US investment banks need stricter regulation-lawmaker

WASHINGTON, May 2 (Reuters) - A senior Democratic lawmaker
said he expected that Congress will require U.S. investment
banks to meet the same liquidity and capital standards as
commercial banks, Bloomberg Television reported on Friday.

Rep. Barney Frank, chairman of the House Financial Services
Committee, said because investment banks now have access to the
Federal Reserve's discount borrowing window, they should be
governed by the same regulations as commercial banks.

"I believe we will," Frank told Bloomberg Television's
Political Capital With Al Hunt, when asked if Congress would
pass legislation requiring investment banks to meet the same
standards.

"What we now have is the banks, the commercial banks and
the investment banks, can do similar things, but the commercial
banks have a set of rules that the investment banks don't,"
Frank said, according to a transcript of the interview.

In March, the Federal Reserve took the unprecedented step
of opening its discount borrowing window to investment banks
after Bear Stearns BSC.N collapsed following a sudden cash
crunch. Bear Stearns, once the fifth-largest U.S. investment
bank, is being acquired by JPMorgan Chase & Co (JPM.N: Quote, Profile, Research).

U.S. investment banks have traditionally enjoyed less
regulation than commercial bank holding companies, which are
overseen by the Federal Reserve Board of Governors.

In 2004, the U.S. Securities and Exchange Commission
launched a voluntary program supervising the five largest
investment banks. SEC Chairman Christopher Cox said last month
he wants Congress to make the program permanent and mandatory.

Another leading Democrat, Senate Banking Committee Chairman
Christopher Dodd, has also said that investment banks should
have to adhere to some of the same regulations applied to
commercial banks now that they have access to the Fed's
discount window.
(Reporting by Julie Vorman; Editing by Tom Hals)