm West End Financial Advisors had 37 accounts at Signature before it declared bankruptcy in 2011. A string of haphazard, poorly performing investments led him and the bank to connive to move money from protected accounts to his and his wife’s personal accounts to bankroll their extravagant lifestyle. According to the New York Times (2/23/16), the plaintiffs’ lawyer charges “Signature knew Landberg was operating a house of cards and knew returning checks on overdrawn accounts would make it collapse, so Signature used that threat to force Landberg to transfer funds. … Signature should have stopped the crime but instead perpetrated it.”

The West End Ponzi scheme transpired well before Barney Frank joined Signature’s board, but should it not have given him pause about signing on there? And did Frank advise the bank to contribute to campaigns of 4 of the 16 Senate Democrats (Joe Donnelly, Heidi Heitkamp, Joe Manchin, and Claire McCaskill), whose votes were critical in passing the rollback legislation? In the 2018 campaign cycle, did Barney have a hand in directing $55M more of Signature’s campaign contributions to Democratic House and Senate incumbents than to Republican lawmakers? (That was a stark turnaround from pre-Barney 2016, when the bank doled out $98M more to GOP candidates than to Democratic ones.) If, as he claimed, Frank really would have voted nay on the rollback, why would he want to sweeten the pot for its passage? Just to look nice and progressivey, apparently.

Then there’s Jared Kushner and his troubled real estate satrapy. He and his loved ones are Signature customers too. In February, Politico reported that Signature is one of 11 banks that have provided the Kushners with unsecured lines of credit totaling anywhere from $19M to $95M, according to his Public Financial Disclosure Report from a little over a year ago. At Signature, he and his father jointly had access to up to anywhere from $1M to $5M in 2016. A more recent disclosure form filed by spouse Ivanka Trump indicates their credit at Signature is still good and has been bumped up to the $6M to $30M range. Will Signature help them gin up funny money, as it did for Landberg, should certain big projects go belly up?

Landberg did three years in a white collar cooler after being found guilty on one count of securities fraud in 2011for his creative financing. (According to White Collar Advice—apparently a consultancy for executives facing hard time—Lewisberg Federal Prison Camp, the Pennsylvania pen where Landberg was sent, is the go-to gaol for the affluent.) For its part, Signature denied colluding with him and, characterizing itself as a victim, has asked that the plaintiffs’ suit be thrown out.

This is a fine kettle o’ fish you’ve jumped into, Mister Congressman. Barney, we hardly knew ye.

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Geoff Dutton is an ex-geek turned writer and editor. He hails from Boston and writes about whatever distortions of reality strike his fancy. Currently, he’s pedaling a novel chronicling the lives and times of members of a cell of terrorists in Europe, completing a collection of essays on high technology delusions, and can be found barking at Progressive Pilgrim Review.

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