Barney Frank is putting together one hell of a Christmas present for the financial-services industry.
The head of the House Financial Services Committee said he plans to push through a whole sack full of new regulations changing the way Wall Street does business, or at the very least trying to change the way Wall Street does business, by next month. Committee debate on the proposals begins tomorrow.
While Congress and the administration have done basically nothing this year to respond to the alleged systemic problems underlying the financial crisis, Frank aims to fix everything in a holiday flurry of activity. Among the measures the man from Massachusetts expects to pass are:
- The much-ballyhooed new consumer financial-protection agency (Frank even has a potential leader of the new regulator in mind: TARP overseer and Harvard Law professor Elizabeth Warren);
- new rules covering derivatives;
- a new fund--paid for by the biggest financial firms in advance--to unwind failing nonbank firms, as well as the power to liquidate those firms if they become (you guessed it) "too big to fail;"
- a reduction in the Federal Reserve's power to lend to whoever it wants whenever it wants;
- and a new Financial Services Oversight Council headed by the Treasury secretary which would decide when, exactly, the invisible hand needs a little government handout.
"No more Fed to AIG, no more Fed to Bear Stearns," Frank said of the measure to restrain the Fed. Surprise, surprise: The Fed is not happy about that, with the Kansas City branch warning that giving more power to the Treasury "could lead to delays or second-guessing of supervisory recommendations and greater political interference."
Barney's not too interested in discretion, consigning to the trash an agreement with the Obama administration to keep those firms deemed a systemic risk a secret.
"The way an institution will be publicly identified as systemically important is the day it is hit with severe, stricter constraints," Frank warned.
Frank Seeks House Vote in December on Financial Measures [WSJ]
Frank Says Measure Will Require Publishing Names of Risky Firms [Bloomberg]