Chairman Frank

Here in a city that, at least for now, outpaces, say, Charlotte, N.C., as the nation's banking capital, the accession of a new chairman of the House Committee on Financial Services — the banking committee, some call it — is a matter of some interest. The Washington Post was out with a dispatch yesterday describing the new chairman, Barney Frank of Massachusetts, as "one of the most left-leaning lawmakers on Capitol Hill," pointing to his support for a minimum wage increase and "universal health care."

If this is what American business is supposed to be afraid of, no wonder the stock market is setting new highs. After all, President Bush has indicated his readiness to sign a minimum wage increase. And one of the leading conservatives in the Republican race for president in 2008, Governor Romney of Massachusetts, made "RomneyCare" — a universal health care initiative for the Bay State — one of his signature initiatives.

The latest tumult in respect of Chairman Frank involves pay for corporate chief executives. Mr. Frank was on the Fox News Channel yesterday denying to the network's Neil Cavuto as unequivocally as possible the idea that the Congress was going to get involved in limiting CEO pay. "It's up to the shareholders," Mr. Frank said. In other words, Mr. Frank is going to wrap himself in the language of corporate democracy, which is capitalistic bedrock.

Now, it's not as if there's room for no mischief there. The congressman made the point that many shareholders are not merely envious individuals but sophisticated institutional investors. True, but many of them — such as the New York State Common Retirement Fund whose sole trustee was until recently the confessed felon Alan Hevesi — have their own political agendas. Even so, what's remarkable is that not even the man the Washington Post describes as "one of the most left-leaning lawmakers on Capitol Hill" is going to come out publicly in favor of a government-imposed cap on executive compensation.

This may be because President Clinton tried something akin to such a government cap in 1993, with Section 162(m) of the federal tax code. That limits the tax deductibility of executive compensation for a company to $1 million. Anything above $1 million must be performance-based, under the law. The rule was so toothless that CEO compensation soared, and not even the Republican-controlled Congress bothered to repeal Section 162(m).

On other matters, Mr. Frank spells trouble, starting with taxes. He has opposed the extension of the Bush tax reductions, a matter of great importance to the entrepreneurs who give the American economy so much of its vitality, since low marginal tax rates allow them to retain growth capital. He also would replace free trade with a policy of attempting to export to the rest of the world American labor and environmental regulations. He would tilt the labor-management rules more toward labor. He calls it part of a "grand bargain."

It would all be bad for the economy, and it's worrisome. But, at least for the moment, we'll leave it to the Washington Post to spread the panic about "one of the most left-leaning lawmakers on Capitol Hill," even if his post has oversight of Manhattan's investment banks and other engines of global growth. The Republican he is succeeding as chairman was none other than Michael Oxley of Ohio.

Mr. Frank would have to do one heck of a lot of damage to equal the havoc wreaked on the New York financial markets by the red tape of the Sarbanes-Oxley law. So if the bankers — and the markets — aren't exactly quaking in their boots at the prospect of Chairman Frank, it may just be that they don't think he's going to be that much worse than the Republican they were stuck with before the election.