Frank: High-Frequency Trading Deserves Congressional Hearings

Flash:

Former House Financial Services Chairman Barney Frank says Congress should hold hearings into high-frequency trading to see if the “transformative” technology has out-stripped the federal government’s regulations intended to police it.

“I think there should be serious inquiries,” the retired Frank, a Massachusetts Democrat, said in an interview off the House floor today. “If we had held the majority” in the 2010 elections “I would have done hearings on it.”

Frank, co-author of the landmark Dodd-Frank law that increased Wall Street regulations after the near-collapse of the financial sector in 2008, said the advent and rapid rise of flash trading isn’t necessarily all good or bad — rather, outdated rules “are no longer applicable to this.”

Flash-trading, as it’s known, has come under increased scrutiny in the wake of the book “Flash Boys,” whose author Michael Lewis calls the U.S. stock markets “rigged.” Democrats who’d been trying to focus attention on the issue have said the book may be a catalyst to prompt action from Washington.

Attorney General Eric Holder promised Congress a thorough investigation into high-speed trading, while regulators including the Securities and Exchange Commission and Commodity Futures Trading Commission have said they’re looking into the issue.

“My hope is that they get on top of this now,” Frank said of lawmakers in Congress. “It’s too early to say what to do, but I don’t want to see a repeat where you wait 20 years and then you see what to do with it.”

Frank, who as a former House member is allowed floor privileges, came to the Capitol and sat in as lawmakers voted on alternatives to the House Republican budget. He said he was in town for a separate event to speak out against African governments cracking down on gay and lesbian people in their own countries.

(It turns out reporters can send cards in to the floor to request meetings with former members inside the chambers.)

A colleague calls it:

Separately, Frank said House Republicans find themselves in a bind on how to reauthorize the Export-Import Bank over objections from Republicans including Rep. Jeb Hensarling of Texas.

Hensarling, now Financial Services Chairman, said last year he has “long believed that many taxpayers feel that it is time to exit the Ex-Im.”

Asked what House Republican leaders should do about Hensarling’s opposition, Frank replied frankly:

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