Congressman Barney Frank
Representing Massachusetts' 4th District

BILL TO PROTECT THE ECONOMY TAKES SHAPE IN FRANK'S COMMITTEE

WASHINGTON – Legislation designed to protect the broader economy against the effect of potential future failures of large financial institutions moved a step closer to completion today in the Financial Services Committee.

The Committee, led by Chairman Barney Frank, approved an amendment by Congressman Paul Kanjorski (D-PA) which would give federal regulators the power to set limits on firms which are so large or whose situation is so precarious that their collapse would pose a risk to the entire American economy.

The Committee also passed an amendment co-authored by Congressman Ron Paul (R-TX) and Congressman Alan Grayson (D-FL) which would authorize the General Accountability Office to audit the Federal Reserve.  Although Congressman Frank opposed the amendment as written, he has supported increased oversight of the Federal Reserve.

The legislation before the Committee is intended to prevent a recurrence of the near-economic meltdown of last year.  At that time, when several of the nation’s largest financial firms faced imminent collapse, it was thought that these firms were “too big to fail” – that their impending collapse would have a catastrophic effect on the entire country.  At the request of President George W. Bush, Congress reluctantly approved $700 billion in loans to major firms. 

It is expected that the Committee will vote on the bill after the Thanksgiving recess.