Barney Frank, the Bay State congressman who chairs the House Financial Services Committee, predicted today that an overhaul of the nation’s financial systems will reach the White House by Memorial Day.
"It’s important that we end the uncertainty," Frank said, addressing the Greater Boston Chamber of Commerce Thursday morning. "This isn’t health care. The public is overwhelmingly on the side of [financial reform]. I know people in the financial community will not be surprised to learn they won’t expect too many Tea Party rallies on their behalf."
Frank first floated plans to strengthen financial regulations more than a year ago, but Congressional infighting and a massive health care overhaul have largely slowed those efforts. He told Boston business leaders that, with health care behind them, he and Senate banking committee chair Christopher Dodd will spend the month of April reconciling their financial regulation proposals.
Frank said his bill will be grounded in "trying to enhance market incentives, and in extending banking regulations to non-bank financial firms.
"We are talking about risk retention," Frank added. "You shouldn’t be able to make the decision to incur the risk and then divest yourself from any responsibility for it. People from the mortgage business have told me, ‘If you do this, we’ll be in terrible trouble. The problem is, we don’t have any capital.’ So we are restricting your ability to lend money you don’t have? That reaffirms to me that this is a good idea."
Frank said that under the financial overhaul package, the Federal Reserve will retain the ability to extend liquidity on a system wide basis, "but individual institutions, if it gets to an AIG point, it will be dead. It’s the one thing I agree with Sarah Palin on – we are passing a bill with death penalties this year, but it’s for large overextended financial institutions, not for old ladies."
The congressman also reiterated his support for increased federal funding of affordable rental housing, pitching a $1 billion-per-year federal trust fund for rental construction.
