U.S. lawmaker sees no new taxpayer money going to banks

BOSTON (Reuters) - The chairman of the U.S. House Financial Services Committee thinks most U.S. banks do not need more government aid and even those told to raise new capital can do so without taxpayers' help.

"I think most banks will be able to go forward without any further infusion of government money," Representative Barney Frank said on Friday, a day after the government released results of "stress tests" on the 19 largest U.S. banks.

The widely anticipated test results found 10 of the big banks needed to raise a combined $74.6 billion in capital as a buffer against a worsening of the economy.

Many banks received government money last year as the financial crisis deepened.

Frank said he thought the stress tests showed U.S. banks are healthier than people had originally thought. "It came out well," he told a meeting hosted by the Financial Industry Regulatory Authority, an industry-funded broker-dealer watchdog.

Frank sounded a similar tone to U.S. Treasury Secretary Timothy Geithner who expects most banks to raise the capital through private investments.

GMAC, an auto and mortgage lender, is likely to be the exception. Geithner said in an interview with Reuters Television that the Obama administration would provide "substantial support" to GMAC.

Frank said he expects to see a stricter financial regulatory framework after the previous Bush administration took a more relaxed approach.

He held out hope that Congress would establish a federal insurance regulator, putting the odds at "fifty-fifty" and saying he will press lawmaker on this point.

Frank said he is optimistic about having a systemic risk regulator to oversee major financial firms and critical payment and settlement systems.

"Good rules are pro-market because they give investors confidence to invest," Frank said.

Loosely regulated hedge funds, which have been blamed for accelerating last year's financial crisis, will likely be required to register with the U.S. Securities and Exchange Commission, he said.

The SEC previously tried to require hedge funds to register, but a court struck down the rule in 2006.

As lawmakers grapple with how to best reshape the regulatory environment, Frank said it would be neither possible nor sensible to either abolish or merge the SEC or the Commodity Futures Trading Commission.

(Reporting by Svea Herbst-Bayliss; Editing by Tim Dobbyn)