Barney Frank On Bailouts, Welfare

Barney Frank has been called the "smartest guy in Congress," which is lucky for us since he works on some of the thorniest issues around.

The 14-term, 68-year-old Harvard-educated Democratic congressman from Massachusetts is chairman of the House Financial Services Committee, which means his portfolio includes banks, housing and now the auto industry.

He has been at the center of both the $700-billion dollar rescue for financial institutions, and the bailout attempt for the car companies that failed in the Senate.

He worked on both this past week: pressuring Treasury Secretary Henry Paulson to deal with home foreclosures, and negotiating with the White House on the loan for GM and Chrysler. True to textbook liberalism, Barney Frank worked hard to keep the carmakers out of Chapter 11.

"There's only one thing you can do in bankruptcy: break your word, break your deals. It allows you to say to the small businesses, who have been catering lunches for you, 'Sorry, we're not paying you.' It allows you to go to the workers and say, 'Sorry, we're not paying you,'" Rep. Frank says.

Frank is a no-nonsense chairman who brought the heads of the big three auto companies before his committee, and let anyone who wanted to vent. But there was never any doubt that Frank himself didn't want the car companies to go under.

"What about the idea that in capitalism, if a company doesn't cut it, they die?" Stahl asks.

"That's what Herbert Hoover said. And Franklin Roosevelt said no," Frank says.

"It's what Darwin said," Stahl points out.

"Yes, it's true," Frank acknowledges. "And Darwin was a very good biologist. I don't think he was much of an economist."

"What we're now faced is with all the taxpayers having to prop up companies that made terrible decisions consistently," Stahl remarks.

"No, we're not propping up companies," Frank insists. "That's your mistake. We're propping up individuals. The world doesn't consist of companies. The world are people. The country is people. And yes, it is possible to argue that the government..."

"But then you're talking about welfare," Stahl says.

"Yeah, I'm for welfare," Frank replies. "You're not? Are you for letting people starve?"

At a meeting on Tuesday, Frank listened to mayors of towns hit hard by car factory layoffs.

"You know, there's a theory out there that you, the congressman, had this public spanking of these [car-company CEOs] in order to cover yourselves," Stahl asks but then Frank interrupts:

"That's the kind of argument that people who do not have any idea what they're talking about like to make."

"Are you telling me I don't know what I'm talking about?" Stahl asks.

"By making that argument, yes," the congressman says.

Remarks like this explain President Bush's nickname for him: "saber tooth." There are many ways to describe Barney Frank:

"I wanted to read you a sampling of descriptions of you. They kind of come in couplets. We have, 'Impatient and antisocial.' 'Sharp tongued and downright mean,'" Stahl ticks off a list.

"I'm antisocial, there's no question about it. I think that I love this job. But the biggest problem is there are thousands of people in Washington who earn a living by trying to waste my time. They repeat themselves. They ask you stupid questions," he says.

And he can be sharp-tongued: a master of the putdown, and a master of the dress-down. When they sat down, Stahl escaped neither put-down nor dress-down.

"Television is apparently the enemy of nuance. But nuance is essential for a thoughtful discussion," Frank told her.

He also said, "Let me start with that second despicable comment you just made I am surprised at you that you would do something like that."

It's no wonder that when "saber tooth" the liberal took over the committee that oversees banking, Wall Street shuddered. But two years later, even the most hardened Republicans give him good reviews.

"I'm very proud of the fact I think we've shown with the last two years, and we will show going forward, that you can be a liberal Democrat and cooperate in creating the kind of climate that's good for business as well as for everybody else," Frank says.

Frank says he is absolutely pro business.

Listen to what the financial community says: "Here's Henry Paulson on Barney Frank: 'He's a market savvy pragmatist who looks for areas of agreement because he wants to get things done.' Here's a guy from JP Morgan Chase. He said, 'He hasn't veered off into crazyland.' Meaning liberalism. I've heard someone describe you this way. You're liberal on social issues. You're a pragmatist on economic issues," Stahl remarks.

"No! I reject the notion that you're talking about two different things. That's like saying are you more of a cook or are you left handed? I am a liberal. What I'm rejecting is this liberal here, pragmatist there. That's like comparing Tuesday to ice cream. As a liberal, I am morally obligated to be pragmatic. What good do I do poor people, elderly people, people who are being discriminated against because of their sexual orientation if I'm not realistic about accomplishing something," Frank says.

And he does accomplish. This week he shuttled from a hearing on the bank rescue package to negotiating and strategizing on the car loans to briefing Tim Geithner, Obama's choice for treasury secretary.

It's been like this ever since the credit crisis hit, and he worked hand in glove with Treasury Secretary Paulson to write the rescue plan for the banks, then pressed and prodded his colleagues in Congress to get it passed.

The relationship between Frank and Paulson has soured lately, since Paulson hasn't spent any of the rescue money to help struggling homeowners. "Secretary Paulson is refusing to use that money that Congress voted to reduce foreclosures. The bill says he's supposed to. He won't do that," Frank says.

"You wrote the bill," Stahl points out. "You're, quote, 'the smartest man in Congress.' How did it happen that you wrote a bill that the secretary of treasury has the power not to fulfill in the way you wanted it fulfilled?"

"Because there's a metaphor that works here: you cannot push on a string. There's no Constitutional way to force them to do things," Frank says.

