Letter to the Editor

How Barney Frank fooled the mega-banks

The front-page excerpt from Robert G. Kaiser’s book on Congress [“The secret handshake that foiled the banking lobby,” May 6] told how then-Rep. Barney Frank (D-Mass.) exploited divisions within the banking lobby to secure the passage of the Consumer Financial Protection Bureau as part of the Dodd-Frank Financial Reform Act.

During the 1970s and ’80s, I and other staffers on the Senate Banking Committee often used the phrase “Gresham’s law of trade association politics.” It meant that the policy of any trade association tends to be driven by its most obtuse elements. Mr. Frank took advantage of this “law” to shift $1.4 billion in the cost of federal deposit insurance to the banking lobby’s most obtuse elements — the mega-banks.

In effect, Mr. Frank charged them for their own obtuseness. Is this a great country or what?

Kenneth A. McLean, Arlington

 
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