The Boston Stock Exchange, located at 100 Franklin St. in Boston, was the site of the New England Council’s recent breakfast featuring U.S. Rep. Barney Frank.

In a firm statement made at the New England Council’s breakfast at the Boston Stock Exchange last week, U.S. Rep. Barney Frank, D-Mass., said he was appalled at the Republican Party’s stance on the most recent, and sometimes controversial, topic of the Sarbanes-Oxley Act, which was introduced to the banking and financial services industry in an effort to prevent corporate fraud.

The council’s breakfast, hosted by the Boston Stock Exchange, provided members of the Massachusetts business community with an opportunity to hear the Democratic congressman discuss the deficit, housing issues and federal laws, including the Sarbanes-Oxley Act, which Frank said is going nowhere.

“It is, today, in complete and total shambles,” said Frank, who went on to say the law’s implementations have been hindered by the recent resignations of Securities and Exchange Commission Chairman Harvey Pitt and the accounting board’s first chairman, William Webster.

Frank said the Sarbanes-Oxley Act has not been given the appropriate amount of funding from the SEC, and he blamed Republicans and the Bush administration for failing to provide adequate financial support.

According to Frank, initial efforts to properly launch the law fell short of expectations.

The act stipulates that the SEC should receive an increased budget of up to $776 million, but Frank alleges that the request has suffered under the Republican-led House and the SEC budget remains at a standstill $460 million.

With the recent takeover by the Republican Party in Congress, Frank said it could be difficult to shift corporate reforms through Congress because “there are people in the Republican Party who believe the election this year was a mandate to go back to the status quo with regards to corporate responsibility.”

Frank quoted former President Ronald Reagan as saying in his first inaugural address, “Government is not the answer to the problem, government is the problem.” But while agreeing with the Republican former president on that point, Frank – a Democrat often at odds with the Republican Party – blamed the government for the continuing financial breakdowns in the economy.

Approximately 75 members of the financial services and banking community listened to the speech by Frank on the fundamentals of the American economy: politics and money.

During the one-hour breakfast in the basement vault at the BSE, Frank offered his opinions on issues concerning housing and health care reimbursement and said he believes those are issues that Congress must address immediately.

James Brett, president and chief executive officer of the New England Council, said Frank’s discussion on housing and health care are of major concern to New England, and since the passing of the Balanced Budget Act of 1997, the health care industry has suffered an incomprehensible loss.

Brett agreed with Frank’s assertion that the act has negatively impacted the health care industry, hospitals and nursing homes.

According to Frank, the Balanced Budget Act of 1997 affected health care in a “devastating way and the industry lost billions of federal dollars … If we don’t address that with reimbursements in the Medicare and Medicaid area it will be more challenging times,” said Frank. “It’s a key issue, and Congress did not address it this year.”

Next in line as the ranking Democratic member of the House Financial Services Committee, Frank was a timely and engaging speaker, said Brett, and while the NEC does not necessarily stand behind all acts of Congress, Brett said it was important to the financial services community to have Frank speak on the current state of the economy in New England.

“All in all, it’s been a terrific year and the issues are really relevant to the members of New England,” said Brett.

The NEC recently expanded its advocacy committees by adding a Financial Services Committee to the organization, a group focusing on specialty issues aimed at the financial services sector in New England.

Stepping Up

Sitting on the committee are industry executives from private and public businesses, academic and health institutions, and Brett said the committee has taken on a role to create an atmosphere in which industry members can debate the public policy initiatives that directly affect their trade.

For the near future, Brett announced his endorsement of the Transportation Equity Act for the 21st Century, otherwise known as TEA-21.

“This transportation bill is huge for the New England states,” said Brett. “The TEA-21 Bill means billions of dollars for New England highways, and reconstruction and rehabilitation [of highways]. It is important that we work together to make sure New England gets it fair share.”

Frank talked about the need for more federal money for health care, more public sector money in health care, funding for a better education and teachers and money for environmental cleanup, but Brett said he remains concerned that those issues were not addressed to the fullest extent in Congress.

“We are fortunate to have strong leaders on both sides – in the Senate and the House – in Washington,” said Brett. “But, the budget is now $175 billion in deficit and there are increasing demands for other things.”

Frank agreed, saying that eventually one has to question where new funding will come from.

“We have budget specifications in all these areas and it’s peaked, so it’s [budgets] going to go down,” said Frank. “We cannot take a tax cut and then spend more than $700 billion … every president who has gone to war has raised taxes. Bush hasn’t, and we don’t have the money. The federal government is an economy, and there is such a thing as fiscal policies. I do not support reversing the tax cut already in place, but the bulk of the tax cut has not gone into effect.”

In the Bay State, Frank said he looks to local government on Beacon Hill for support.

“I would do two things: stimulate the economy with unemployment compensation and ask the Governor’s help with Medicaid,” said Frank. “What we should be doing is providing help in increasing the federal issue of Medicaid. [Governor-elect Mitt] Romney ought to be supporting this effort … by the government making immediate payments to the state.”

According to Frank, the best way to fix the budget is through the simplest form of capitalism, and he challenged those who base their social system on the principal of individual rights and a free market to stand up and speak.

“Bush promises to keep up spending and wants to cut the budget – the danger is if we overreact,” said Frank. “If all we do is enhance the ability of [the] free market to function and cut back housing, financing … that’s wrong. The leaders in the country who help make capitalism work need to step up.”