WASHINGTON - The current mortgage crisis has exposed the need for financial reform, but there is no time for legislative fixes this year, a leading member of the U.S. House of Representatives said on Sunday.
"It's much too complicated a subject ... to get done between now and the end of August, which is essentially when we will be finished for the year," Financial Services Chairman Barney Frank said in an interview on CSPAN program "Newsmakers."
Last week, Frank's panel passed a homeowner aid bill that will give a cash infusion and new mandate to the Federal Housing Administration so that the program can steer as many as 2 million homeowners away from foreclosure.
Frank, a Massachusetts Democrat, has for several months advocated more government intervention to stabilize the national housing market that has seen double-digit price declines in some cities.
The FHA reform plan would see Washington offer a federal backstop on home loans that had first been written down by lenders. That initiate and another plan to give local governments big grants to buy blighted homes will cost the government $12 billion over the next five years, Frank said.
"I think these are manageable sums over a period of five years," he said. "The goal here is to try to diminish foreclosures and try to shorten the recession."
Nearly a third of Republicans on the financial services panel voted for the FHA reform package and President George W. Bush will feel pressure when that support grows in the full House, Frank said.
"I think the president is going to pay attention when the people from his own party say 'You know, in my state where this is a serious problem, they need some help."'
Frank said he wants to harmonize some regulations that guide commercial banks and investment firms. Critics have blamed lax supervision of Wall Street investment houses for part of the loose underwriting that dominated during the five-year housing boom that ended in 2006.
"That is what we were talking about for next year," Frank said of his reform agenda. "What we have is investment banks and commercial banks doing many of the same things, but with different rules ... Investment banks are not well regulated and they have kind of a negative influence on the commercial banks."
In recent months, Frank has enjoyed cordial dealings with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, who have all played a part in shaping national housing policy.
"All three of us have an appreciation of reality. You can't always take that for granted ...," Frank said. "Temperamentally, to be honest, I have a lot more in common with Mr. Paulson. Mr. Bernanke is a little bit more formal. But all three of us share an understanding that sometimes reality governs. We are all committed to try and get this done the right way."
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