Frank Bill Wants Wall St. to Pay for Housing Relief Programs

Rep. Barney Frank (D-MA) introduced H.R. 1151 last week and would direct the Treasury to levy $2.5 billion in “risk-based assessments” on “hedge fund managers with $10 billion or more in assets under management on a consolidated basis” and on other “financial companies with $50 billion or more in total consolidated assets.”

The top ranking Democratic lawmaker on the House Financial Services Committee said the bill would seek the funds from large banks.

“This program provides important funding to cities that have already been hit by the foreclosure crisis and allows them to cope with the blight, expense and destabilization that come with the presence of large numbers of empty properties,” he noted.

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The money would go into the Treasury’s general fund, but Frank has said he wants the money to help pay for housing relief programs Republicans are hoping to axe.

Frank announced last week on the House floor that such a bill would be forthcoming, arguing that large financial institutions can afford to pay for mortgage assistance programs.

“I don’t mean to demonize, but I think Goldman Sachs and Wells Fargo and the Bank of America and Citicorp and Morgan Stanley and the large hedge funds, I think they can pay for this,” he said March 11.

The House voted on March 16 to end the Neighborhood Stabilization Program (NSP), a program which provides funding to help communities deal with large numbers of foreclosures and abandoned properties. The NSP Termination Act (H.R. 861) has now been referred to the Senate Banking Committee.

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  • This is perhaps one of the worse proposals Representative Frank has introduced into the House. It is a statement to Democratic supporters who want to punish someone for the abuses of the past. Why should a hedge fund which was formed in 2009 or later pay “a tax” for “the sins” of other companies? This is not a tax on Angelo Mozilo, Ken Lewis, or others.

    This bill is little more than class warfare. It will never go anywhere in this Congress. No doubt this bill serves two significant purposes. First it tells Democrats how they differ from Republicans and second it is intended to rally support for Representative Frank for reelection next year. What is also clear is that Representative Frank does not expect this bill to be passed in the House; thus Representative Frank knows he will not create very much backlash by its introduction.

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