WASHINGTON—Rep. Barney Frank, D-Mass., today defended the Dodd-Frank Act, and said it is unlikely it will be reversed by Republicans. He also said he would oppose creation of a self-regulatory agency for financial advisors.
Frank made his comments as keynote speaker of the Consumer Federation of America’s 24th annual financial services conference.
Frank announced earlier this week that this will be his last term in Congress. He opened his remarks in his typical tongue-in-cheek fashion by saying that he felt his retirement announcement Monday was not the reason for the strong stock market rally this week.
In comments to reporters after his appearance, and in Wednesday comments, he said he would oppose creation of self-regulatory agencies that would shift oversight of investment advisors from the Securities and Exchange Commission.
Draft legislation on this issue was proposed in September by Rep. Spencer Bachus, R-Ala., chairman of the House Financial Services Committee, where Frank now serves as ranking member. It is possible that such legislation could be introduced at any time.
“I’m skeptical of self-regulatory agencies,” Frank said. “I would not want to detract at all from the responsibilities of public agencies.”
The SRO proposal has industry support, both from the National Association of Insurance and Financial Advisors and the Association for Advanced Life Underwriting.
At the same time, Frank used the bailout of American International Group as a means of defending provisions of the law that eliminated the ability of the Federal Reserve Board to bailout out troubled institutions, like AIG.
In his comments on AIG, Frank implicitly touched on issues raised at a hearing of a Financial Services committee subcommittee Nov. 16 that sought to weaken DFA by limiting the ability of the Financial Services Oversight Council to monitor insurers and have them pay the costs of a failure of a “too-big-to-fail” institution, like AIG.
Frank, in his CFA appearance, also criticized efforts by Republicans to weaken enforcement and implementation of DFA.
He said Republicans are doing this by attempting to attach riders to appropriations bills that limit implementation of controversial provisions, and also by reducing funding of the SEC and the Commodity Futures Trading Commission in order to limit the agencies from writing the rules needed to implement the law as well as enforce its provisions and intensify oversight of market players.
He cited the SRO issue as an example.
He said Republicans have resisted giving the SEC the increased funding called for in the DFA law. But, he contended that the G.O.P. majority on the FSC then engage in what Mr. Frank refers to as a self-fulfilling argument: An SRO is required because the SEC doesn’t have the resources to police advisers.
Frank said: “I have an answer to that. Give the public agencies enough money.”
Officials of two trade groups representing insurance agents and brokers today voiced strong support for proposed legislation that would authorize one or more self-regulatory organizations, or SROs, to examine SEC-registered investment advisers.