House Financial Services Committee Chairman Barney Frank on Monday said the House would approve regulatory reform by October and predicted the president would sign the legislation into law by yearend.
In a speech at the National Press Club, Frank said his committee was committed to finishing a bill by the fall and sending it to the Senate in October. He also dismissed concerns about recent delays.
"I expect the House to pass to pass this in September/October. I think it is overwhelmingly likely the Senate will get this bill in October and the president will sign the package before the end of the year," Frank said.
The regulatory reform Frank envisions includes a new consumer protection agency, systemic risk regulation, tighter oversight of derivatives and limits on executive compensation.
But the committee has already postponed work on systemic risk resolution, and a vote on a legislation to create a consumer protection agency was postponed from this month to September.
Frank also reiterated his opposition to creating a list of "too big to fail," or Tier One, financial companies to be regulated for systemic risk.
"Because we don't want to see 'too big to fail,' there will not be that list," he said. "Yes, there will be a restrictions on excessive leverage and et cetera, but not with a predetermined list."
Under legislative language released by the Treasury Department last week, the Federal Reserve Board would take a look at every financial company with assets of more than $10 billion and narrow that list to those that pose systemic risks. These companies would be subject to tougher rules. But Frank has argued that naming these companies would exacerbate the "too big to fail" problem. He wants regulators to use discretion in identifying which firms are subject to systemic oversight, he said.
Frank also used the speech to reject claims that the consumer protection agency would diminish product choice, and he challenged the financial services community to work with him or be left out of the debate.
On Tuesday the Financial Services Committee will mark up an executive compensation bill to discourage excessive risk-taking, making it the first piece of regulatory reform addressed. The legislation, which is expected to pass, would require nonbinding shareholder votes on compensation and golden parachutes at any public company.
Returning "to those thrilling days of yesteryear with the level of compensation is a great mistake," Frank warned. "I have to say to my friends in the financial services community, think about what it says about your character when you tell us you have to have enormous bonuses to align your interests with those of the people who take a salary."
