How to Make Money on Barney Frank

Barney Frank, (D Mass), the Chair of the House Financial Services Committee, is a polarizing figure.

He is the bête noire of the conservative punditry.  Whenever he does or says anything, there will be a chorus of objections from those who disagree with his politics or his lifestyle.

Over at Zero Hedge, one of the several “Tyler Durdens” managed to work in a couple of offensive remarks in a very brief post.  (We’re not repeating them.  It will be interesting to see if the Seeking Alpha editorial team publishes this one!)

The issue?  CNBC scored one of their “First on CNBC Interviews” by getting Rep. Frank on Squawk Box right before the hearing on executive pay.  It all started OK, but then Mark Haines started to weave from straight questions into a discussion of his own opinion.  He often does this, and his viewers like it.  With a rookie on the show, it can be devastating.  With Barney Frank, who showed very little tolerance for this.  In fact, he seemed pretty testy about the questioning.  For CNBC, it just meant that they lost the interview.

You can see it yourself right here:

Why Listen to Barney Frank?

Barney Frank is one of the most polarizing figures in Congress, at least to a national audience.  His constituents think he is great, and he has a very safe seat.  (This means that those who believe that he took various actions for small campaign contributions do not understand the political process).

As a funny-sounding, very liberal, and openly gay member of Congress, Frank is an easy target.  He is no stranger to controversy, providing more ammunition to right wingers and gay bashers.

Our question is the same, practical, relentless one we have been offering for some months:

Do you want to make a political statement, or would you rather make money?

The blog writers who want some boo-yah’s from their audience bash away on Barney.  While avoiding explicit criticism of Frank, Mark Haines probably scored points with his own audience by offering his personal viewpoint on executive compensation and shareholder influence.

The Attitude of the Smart Investor

Let us suppose for a moment that you do not agree with Rep. Frank’s politics.  Here are a few facts:

  • He is one of the most powerful people in Congress, at the epicenter of various decisions on financial regulation;
  • He is (perhaps) the smartest person in Congress, according to a poll of Congressional staffers.  (If you do not see this, then maybe you need to review your personal biases.  He regularly runs rings around interviewers, as he was doing with CNBC this morning.)
  • He has been accepted by the Street and the GOP (Hat Tip Charles Kirk).

Here is what Crains New York has to say:

Just about everyone in banking wants to be Barney Frank’s friend nowadays……

Mr. Frank ambles around the halls of Congress in the type of
pin-striped suit familiar to any banker—although his untucked shirt
betrays any notion that he might be one. Yet financial executives
credit him with reining in his fellow Democrats’ angriest impulses
about how to handle Wall Street. He can charm Republicans, too: Last
month, he was the only congressman ranked among the “most partisan” and the “most bipartisan” in a survey of members by The Hill newspaper.

finds a way to negotiate,” says Scott Talbot, senior vice president of
government affairs at the Financial Services Roundtable.

course, it also behooves bankers to play nice with Mr. Frank. Asked if
bankers have come to grips with new realities, he tartly answers: “I
think they understand a new set of regulations is coming. And it’s
better to sit down and get it right than get it wrong.”

You really need to read the entire article to understand how serious financial executives view Frank.

The Simple Question

So it is a pretty simple question.  When you are watching CNBC do you want to hear the viewpoint of one of the most powerful Congressional leaders, or do you want to hear opinions from Mark Haines?

Do you want to read some politically oriented bashing of Barney, or would you like to make money?

Investors should be agnostic with respect to politics and to life style.  Those who insist on injecting politics as part of their analysis are facing (at least) four tough years of investing.

There are investment stories that will work.  It does not matter if you agree with Frank, or Pelosi, or Obama.  As long as we can predict what they will do, we can find an edge.  Even though we absolutely hate government control of business, we have found winning investments this year.


Be practical, not political.

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  • Dinasour June 11, 2009  

    Yes Frank is super sharp and has alot of power, but he had already laid out what he wanted out of this regulation in the interview. The next step was to debate it. BTW, I’ve seen CNBC interview him many times. I think the guy is a weasel as evidenced by his support of the ever expanding leverage of FRE and FNM and blind eye to the compensation and regulation issues that came before congress in 03′ and 04′. The guy definetely knows what to say and when to say it….macheavelian indeed.

  • BKL June 11, 2009  

    Why the jab at Zero Hedge?

  • Jeff Miller June 12, 2009  

    BKL — I am trying to illustrate how to use information from various sources.
    My approach is to get whatever information is available, whether I personally agree with the source or not.
    Zero Hedge has a different model, with commentary often emphasizing political opinion. This seems to be popular with most readers.
    I leave it to you to determine whether this political approach helps your investments. Also, if you read their commentary, there is another question —
    If what I wrote is a jab, what would you call their commentary about Rep. Frank?
    For the record, I find many of the articles at ZH to be quite interesting and helpful. I think they would be even better if they focused on the analysis and did not engage in personal attacks related to lifestyle.
    I am curious. Do you think the comments there were helpful and appropriate?
    Thanks for the question, allowing me to explain better.

  • Jeff Miller June 12, 2009  

    Dinasour — So you are one of the many who do not like Frank or his record. I am agnostic. I just want to figure out what is likely to happen, and what the implications will be for stocks.
    The key question is how much he and Congress will meddle with the decisions of private companies. I want to learn as much as possible about this. I like interviewers who draw out his opinions, asking brief questions that get him to elaborate.
    Briefly put, we should all be trying to figure out what is going to happen, whether or not we like the key power figures.
    This is a method that has worked for me through several administrations. I am just trying to explain the approach.
    Thanks for sharing your thoughts, and I hope this clarifies my approach.

  • REW June 12, 2009  

    Your position fits what I receive from other advisors I follow. Frank is always worth monitoring due to his massive power in the legislature. Frank, as you point out is also very smart. However, none of those facts counters Frank’s personality. He is a bully, partly because he is so smart and can rough up the media. He enjoys these confrontations and his reputation.
    The real issue is that the financial media acts too much like the regular media. Regular media’s job is to confront politicians. Financial media is no different. With Frank, a similar exchange could have just as easily happened with Charlie Rose as Mark Haines.

  • John June 12, 2009  

    Jeff, this was a great post.
    The financial news companies believe the best way to get ratings is to espouse political views, offer opinions and scream. How does this make investors money? It doesn’t.
    Investors should do the right thing and turn off the TV.

  • Tom June 12, 2009  

    Over the last several months I have taken to watching Bloomberg TV almost exclusively for my financial TV news (also, now that my local cable provides it 24/7). While not perfect, it is far more professional in its approach to interviews, and often provides long-form interviews with people who have something to say, not shouting matches. Also from my west coast timezone perspective, I like its rolling around-the-globe coverage of Asia and Europe in my evening hours, rather than CNBC’s reruns of afternoon shows, game shows, and infomercials.
    CNBC’s mgmt has suffered from “Fox News-envy” ever since, well, since Fox news was just on the drawing boards in the mid-’90s. And rather than rise to the occasion in this financial crisis, and despite having maybe a few sharp journalists, CNBC has chosen to double-down on the sensationalism, WWE-style fake debates, and pointless cross-talk.
    Having said all that, I thought Haines’ question was not an invalid one to ask. It seems Frank, already prickly at the lightweight questions, misunderstood the intention of “Burning Down the House,” and in the ensuing cross-talk interruption he and Haines got into a posturing match rather than a genuine disagreement. I’m sure Frank will be back for more interviews though.

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