"Believe it or not," declares the headline at a financial news website Housing Wire, "Barney Frank set to join a bank board."
I believe it. The only surprising thing about Frank's election this week to the board of New York-based Signature Bank is that it took this long for the former Financial Services Committee chairman to land a job in banking.
Under the standard view of government's relationship to business, it's shocking that Frank, a big-government pragmatic liberal politician, would wind up in bed with corporate America. Specifically, it's supposed to be surprising that a leading advocate of bank regulations would land at a bank.
The shock this week was widespread. "Barney Frank–Yes, THAT Barney Frank–Joins a Bank Board," the Wall Street Journal announced.
"Dogs and cats living together," blared the subheadline at Housing Wire "Mass hysteria!"
"Quick, everyone check outside and make sure pigs aren't flying!" the article began, "[T]he world may be turning upside down right before our very eyes."
The premise behind this shock is not merely simplistic, it's almost 180 degrees from the truth.
Frank has never said there are too many banks in the world. He never said he hated bankers. Instead, Frank was consistent in advocating greater government involvement in the banking industry. Any shock at an economic interventionist joining a bank is grounded in (a) the false notion that what banks want is simply to be left alone, (b) an ignorance of how government growth fuels the revolving door.
Rather than being a surprise, Frank's hire was foreshadowed in 2010 just after he passed the Dodd-Frank financial regulation bill into law.
"What I think bothers businesspeople," Signature chairman Scott Shay told Politico's Ben White back in 2010, "is they feel like they have a multitude of new regulations to comply with, and now they have to hire compliance experts and lawyers and other cost-generating personnel rather than revenue-generating workers."
In other words, laws that force companies to deal more with government encourage them to hire up the meddling politicians and regulators when they choose to enter the private sector. Republican former congressman Michael Oxley, of Sarbanes-Oxley fame, became lobbyist for FINRA, a Wall Street industry group. Republican former Rep. Richard Baker was the first congressman to propose federal regulation of hedge funds — he later became to first congressman to head the Managed Funds Association.
Frank, as a board member at Signature, won't be a regular employee at the bank. But think for a minute about why a burgeoning bank like Signature would hire a politician like Frank.
First, the headlines are good public relations — free ink.
Second, and like his fellow board member, former Senate Banking Committee Chairman Al D'Amato, Frank provides Signature with insight and access into government. Signature's announcement of Frank's election to the board was telling: "With a 32-year career devoted to government and his distinguished expertise in financial services, we believe Barney will be an asset to the board."
Regulators will take his phone calls. Frank possibly provides cover for the bank — hey, if Frank said this was okay, are you, a lowly Federal Reserve staffer, going to disagree?
And even if Frank is "cost-generating," that doesn't mean his legislation can't be profit-generating for Signature Bank.
"Volcker Rule Will Benefit These Firms," was a 2013 headline at The Street, a financial publication, which explained, "implementation of consumer banking laws in through the Dodd-Frank bank reform legislation has been cumbersome for the large banks, but has allowed lenders such as Discover Financial Services and Signature Bank to gain market share." Investor's Business Daily reported that Dodd-Frank was helping Signature lure talented bankers away from the big banks.
There are many ways, big and small, in which Frank's interventionism has been good for banks.
Signature, in its announcement of Frank's hire, pointed out his central role in the 2008 bailout. The announcement called Frank, "instrumental in crafting the short-term $550 billion rescue plan in response to the nation's financial crisis." (Signature, to its credit, was one of the first banks to return its bailout money.)
It ignores history to call Frank an enemy of the banks. In his only potentially difficult reelection, in 2010, once late polls showed the Republican gaining on Frank, Bank of America CEO Brian Moynihan cut a $2,000 check to help save Frank.
Once we shed the notion that big government is the enemy of the banks, we see clearly through to the truth, that big government is the friend of the politician who wants to work for a bank.
Now Barney Frank has followed the road that leads, nearly inevitably, from regulating the banks to working at a bank.
Timothy P. Carney, The Washington Examiner's senior political columnist, can be contacted at email@example.com. His column appears Sunday and Wednesday on washingtonexaminer.com.