Barney Frank Can’t Stop Tinkering With Money and Markets

Posted on December 8, 2009


Rep. Barney Frank. Unarmed but Extremely Dangerous to the future of the US economy and perhaps even the world itself. He has his dreams.

Whenever Barney Frank drops out of the news, it means he is feverishly at work on something – usually something that smells bad – like his latest proposal:  Foreign Exchange “…currency derivatives would not be exempt from proposed US rules that would require all derivatives trades to be processed through a centralised clearing system.” [Financial Times]   P-U!

Mr Frank’s move came as policymakers are debating the detail of legislative proposals designed to increase transparency and reduce risk in the vast over-the-counter derivatives market. While the proposals are not final, the U-turn on his previous stance has stunned the FX market.

Bankers have been lobbying hard to steer lawmakers away from forcing currency swaps and forwards on to clearing platforms. They fear it will introduce new systemic risk into the financial system and impose heavy costs on companies that trade internationally. Some fear it could drive currency trading offshore. [Financial Times]

For reasons of copyright, I cannot fully reproduce the article from the FT, but if you have a subscription, I urge  you to read it.  Anything to do with Barney Frank, Chairman, House Financial Committee needs to be tracked since he tends to go off the track.

While his views and often his votes support his extreme progressive philosophy, still Barney Frank survives.  His scandalous love relationships “off campus” have made headlines but have not lessened his power. He is at the center of the housing and banking sectors of the economy.

Another proposal of note framed by Frank has been that of using TARP funds to “shift $3 billion of the $700 billion financial bailout in favor of emergency mortgage aid.” It appears as an amendment to far-reaching fiscal reforms in a bill developed in the House. Republicans stand firmly on their position to use TARP funds to draw down the national debt.[The Hill]

With his term as Chairman up for review but with confirmation not in doubt, Ben Bernanke is fighting legislative action that would allow Congress in effect to control the Federal Reserve.

The not-to-be-believed team:  Barney Frank and Ron Paul have worked in tandem to radically overhaul the Federal Reserve’s structure – in the middle of the country’s worst fiscal crisis since the Great Depression.

But current Fed Chairman, Ben Bernanke, is a hero these days and also a powerful force in helping to maintain the economy on a steady course.

Neither the Fed nor the Treasury nor the FDIC has functioned flawlessly throughout this crisis, but together they have functioned well enough: better, even, than many had expected, and Bernanke’s clear thinking has helped to unify and coordinate their efforts. Independence is the Fed’s characteristic virtue, as solvency is the FDIC’s and creditworthiness is the Treasury’s. [The National Review]

And so Barney Frank continues to tinker with money and markets largely unnoticed by the public in general but whose intellect and ability are legend and respected in Congress.  We the people had better keep better track of Barney.

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