Outgoing House Financial Services Committee Chairman Barney Frank sharply criticized incoming chairman Rep. Spencer Bachus on Wednesday, ridiculing the Alabama Republican for reportedly saying "Washington and the regulators are there to serve the banks."
Frank has already said he plans to defend the Dodd-Frank Wall Street Reform and Consumer Protection Act from Republicans next year, but his press release made it clear he was willing to get personal.
Frank said Bachus' statements and subsequent clarification "makes two things very clear."
"First, the assault he intends to lead against improved financial regulation is based on a seriously flawed view of the relationship that should exist between financial institutions and those who set the rules governing safety and soundness," Frank said.
Frank then predicted Bachus' staff will be busy correcting their boss' statements next year.
"Second, Representative Bachus' staff is going to be very busy getting him to retract statements in which he reveals what he really believes about a fundamental issue before the Committee," Frank said. "His view of the role of regulation, expressed before he 'clarified' his genuine belief, explains why he is so opposed to an independent consumer financial protection bureau, and why he wants to weaken restraints on speculation by banks with depositors' money."
Frank's ire stemmed from an article in The Birmingham News last week, in which Bachus said, "In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks."
Bachus later qualified to the paper that regulators should set the parameters in which banks operate, but not micromanage them.
Bachus' remarks have also been used by the Democratic Congressional Campaign Committee. According to Politico, the DCCC is attempting to force new GOP members of the Financial Services Committee to say whether they agree with Bachus' comments.
But some observers were still surprised by the nature of Frank's remarks, suggesting it would set a negative tone for the committee's work next year.
"Barney Frank should be arguing in defense of the Dodd Frank Act on the basis of the substance of the issues, not on the personal level," said Bert Ely, an independent analyst in Alexandria, Va.
Other observers disagreed. Ed Mierzwinski, the consumer program director for the U.S. Public Interest Research Group, said he was glad to see that Frank would come out fighting against any attack on Dodd-Frank.
"I can tell you next year if we are going to have a committee that works to undo all the important work that was done this year it's going to be counterproductive," he said. "So I think Chairman Frank was trying to frame his concerns … I would agree with chairman Frank that we should not undo the important reforms that were passed."
Spokeswomen for Bachus did not respond to requests for comment by press time.
This story has been reprinted with permission from American Banker.
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Corrected December 15, 2010 at 1:43PM: yes