Massachusetts congressman Barney Frank, a long-time advocate of affordable housing who also played a major role in crafting landmark financial services regulation, stated on Monday that he would not seek re-election for his 17th term of office in 2012.
Articulate, acerbic, and combative, Frank has been one of the leading liberal voices in Congress since voters in his state’s 4th District first elected him in 1980. But at 71, Frank decided against running again partly to avoid what is expected to be a tough race in a district that in recent weeks has been altered to include more conservative towns. Even if he had run and won, Frank says he intended to retire in 2014.
As chairman of the House Financial Services Committee until this year, when Republicans took control of the House of Representatives, Frank had often been at the center of legislative actions that had an impact on the housing and mortgage banking markets. NAHB named him its Federal Official of the Year for 2008, citing his actions “to provide reasonably priced, affordable mortgage solutions to millions of potential home owners while greatly enhancing liquidity in the mortgage credit markets.” NAHB also lauded Frank’s efforts to modernize the Federal Housing Administration and reform Fannie Mae and Freddie Mac.
“When we look at Congressman Frank, we see ... [him] as someone truly in favor of providing low-income, non-subsidized housing,” Danny Ghorbani, president of the Manufactured Housing Association for Regulatory Reform, told Builder on Monday. “Consumers are going to lose a very good friend.”
He’s been less amicable to the banking and investment communities, with which Frank has had an ambivalent relationship. Frank Keating, the former governor of Oklahoma who is president and CEO of the American Bankers Association, called Frank “a storied lawmaker. He is a very tough adversary because he’s bright and relentless, but he’s open-minded to the facts.”
But Frank’s aggressive attempts to rein in the financial system after its free-wheeling lending and mortgage securitization practices helped drag the country into a prolonged and debilitating recession have drawn flak from the investment, financial, and housing quarters.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, which Frank cosponsored with Connecticut Senator Christopher Dodd, ushered in some of the most stringent restrictions on the financial system in 50 years. Frank was ubiquitous in the media touting the virtues of that bill, to the point where he became the face of the legislation. “There was no greater champion for Wall Street reform than Barney Frank,” Michael Greenberger, a University of Maryland law professor and former official at the Commodity Futures Trading Commission, told the Washington Post.
Since it became law in 2010, Dodd-Frank has been the target of Republican lawmakers who have vowed to repeal it. Builders and developers are among those who have complained that Dodd-Frank swings the pendulum too far by enforcing restrictive lending requirements that have severely limited access to financing for residential development and construction.
One provision of Dodd-Frank in particular that has drawn the housing industry’s consternation is the requirement that to be eligible for qualified residential mortgage exemption from risk-retention rules a home buyer must ante up a 20% down payment, be current on all debt obligations, and have a debt-to-income ratio of no more than 28%.
The Mortgage Bankers Association was among the groups that were hoping for a more flexible down-payment threshold. In a letter it sent on August 1 to several government agencies, NAHB stated, “the narrow definition of a qualified residential mortgage (QRM) would have a severe adverse impact on the availability and cost of residential mortgages.”
NAHB went on to say that it was “very concerned that as a result of the proposed rule, additional capital will have to be retained by the lenders. The amount of capital will vary, but without the correct exemptions, the net effect will be to make securitization less effective and unnecessarily raise the cost of mortgages.”
Frank becomes the 16th Democrat to announce his or her intention not to seek re-election next year, compared to six Republicans. Speaking from his home base in Newton, Mass., Frank said retirement would allow him more time to lecture and write. He also indicated that, after 30 years in Washington, he wouldn’t miss the political gridlock that has besieged the nation and its Capitol.
John Caulfield is senior editor for Builder magazine, whose senior editor-online Claire Easley contributed reporting to this article.