Former Rep. Barney Frank says he's changed his position on a central regulatory provision from his namesake Wall Street reform bill that is now at the center of a high-stakes congressional budget battle.
Frank — a co-author of the 2010 Dodd-Frank financial reform law — was at the forefront of a progressive public campaign on Wednesday, along with liberals including Sen. Elizabeth WarrenElizabeth WarrenHillicon Valley — Presented by Connected Commerce Council — Incident reporting language left out of package Exporting gas means higher monthly energy bills for American families Senators turn up the heat on Amazon, data brokers during hearing MORE (D-Mass.), criticizing Republicans for including language to change the statute in the $1.1 trillion funding bill now before Congress.
The provision would no longer require that big banks keep derivatives — a form of financial trading that some argue is riskier than traditional trading — in accounts that are backed by the government through Federal Deposit Insurance Corp. (FDIC).
But in February 2012, Frank was still in office and supported a bipartisan bill that included the change, saying at the time, "this should be passed."
In an interview with The Hill, Frank said his current opposition is rooted in his concerns for the precedent it sets for altering Dodd-Frank via a budget bill.
"If I was voting on the merits now, I'd vote against this," Frank told The Hill. "There's more uncertainty that's created if you start pulling this stuff out of [Dodd-Frank]. I'm inclined to believe that banks are too complex, and this forces them to have more compartmentalization."
At the 2012 mark-up hearing, he said the bill "will not in any way, shape or form reduce sensible regulation of derivatives."
In fact, Frank joined other Democrats, Republicans and former Federal Reserve Chairman Ben Bernanke in arguing that, if lawmakers didn't support the provision, regulators were risking that bad actors in the financial market would be tempted to take their risky trading in markets without oversight.
The House Financial Services Committee approved the 2012 bill on a voice vote, and it was sponsored by Democratic Reps. Jim Himes (Conn.) and Carolyn Maloney (D-N.Y.), along with then-GOP Rep. Nan Hayworth (N.Y.).
In October 2013, the House passed a reintroduced version of Himes's legislation on a 292-122 vote, with 70 Democrats joining 222 Republicans.
Frank told The Hill on Wednesday he has "changed" his position since he was ranking member of the House Financial Services Committee.
"I was being tactful," Frank told The Hill of why he supported the bill in 2012. "I do now think it is a bad policy. Early on, two-and-a-half years ago, I though, 'OK. This hasn't been implemented yet. We can live without it.' But two-and-a-half years later? It's implemented, and I think we should keep it."