WASHINGTON (AP) -- The chairman of the House Financial Services Committee said Wednesday he will push for stricter federal regulation of investment banks, including making them hold reserves similar to those required of commercial banks.
Rep. Barney Frank, D-Mass., said the financial market crisis that has shaken Wall Street demonstrates that innovations by investment houses have outpaced regulations.
Mandating that they hold reserves could help those institutions avoid trouble and boost investor and consumer confidence, he said.
"These investment houses are going to have to be regulated so they are not able to get themselves into the kind of trouble that then either causes a serious economic problem for the whole country or requires us to help them out," Frank told WBZ Radio in Boston.
Frank plans to discuss his proposals at a breakfast speech Thursday in Boston before business leaders.
His speech was scheduled days after the collapse of Wall Street giant Bear Stearns Cos. The recent sale of the troubled investment house to JPMorgan Chase & Co. was seen as a way of keeping the impending failure of Bear Stearns from dragging down other big financial firms and perhaps plunging global markets into a cascading collapse.
"We've got to put some rules in there so that you don't have institutions like Bear Stearns, frankly, being irresponsible," he said.
Frank recently proposed a plan aimed at easing the home foreclosure crisis. It would allow the Federal Housing Administration to insure as much as $300 billion in refinanced mortgages for lenders who offer affordable loans to at-risk homeowners.
Democratic leaders in Congress are expected to move such measures to the top of their agenda in April.