(Adds more comments from Frank)
WASHINGTON, July 9 U.S. Rep. Barney Frank said
on Thursday he does not intend to seek limits on the size of
financial firms as he drafts regulatory reform legislation and
that restructuring mortgage finance sources Fannie Mae FNM.P
and Freddie Mac FRE.P was not on his agenda for this year.
Frank, the Massachusetts Democrat chairman of the House
Financial Services Committee, told reporters after a hearing
that instead of size limits and similar restrictions to limit
risk, he would focus on providing authority to wind down
failing large financial firms and creating a systemic risk
"The biggest problem is that we have no option but total
failure or a total bailout, like AIG on the one hand and Lehman
on the other," he said. Regulators need authority to "go in and
fire the bank president and wipe out the debt holders, but in a
more orderly way," he said.
Frank has said that he plans to move financial reform
legislation, taking cues from proposals made by the Obama
administration, in pieces this summer, starting with a
Financial Services vote on creating a consumer financial
regulatory agency by early August.
The consumer agency would include a licensing regime for
mortgage brokers and payday lenders, he said.
He said the new consumer agency would not seek to usurp any
investor protection authority from the Securities and Exchange
Commission, but these will be strengthened.
"We will beef up investor protection at the SEC. The point
is that investor protection is a more central part of the SEC's
picture than bank customer protection is at the OCC (Office of
the Comproller of the Currency)."
Almost a year after market confidence in Fannie and Freddie
eroded rapidly, leading to their seizure by the U.S. Treasury,
Frank said a restructuring of the housing finance behemoths was
not high on his agenda for this year. It would be a top
priority for next year.
"Fannie Mae and Freddie Mac are very important public
utilities. They are not now contributing to the crisis," he
(Reporting by David Lawder, Editing by Chizu Nomiyama)