Rep. Barney Frank, D-Mass., ranking member on the House Financial Services Committee who co-authored the landmark Dodd-Frank financial reform legislation, announced Monday that he will not seek re-election in 2012 and plans to retire from Congress at the end of next year.
Frank, 71, who serves the 4th district of Massachusetts, said during a press conference from his home state the same day that congressional redistricting was the primary reason he chose not to seek re-election. Frank’s new district would include 325,000 people that he had not previously represented, he said during his press conference, which would require him to “learn about new areas and introduce myself to new people.” Frank admitted that re-election would be “tough,” and said he found it hard to “justify” asking new constituents “to trust me and be their advocate.”
Frank also acknowledged that the “very substantial changes” in redistricting would take him away from serving his current constituents and protecting financial reform—one of his top goals. Frank said he will be attending a caucus on protecting financial reform in Washington on Tuesday.
Rep. Maxine Waters, D-Calif., the second-ranking Democrat on the Financial Services Committee, may be the likely successor to Frank’s post.
While Frank is not running for re-election next year, “it would be a mistake to count Rep. Frank out until that time comes,” David Tittsworth, executive director of the Investment Adviser Association, told AdvisorOne. “He is still the ranking Democrat on the House Financial Services Committee, a seasoned and effective legislator, and a force to be reckoned with.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act set in motion crucial changes for the advisory industry that have yet to take shape—namely a fiduciary mandate for brokers and a self-regulatory organization for advisors. Frank was instrumental in crafting Section 913 of Dodd-Frank, which gave the Securities and Exchange Commission the authority to write a rule to put brokers under a fiduciary mandate, as well as Section 914, which asked the securities regulator to study the need for enhanced examinations of advisors (one option being an SRO).
The SEC is expected to issue a rule on fiduciary duty in the first quarter of 2012. Frank sent a letter to SEC Chairman Mary Schapiro in July which said that while Section 913 of Dodd-Frank gives the SEC the authority to establish a new fiduciary standard of care for broker-dealers, “the requirement that the new standard be ‘no less stringent’ …was not intended to encourage the SEC to impose the Investment Advisers Act standard on broker-dealers, but to ensure the new standard would not be a ‘watered down’ version of the investment advisors’ fiduciary standard.”
It was also Frank who led the effort to remove House Financial Services Committee Chairman Rep. Spencer Bachus’ amendment that would have subjected about one-third of all SEC-registered investment advisors to the jurisdiction of the Financial Industry Regulatory Authority, or another SRO.
Dale Brown, president and CEO of the Financial Services Institute, told AdvisorOne that “While we haven’t always agreed with Congressman Frank on how the financial services industry should be regulated, we have always shared a passion for protecting investors.” Brown said that FSI is “grateful” to Frank for “his leadership on the Department of Labor fiduciary issue, where he played a pivotal role in helping us get the proposed rule withdrawn, and helped preserve Americans’ access to affordable advice on their IRAs.” The DOL plans to repropose its fiduciary rule early next year.
On Nov. 8, Frank along with 29 of his Democratic colleagues sent a letter to Secretary of Labor Hilda Solis which argued that if the previous rule amending the definition of fiduciary under ERISA had been finalized, “millions of Americans would have been left without the ability to receive adequate investment education and assistance in planning for retirement. Furthermore, the proposal would have been harmful for the many small businesses that need help in providing retirement benefits for their employees.”
So what will Frank do after leaving office? “There is no way that I will be a lobbyist,” Frank quipped during the press conference. But, he said, he will continue to “fight for public policy issues” and “do a combination of writing, teaching and lecturing.”