Rep. Frank To Banks: 'Don't Do Stupid Stuff'
In a wide-ranging press conference concluded moments ago, Rep. Barney Frank (D-Mass.), head of the Financial Services committee, said that banks receiving federal bailout money must do two things: 1) "Don't do stupid stuff," such as buying $50 million jets, like Citigroup tried to do and 2) Show people they're getting something for their money.
Frank focused on "foreclosure diminution," and predicted a "major" federal program to reduce the number of foreclosures to be released in coming days.
To the bankers, he said: "People really hate you and they're starting to hate us because we're hanging out with you."
Other topics Frank touched on:
-- Executive compensation should be changed -- by Congress -- so that executives actually lose money if they make poor business decisions, instead of simply not getting bonuses, which is the case now. "They're one-way streets: heads I win, tails I break even," Frank said. He favors a "prohibition on those forms of executive compensation that have perverse risk incentives," he said.
-- He said that foreign companies will continue to invest in the U.S. "We're the safest place in the world. Where else are you going to put it? Russia?" Frank said.
-- Frank said he plans a hearing of bank chief executives next week, which will include Bank of America chief Ken Lewis.
-- Frank does not favor abolishing mark-to-market accounting -- which requires companies to value assets on their books as if they were going to sell them today, a provision that has forced banks to value trillions in toxic assets at near-zero right now -- but favors a restructuring of it to help banks.
-- He said that securitization has "enormous power to do good," but if can do harm if no one holds the risk. He would favor forcing securitizers to hold a small percentage of the risk.
-- In response to a question, Frank said he is looking to overturn Bush administration bans on Internet gambling that force the banks to police the practice. "Should we outlaw Internet gambling? No," Frank said. "You shouldn't put the burden on banks that are already overburdened.
February 3, 2009; 12:47 PM ET
Categories: The Ticker | Tags: Barney Frank, executive compensation, mortgage workouts
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