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March 20, 2008 - At the Boston Chamber of Commerce on March 20, House Financial Services Committee Chairman Barney Frank (D-Mass.) highlighted several considerable possibilities for policy reforms to stabilize the housing market and the challenged economy.
Chairman Frank suggested that Congress consider establishing, or empowering the Federal Reserve to act as, a “financial services risk regulator.” The regulator would assess risk across financial markets, regardless of corporate form, and intervene when appropriate. The risk regulator would report to Congress and when necessary, limit risky practices to protect the integrity of the financial system. Frank said consideration should focus on consumer protection and on regulating market behavior, not form.
Additionally, he encouraged reform of the regulatory system and consolidation of the duplicative regulatory structure. Frank also expressed the need to reassess capital, margin and leverage requirements. He said this economic crisis has shown that well-capitalized institutions can fail when liquidity runs dry and particular assets lose favor.
Chairman Frank further emphasized that quick action is necessary on his comprehensive legislation to address the housing crisis. The legislation, introduced last week, would provide at least $10 billion in loans to states to address the foreclosure crisis and expansion of the Federal Housing Agency (FHA) loan program to reach at-risk borrowers. Hearings on the legislation will be held April 9 and 10.
For information on Chairman Frank’s speech, visit the Committee’s website here.
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