The Barney Frank Legacy

Wait -- do you hear that? It sounds like "don't let the door hit you on the way out, Barney" coming from Wall Street.

The boisterous Rep. Barney Frank is set to give a press conference at 1pm to announce that he will not seek re-election next year, according to his aides in a report from Reuters.

The 71-year old congressman, who has served his district in Massachusetts since 1981, has not given any reason for stepping down. Age? Health? A tough re-election battle? We'll find out around lunchtime.

Franks is, of course, one half of the Dodd-Frank Wall Street Reform and Consumer Protection Act that was signed in the summer of 2010 and put Wall Street and the investment community on notice. (Former Connecticut Senator Chris Dodd stepped down to become head of the Motion Picture Association of America lobby.) The sweeping law has been a major source of grief and complaints from hedge fund owners, investment and retail bankers and traders who now have a raft of new rules with which to deal. The 900+ page law is only 60 percent enacted (by some estimates) but that has not stopped Wall Street executives from hiring Washington DC lobbyists to help weaken the law either by pushing back deadlines or demanding more time and exceptions.

And even though Barney Frank may be leaving politics, he remains on the firing line from Republicans on the campaign trail where nearly all candidates are calling for the law to be overturned. At one of the seemingly dozens of GOP debates, former Speaker of the House Newt Gingrich stated that Barney Frank should be arrested for his activities with Fannie and Freddie Mac before the 2007 credit crisis and subsequent bailout. (Perhaps this was part of his work as a paid "historian" for the firms).

Frank has been a jovial and blistering defender of the law that bears his name. In an interview with associate editor Justin Grant for Advanced Trading's Innovators of the Decade issue, the Massachusetts Congressman admitted that the law needed to do more, not less:

While Frank is mostly pleased with how the bill turned out, he acknowledges that it hasn't been sold effectively enough to the general public. And he wishes the law were tougher on the derivatives market. But for the most part, Frank says, the Dodd-Frank law is as tough as it needs to be.

"The bad mortgages, risky securitizations -- I can't tell you that it's going to prevent new problems," Frank admits. "But if you look at all the causes of problems in the past, we made them much less likely to occur."

This is the irony for all the bankers, hedge fund and portfolio managers who have cursed Frank for his law. They claim that any rules and regulations stifle growth and yet many firms are enjoying record profits and have grown even larger since the collapse of Lehman Brothers in 2008.

While the law that bears his name will be around for years to come, Dodd-Frank has yet to have a significant impact on the size of banks, many of which remain "too big to fail."