Rep. Barney Frank told CNBC Friday that he does not support removing the Federal Reserve's authority, in part because it wasn't the only government agency to make the mistakes that led to the financial crisis.
"If the argument is nobody who didn't do a good job over the decade that we just passed can do any regulation, then we've got nobody left," Frank said in a live interview.
Frank added that the central bank's issues weren't as much of an institutional failure as they was the mistakes of former Federal Reserve Chairman Alan Greenspan, who refused to regulate subprime mortgages.
Video: Congressman Barney Frank (D-MA) discusses the Fed's scope of control.
The Financial Services Committee Chairman also said that he still favors establishing an independent agency on protecting financial consumers.
A bill being debated in the Senate would put the consumer watchdog first proposed by President Barack Obama inside the Federal Reserve.
The House in December approved a bill, steered to passage by Frank, with an independent watchdog agency. Frank also said it will be important for financial reform legislation to require lenders who package loans for resale as securities onto the secondary debt market to retain some percentage of the portfolio risk.
On the topic of health care reform, Frank said the deficit is not just a near-term problem, and it's "misleading" for people to imply that the $940 billion pricetag is a net cost.
"This is an expenditure in the hundreds of billions that's going to be offset by revenue," he said.
—Reuters contributed to this report