Barney Frank: “We need to re-establish the credit system”

by Michael Ruhl, University of New Mexico and staff-Talk Radio News Service,

At a press conference House Financial Services Committee Chairman Barney Frank (D-Mass.) spoke on what the federal government is doing to deal with the economic crisis. Frank said that it is likely that a federal entity will be empowered to regulate systemic risk, and that this entity will very likely be the Federal Reserve. He said that the powers given to the Federal Reserve will be newly created powers of the federal government, and will not be taking powers from other organs of the federal government. Frank said that a “prohibition” on irresponsible subprime lending would be necessary, because if enough bad loans are made, it is “hard to protect yourself against them”. Frank continued that the government wants the institutions “To be safe and sound”, but that the goal is for lending to increase. He also said that the House is working closely with the Obama Administration, and that their aim is to coordinate Systemic Risk Regulation with allies in Europe and Asia.

Chairman Frank also spoke of other priorities of the House Financial Services Committee in the coming year, which included refocusing on debt relief and expanding consumer protection. Frank also said that the Federal government will take a more active role in building houses and keeping people in their homes.

When addressing the topic of America borrowing so much money from foreign countries, in particular China, Frank said that he is alright with these lending arrangements, because he doesn’t feel it gives those foreign governments undue influence on America. However, Frank said that spending is too high in some areas, particularly in defense spending that the country is engaging in.