More Risk-Taking Restraints Needed for Banks: Frank

The head of the U.S. House of Representatives Financial Services Committee Friday said investment banks should not face the same capital rules as commercial banks, but that risk-taking restraints were needed.

Asked in an interview with CNBC whether investment banks should face the same capital standards as commercial banks if they have access to loans from the Federal Reserve, Rep. Barney Frank said, "No."

"There needs to be some regulations, I think, over investment banks ... but its different than commercial banks," the Massachusetts Democrat said.

Frank, who chaired a hearing on Thursday with the chairman of the U.S. Securities and Exchange Commission and the president of the New York Federal Reserve, also said it was important for the New York Fed to play a big role in investment bank regulation going forward.

"You need to have people who have got a degree of expertise that, frankly, it would be hard to amass in large numbers on the regular federal civil service. We don't have those kind of pay scales," he said.

Frank, the key architect of a massive U.S. housing rescue bill that would extend a government lifeline and create a new regulator for mortgage finance companies Fannie Mae and Freddie Mac, said he had confidence, for now, in the current regulator, Office of Federal Housing Enterprise Oversight Director James Lockhart.

Asked if he had confidence in the current regulator, Frank said, "He does, at this point. I've had some disagreements with Mr. Lockhart," he said.

Frank noted that Lockhart would be the interim regulator under the legislation, but that whoever wins the White House in November would be able to nominate someone new.

"Jim Lockhart's expertise is not in financial markets, and that's more of an issue these days. On the other hand, the first thing that has to happen is, the regulatory structure has to be set up ... and I think he will be able to do that well."