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Washington, DC - House Financial Services Committee Chairman Barney Frank made the following statement in reaction to the address today by U.S. Treasury Secretary Henry Paulson:
“I welcome the speech today by Secretary Paulson, and I agree with him that we need to restructure the way the United States financial system is regulated. In particular, I welcome his conclusion that ‘First, we should quickly consider how to most appropriately give the Federal Reserve the authority to access necessary information from complex financial institutions and the authority to act to mitigate systemic risk in advance of a crisis.’ The secretary correctly observes that our regulatory apparatus has not kept up with the transformation of our financial markets; consequently, as evidenced by the Bear Stearns crisis, new systemic risks have emerged. When the secretary appears before the committee next month, we look forward to his thoughts on how to identify and mitigate those risks in the future, and particularly we look forward to working with him on those issues he has identified as of immediate importance. Restoring confidence in the safety and soundness of our markets requires ensuring that regulators have the tools and the authorities necessary to perform both tasks.
“The House Financial Services Committee will begin a series of hearings in July on the policy implications of the transformation of domestic and international financial markets -- chief among them are the dramatic growth in the share of assets held outside the commercial banking system, the complex arrangements that link firms that are regulated differently (or not at all) and the increasing amount of leverage. Our committee will explore the potential systemic risks associated with these developments, the adequacy of current oversight and tools, and the extent to which existing structures are adequate to respond to future problems.”
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