President Barack Obama’s plan to bar banks from proprietary trading or participating in the alternative investments industry could be passed by the summer, the head of the House Financial Services Committee said.
Rep. Barney Frank (D-Mass.) told the Financial Times that he and his Senate counterpart, Sen. Christopher Dodd (D-Conn.), would have a bill ready by March, and it could be passed within six months, and definitely before November’s mid-term elections to Congress. Frank also moved to quell concern that the U.S. would be going it alone on the new regulations, a worry expressed most recently by French President Nicolas Sarkozy.
“I think we’re going to see substantial harmonization,” he told the newspaper. “We’re taking to the EU and I’m hopeful we’ll end up in the same place.” And despite the protestations of its leaders to the contrary, Frank said he believed the U.K. is “ready to come with us.”
Frank said Obama’s proposals, which would bar bank holding companies from owning, investing in or sponsoring hedge funds or private equity funds, could be added to the financial industry regulation overhaul making its way through both houses of Congress.
“We’ve been working with Paul for most of the year, so I wasn’t surprised,” Frank said of former Federal Reserve Chairman Paul Volcker, the driving force behind Obama’s planned restrictions. But he said that banks would be given “at least three years” to comply with the new regulations.
“You can’t have a fire sale,” Frank told the FT. “There would have to be a phase-in.”