"But didn't you write the bill in a way that allows him to do this? And you could have written it differently," Stahl remarks.

"No. There's no way you can force people to do things," Frank says.

But there are those who argue that reducing foreclosures would reward and encourage delinquencies. "You have the guy who's working three jobs so he can pay off his mortgage; you have a guy who's delinquent. He gets help, this other guy doesn't get help. So isn't there an unfairness…," Stahl points out.

"Yes, there is," Frank acknowledges.

"That you're setting up? And why shouldn't the guy over here who's been paying off his mortgage," Stahl asks. "Why doesn't he deliberately stop paying it."

"Let me give you another unfairness. I wanna see what you think about this. What about someone who's been working hard, 40 hours a week, maybe with some overtime, and goin' to work every day. And then his neighbor loses his job. The neighbor starts getting unemployment insurance. The neighbor who lost his job is getting money for nothing, from the government. There's some unfairness there," Frank argues.

Because of his support over the years of affordable housing for the poor, conservatives actually blame him for the whole sub-prime mortgage mess, saying he enabled Fannie Mae and Freddie Mac to back riskier and riskier loans. Accusations he fends off, most famously in a screaming match with Bill O'Reilly.

Frank has been a target of criticism for years, and not just because he's a liberal.

"I'm gay, I'm left handed, I'm Jewish," he says. "There's a lot of things that I'm supposed to do that I don't do."

One thing he does do is get re-elected over and over as an openly gay man, though his district is in Massachusetts.

60 Minutes caught up in Fall River, Mass., where 60 Minutes met the congressman with his boyfriend, Jim Ready.

"It must have been really hard for a gay kid in high school in the '50s," Stahl remarks.

"Well, it was hard internally. It wasn't hard externally because I just never told anybody I was gay. I mean, not anybody. Not a single human being," Frank says.

He grew up in blue-collar Bayonne, N.J., a Jewish kid in a predominantly Catholic community, who was gay.

He says he realized he was gay when he was 13 years old. "And it was very depressing, very sad. And I was frightened about it. I just figured, okay, I will repress it. "

Which he did till his 20s, but he still kept it secret as he got into politics, first in the Massachusetts legislature, then as an up-and-coming congressman. But by 1986 enough people knew that he felt compelled to tell Speaker of the House Tip O'Neill.

"And I said, 'I just wanted to alert you that there may be some stuff coming out about my being gay,'" Frank remembers. "He said, 'Oh, Barney, don't be listening to that crap. They say all that stuff about all of us.' I said, 'Well, Tip, the point here is that it's true.' And he sort of slumped. He said, 'Oh, Barney, I'm so sad. I thought you might be the first Jewish speaker.'"

Frank says O'Neill's reaction was serious.

But soon after, Frank decided to take a step no one in Congress had taken: to out himself. When the Boston Globe sent its reporter Kay Longcope, Frank tried to make it no big deal. "And Kay came and sat down and put a tape recorder in front of me and said, 'Are you gay?' And I gave what was a very considered answer. 'Yeah, so what?'" he remembers.

Asked if he didn't think it would kill his career, Frank tells Stahl, "I thought about the House leadership. It became clear to me if I came out I would never be in the House leadership. And that's surely the case, because I couldn't expect members from all over the country to then be voting for me and defending that in their own districts. On the other hand, it has not in any way diminished my influence as a committee chairman."

The lowest point of is life, he says, came two years later when he found himself in a sex scandal. A male hooker Frank had hired told reporters that he had run a prostitution ring out of the congressman's apartment. An investigation concluded that Frank didn't know anything about it, but he was reprimanded and went to the floor of the House to apologize.

And then he went back to work. Frank, who composes letters by Dictaphone - not e-mail, and doesn't even use a computer, delved into the intricacies of modern banking, becoming the authority on all things Wall Street.

Asked where he is putting his money, Frank says, "Well, actually I can say because it's a matter of public record: Massachusetts Municipal Bonds."

He said he's pretty confident the crisis will end in about a year. Part of the problem right now, he says, is that Secretary Paulson gave the bailout money to banks, but he's not leaning on them to lend it.

"So, in other words, the Treasury Department is not going to hold their feet to the fire to lend this money," Stahl asks.

"Absolutely," Frank says. "They're not only not going to hold their feet to the fire; they're telling them that the fire's out."

Asked what he is really saying about Secretary Paulson, Frank says, "I am very disappointed in this. At first I thought he was focused too much on the financial community's tender feelings. Now I think he's focusing almost exclusively on them."

True to form, he's an equal opportunity curmudgeon, also criticizing Barack Obama for not being "assertive" enough on the credit crisis. "Part of the problem now is that this presidential transition has come at the very worst possible time. We saw it coming. I don't know if there was any way to avoid it," Frank says. "You know, Senator Obama has said, 'We only have one president at a time.' Well, that overstates the number of presidents we have at this time. We don't appear to have any."

But we do have Barney Frank. We wondered what he thinks of the job he's done.

"The problem in politics is this: you don't get any credit for disaster averted. Going to the voters and saying, 'Boy, things really suck. But you know what? If it wasn't for me, they would suck worse.' That is not a platform on which anybody has ever gotten elected in the history of the world."

Produced by Shachar Bar-On