This is a rush transcript from "Special Report," November 28, 2011. This copy may not be in its final form and may be updated.


REP. BARNEY FRANK, D - MA: One of the advantages to me of not running for office is, I don't even have to pretend to try to be nice to people I don't like.


FRANK: Now, some of you may not think I've been good at it, but I've been trying.


CHRIS WALLACE, ANCHOR: Massachusetts Congressman Barney Frank a nnouncing as only he could today he will retire after 16 terms in the House. And we're back now with our panel.

Mara, what should we make of Barney Frank's retirement? He is 71, he has been redistricted so he is going to have a lot of new constituents, and he said that was too much for him at this age to have to campaign and try to win over a bunch of new folks. Is that the story or is there more to it?

MARA LIASSON, NATIONAL PUBLIC RADIO: I think that's part of it. Last time he had to lend himself a lot of money. He had a tough race last time, tougher than usual. I also think that if Barney Frank thought he would be the chairman of the banking committee in 2012 he might run again. But I think it's a sign that Democrats think while they might pick up some seats, 25, which is what they need for a majority, is maybe a bridge too far.

One of the things that we're looking at now is how many retirements there will be, because that is usually a sign of how a party views its prospects. And I don't think it's become a flood yet, but there is about 17 Democrats retiring, half of them are running for higher office. This tells you that, you know, Democrats can read the writing on the wall and don't think that they're gonna be in the majority next time.

WALLACE: We'll talk about the bigger political picture but let's stay with Barney Frank. Steve, Frank's admirers, said he was brilliant. Obviously, as you can see there, funny, sharp, did a lot of good things according to them. His critics say that he contributed, especially I think to the terrible problems with the mortgage, failed mortgage giants Fannie Mae and Freddie Mac. And he addressed that criticism today. Let's take a look.


FRANK: Since Paulson used the power in the bill I initiated and put them in aconservatorship, there has been no losses. The losses you read about are payments for things that happened before that. And since 2008 they have done a pretty good job in housing and have not, have not caused any losses. So yes, I was late in recognizing the problem, but it was when I was in the minority.


WALLACE: Is he being too easy on himself?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Well, certainly, he is. He is not only late in recognizing the problem, I think he did many things, perhaps with good intentions, to help create the problem. He was pushing lax lending standards. He was doing all of the kinds of things that set the stage for private entities to come in and try to compete with Fannie and Freddie in a way that I think led to the financial crisis of 2008.

There is a moment in Gretchen Morgenson's book "Reckless Endangerment" where she describes a reporter going up to Barney Frank after a speech in March of 2005 and asking the questions, you know, what about the possibility that you could be pushing people into mortgages that they can't afford and what would the consequences be? And he said rather flippantly, as he was wont to do, "We'll deal with that problem if it happens."

Well, you know, this is the kind of legislating with the best of intention and not thinking of the long-term consequences that I think will make the first line in Barney Frank's political epitaph be the housing crisis.

WALLACE: Your take on Barney Frank?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think that's always true, remember him, the man who said, there is a quote of his on September 11, 2003, in which he said these two entities Fannie and Freddie, are not facing any kind of financial crisis. And then he goes on the offense for anybody who might imply that it was. The more people exaggerate these problems the more pressure there is on these companies, the less we see in terms of affordable housing.

Well, it wasn't affordable housing. It was unaffordable housing. And that's what he was pushing and trying to deflect to those who were trying to reign in these entities. And of course, given the reward system in Washington, the man who was neglectful at the least on the way up is they guy who gets to be author of the bill that is supposed to stop it from ever happening again. I would say that the best thing, the most important thing he has ever done to prevent the crash from ever happening again is what he did today -- retire.

WALLACE: Ouch. Steve, let me -- I'm skipping Mara because she kind of got into this already. Barney Franks becomes the 18th House Democrat to not run again either through retirement, resignation, seeking another office. There are nine Republicans, 18 Democrats, nine Republicans. What does that tell you about how -- or does it tell you anything about the Democrats' view of their chances of taking back the House?

HAYES: Well, I think it does. I think in part that is because the 2012 political landscape looks a lot more like 2010 than it did like 2008. And you have this added difficulty for Congressional Democrats. President Obama has made clear that he wants to run against Congress for reasons that are understandable to all of us. At 13 percent or nine percent approval it makes sense. He is going to say despite the fact I'm atop Washington I am running against Washington and I'm not really like these people and all of these things I said about hope and change to rein Washington in, I couldn't affect them because of the people in Congress. So I think congressional Democrats looking for a hand-up from President Obama are not likely to get it. He could actually have reverse coattails.

WALLACE: We have less than a minute, Charles. Democrats need a, as Mara pointed out, a net gain of 25 seats next November to regain control of the House. Do they get there? Do they gain seats? Do they lose seats? What do you see right now?

KRAUTHAMMER: I'm not sure they will gain any but they're certainly not going to get control of the House. On the other hand, I said that Newt had no chance of coming back. So take that with a grain of salt.

WALLACE: The self-flagellation really has to stop.

KRAUTHAMMER: I know. It's rare and it hurts, so I won't do it again.

But don't rely on me. Look at Frank. Here's a guy whose whole life is to be a congressman and he decides he is not going to run. Why? A, he might lose because he has a lot more conservative people in his district. But B, he knows, in his heart, that he is not going to have control. And if you are in the minority in the House, there are few jobs in Washington less important.

WALLACE: That is it for the panel. But stay tuned for a kind of scorecard on which group is rioting over what.

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