WASHINGTON — Anyone who has ever watched former Rep. Barney Frank at a hearing or give a speech knows that he is a tough act to follow.
But that is particularly true for Rep. Maxine Waters, who has inherited his mantle as leader of the Democrats on the House Financial Services Committee, a role Frank played for a decade.
In her first extensive interview since assuming that position, Waters contends she's up to the challenge, saying she learned a lot from watching the Massachusetts Democrat work and plans to follow in his footsteps — including defending the financial reform bill that bears his name.
"Barney Frank has led us to understand that which we have to fight for," said Waters. "The basic idea of Dodd-Frank and what it will do for the financial services industry and the consumers of this country is what we really have to stand up for."
Looking back on the experiences of her predecessor, Waters called Frank "the premier leader in the financial services community." She pointed to his dedication to his job, and also the respect he commanded from colleagues.
"I once had a conversation with him about how much time does he spend on this job, as chairman or even as a ranking member, and he said that all of his time is taken up on learning, leading and dealing with the issues of financial services," she said. "You have to put in a lot of time. You're going to have to read, you're going to have to listen. It becomes a real part of your life. It's not like many issues of Congress where you can get in and out."
She also noted that most Democrats took their cues from Frank on how to vote on certain issues, a position that she acknowledged would be tough to reach.
"Because so many members of Congress do not know these issues, they look to you for guidance," Waters said. "And Barney had arrived at a point in time where his word was golden. So when the caucus had to vote on issues that they know nothing about and that were complicated issues of finance, it was whatever Barney said. And I think achieving that status is not easy, you have to work at it, you have to build that kind of confidence based on your knowledge, and I kind of learned that from him."
The California Democrat earned her top spot on the panel the old-fashioned way, rising up the ranks over her 22 years on the committee. Waters, the fifth of 13 children and raised by a single mother in St. Louis, came to the House after serving in the California State Assembly for 14 years. She joined the committee at a pivotal time for the financial services industry, in the wake of the savings and loan crisis.
Members were "fleeing the committee," she said. "Some of them had been involved in actions that had been considered inappropriate. Some of them did not want to have to go through perhaps reform, because of what we had learned about the S&L debacle."
Waters acknowledges that she joined the committee with "not a lot of knowledge," except what she had picked up in the state legislature, where she led efforts to divest state pension funds from companies doing business in South Africa.
But over the course of her career on the panel, the California Democrat has had to assume a number of leadership roles, including as the chair of the housing and community opportunity subcommittee and as the lead Democrat of the capital markets subcommittee.
Questions loomed last year about whether Waters would be chosen to take over for Frank when he retired, thanks to a multiyear ethics investigation over whether she helped steer Troubled Asset Relief Program funds to a bank with which her husband had financial ties. She was cleared of any wrongdoing in September, paving the way for her to assume the ranking member slot on the panel.
But Waters may face an even tougher challenge than Frank in his final two years. Frank faced off against then Chairman Spencer Bachus, a Republican moderate pushed by House leadership to act in a more conservative manner.
New chairman Jeb Hensarling, however, is a true believer, a Texas ulta-conservative who has in the past shown disdain for Democratic positions.
One of the biggest questions for the panel is whether Waters, who has also been known to sound off on her Republican colleagues, can work effectively with Hensarling.
During the interview, Waters touched on some of that speculation, saying she believed they could discuss issues in a civil manner, even if they disagree on their philosophical approaches to issues.
"The interesting thing about this is, based on my reputation and his reputation, there are people, particularly in the media, who are waiting for the fireworks," she said. "One of the things I have said is that I believe we can be civil and we can get along, but that does not eliminate the debate. The debate is key and central to who you are and the different philosophies in the parties."
She noted that the two have already had the chance to meet privately to discuss "who we are, our lives, our families." The majority of the committee also met for dinner earlier this month to get to know each other, an idea she credits to Hensarling.
Waters and Hensarling also share an intense interest in housing issues, albeit from opposite ends of the political spectrum. In fact, the leaders' divide on those issues has already been on display this year during the committee's first two hearings examining the Federal Housing Administration's finances.
A big concern for Waters is misinformation about the role of FHA among some committee members, she said.
"Just yesterday the chairman said they are not out to kill out, but they are out to make some changes. So we have to see what those are, and we have to work them to maintain that missions," said Waters. "Clearly some people don't understand how it works. I picked that up from listening to some of the folks who spoke today — they really don't understand."
She added that if specific concerns do emerge that are workable, on loan limits for example, she's open to pursuing some kind of compromise.
"If we find they really understand and they really have a problem with some aspect of it, then we really have to being to gear in and talk about that," Waters said. "Something that's emerging is that they don't like the loan limits. They think the loan limits are too high. But even in talks with the chairman, I reminded him that in New York and California and some other places where the cost of real estate is extremely high, they would certainly push back on trying to reduce those limits. But there may be some ways we could deal with it."
Waters will also be in a key position to defend the Consumer Financial Protection Bureau, a prime target of House Republicans.
The outspoken California liberal says the agency remains "one of the most significant advances and changes that this government could make."
"When we began to talk with all of the representatives of the agencies of government responsible for any aspect of financial services, they all said, well our responsibility was safety and soundness and they almost admitted that they paid little attention to consumer affairs," she said of conversations that took place during the writing of provisions of the Dodd-Frank Act.
That is not to say she opposes any changes to the financial reform law. Waters sounded open to fixing potential problems with the derivatives portion of the statute, for example.
"While we know our basic thrust is transparency — that we can't continue to have the same kind of over-the-counter trading that we have seen — there may be some room there somewhere where we can work out ways by which we get the transparency and maybe not in the one way we thought about it," she said.
But Waters also echoes concern by liberal groups and lawmakers like Sen. Elizabeth Warren who fear that banks are not being appropriately punished for their misdeeds.
"Whether its drug money or laundering, conspiracies to manipulate LIBOR, other actions like credit ratings that were evidently not based in fact … It's not enough to keep hearing about this and keeping having newspaper stories about it and slaps on the wrist and fines," she said. "The question in my mind is, what do we do about this?"
She has also joined the chorus of critics frustrated about a $9.3 billion settlement between regulators and mortgage servicers announced earlier this year, which ended the troubled independent foreclosure review. She wrote a letter to Hensarling earlier this month requesting a hearing on the topic, but said in the interview that while she's talked to the chairman about her request, nothing is on the schedule yet.
"I know that when you enter with something additional to what they've been thinking about that it may not readily get into the mix," she said. "And I said to him, we made the request, and I don't know if this request will trump another request that I may have, so just give it some thought and let me know what you think, and we'll see."