DAVOS, Switzerland (Reuters) - Barney Frank, chairman of the U.S. House Financial Services Committee, said on Thursday international regulators agree they need to work together on tough new rules for global banks.
Frank said his talks with regulators and lawmakers from the European Union and other nations at this week’s World Economic Forum showed a consensus that it would be dangerous to give banks the opportunity to go shopping for the easiest regulator.
“There is an international consensus that we need tough regulation and we can’t afford to have a situation where they can play us off against each other,” Frank said in an interview with Reuters at the WEF in the Swiss resort of Davos.
Frank, the chief architect of the sweeping financial reform package moving through Congress, said he believed U.S. President Barack Obama’s moves to crack down on banks’ proprietary trading would get support among U.S. lawmakers and globally.
Frank said Obama was clearly still determined to push for a consumer financial protection agency in the face of concerns that the U.S. Senate may not support it.
Frank said he also wants to extend a plan to give shareholders a “say on pay” at banks, including the possibility of a vote on the overall size of compensation as a percentage of revenue.
Frank’s committee has passed a broad set of reforms that was later approved by the full House, including a new consumer agency to police financial products, vast powers for a new systematic risk regulatory council and the ability to break up large financial firms whose activities are deemed too risky.
The Senate is working to pull together a bipartisan version of similar legislation, but does not have a set timeline.
Frank expressed support for Federal Reserve chief Ben Bernanke’s nomination for a second term running the world’s most powerful central bank and said it would be alarming if it didn’t go through. Bernanke faces a decisive day in the Senate on Thursday when his confirmation vote looks set to go ahead.
“I think if Bernanke were dumped it would be very bad for credit, for markets. I think interest rates would go up. I think it would be very destabilizing,” Frank said.
Frank said that he believed that while Bernanke and U.S. Treasury Secretary Timothy Geithner had been too deregulatory in the past, they had both performed well in the financial crisis.
Reporting by Martin Howell; Editing by Lin Noueihed