Posted By: Margaret Pozzini
Alison VekshinWed Nov 8, 3:39 PM ET
Nov. 8 (Bloomberg) -- Representative Barney Frank (news, bio, voting record), the
liberal and quick-witted lawmaker expected to lead the House
committee that sets federal policy for Wall Street, promises to
scrutinize executive pay while going slow on hedge-fund
restrictions.
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Frank, 66, said he planned to steer the House Financial
Services Committee in a more working-family and consumer-
friendly direction, with a focus on creating more affordable
housing and correcting economic inequalities.
With Democrats having gained at least 27 House seats,
sealing control of the House in January, Frank is seeking to
head the panel that oversees the Securities and Exchange
Commission and the Federal Reserve and helps set policy for the
banking, securities and mortgage industries.
Frank will replace retiring chairman Michael Oxley, an Ohio
Republican best known for co-authoring the Sarbanes-Oxley
corporate-governance law. Frank, a Massachusetts Democrat, would
take a much more activist approach than his predecessor. One of
the first items on his agenda: giving shareholders more say over
soaring executive salaries.
``A handful of people are getting very wealthy, and a lot of
people aren't getting anything,'' Frank said in a recent
interview. ``And I think one of the most visible signs of that
is runaway executive compensation unrelated to performance.''
Executive Pay
As chairman, Frank plans to revive executive-pay legislation
that stalled this year. In May, Frank used a procedural maneuver
to force Republicans to allow a committee hearing on the bill.
Mostly Democrats showed up.
``We are saying this is something we think shareholders
should be able to vote on,'' Frank said. ``I think the influence
of institutional shareholders is generally pretty healthy.''
During campaign season, Republicans singled out Frank, who
is gay, and several other potential chairmen to raise fears
about Democrats running key committees.
Frank's speed-talking style can be a jolt for the bankers
and regulators that come before him. Last year, when questioning
former Treasury Secretary John Snow about the departure of White
House economic adviser Gregory Mankiw, Frank said, ``He took
150,000 jobs a month with him, can we get them back?''
``As I recall, the job number comes out of the --,'' Snow
began.
``Black box,'' Frank replied.
Hedge Funds
Frank said additional hearings on hedge funds wouldn't be
one of his first priorities. In June, when a federal court threw
out an SEC registration requirement, Frank introduced
legislation that would have restored the agency's rules.
The hedge-fund industry expects Frank to have an open mind
and to support a different bill that would require four federal
agencies to conduct a study and recommend whether regulations
are needed, said John Gaine, president of the Managed Funds
Association, a Washington-based trade group.
``He's going to do a careful examination of the industry,
working with his counterparts on the committee,'' Gaine said.
Frank isn't ``a pro-regulatory hawk.''
Speaking of other priorities, Frank sounds more like a
traditional Democrat. ``You've got a lot of American workers so
angry because they don't see their wages going up when the GDP
goes up,'' Frank said. ``It's in the interest of the business
community to cooperate with some of us on the Democratic side to
re-convince the average American that he or she's got a stake in
economic growth.''
Business Relations
Still, business lobbyists expect a good working relationship
with Frank, whose suburban district abuts Boston, host to
Fidelity Investments -- the largest U.S. mutual-fund manager.
They say Frank's constituency makes him more sensitive to the
needs of financial-service companies.
Frank recognizes ``you can't hamstring the industry,'' said
Gilbert Schwartz, a partner at Schwartz & Ballen LLP, a
Washington-based firm specializing in financial services. ``I
think he'll stand up for the industry, but with more of a
consumer-advocate focus than the previous chairman.''
Frank, a self-described liberal, came to the House in 1981.
Known for his biting wit and snappy one-liners, the Harvard-
educated lawmaker is considered one of the most intelligent and
colorful members of Congress. At committee hearings, he can go
from offering comic relief to sharp rebukes of witnesses.
`Top-Notch Debater'
``He is an absolutely top-notch debater who does not suffer
fools,'' said David John, a senior research fellow specializing
in financial services at The Heritage Foundation, a Washington-
based conservative policy think tank. ``He's also someone who,
despite his image of a fierce partisan and a Massachusetts
liberal, also works exceedingly well with people from the
Republican Party.''
Frank said he supported several proposals to ease
regulations for banks, including one that would give banks a
break on filing anti-money laundering reports on their most
loyal customers. He said he didn't like restrictions bank
regulators have proposed on large concentrations in profitable
commercial real estate loans.
Frank said he expected federal regulators to ease some of
the costs of complying with the 2002 Sarbanes-Oxley corporate
governance law, which set tougher civil and criminal standards
for public company accounting.
Matching Greenspan
Frank gained notoriety by matching wits with former Federal
Reserve Chairman Alan Greenspan during his biannual monetary
policy briefings to the committee. The former prosecutor earned
a reputation as an intellectual equal to the free-market
conservative economist by repeatedly pressing him for answers.
Chris Rupkey, senior financial economist at Bank of Tokyo-
Mitsubishi UFJ Ltd. in New York, said Greenspan ``met his
match'' with Frank.
``Former Chairman Greenspan was a master of politics,''
Rupkey said. Frank ``was very forceful in trying to get his
point across and would ask repeated follow-up questions. He
wouldn't allow the former Fed chairman to escape with a neutral
answer.''
Democrats are expected to begin selecting committee chairmen
in the coming weeks.
``I will be putting my name forward to become the next
chairman now that we will have the majority,'' Frank said today
in a statement. ``I look forward to working with my colleagues
and will be asking for their vote as we organize the House
Democratic caucus.''
Party Fund-Raiser
On his Web site, Frank says he had a hand in more than $1.4
million in contributions to candidates, including more than
$511,000 in direct contributions to the Democratic Congressional
Campaign Committee, the fund-raising arm for House Democrats.
One potential wrinkle could come in the form of
Representative John Dingell (news, bio, voting record), who may try to seize the
committee's jurisdiction over securities and insurance issues.
Dingell, a Michigan Democrat, is poised to retake the
chairmanship of the House Energy and Commerce Committee, which
lost the jurisdiction to the Financial Services Committee when
Republicans reshuffled committee assignments in 2001. Dingell
strongly opposed the shift.
``It was a shame when securities and insurance jurisdiction
was removed from the Committee on Energy and Commerce, because
we had the expertise and experience to handle those issues,''
Dingell said in a statement. He declined to say whether he would
pursue the jurisdictional changes.
To contact the reporter on this story:
Alison Vekshin in Washington at
avekshin@bloomberg.net .
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