Rep Frank warns banks to stop "being stupid"

By Kevin Drawbaugh and Karey Wutkowski

WASHINGTON (Reuters) - Warning bankers to stop "being stupid," the chairman of a U.S. House of Representatives financial oversight panel outlined a 2009 reform agenda on Tuesday that targets executive pay, hedge funds, predatory lenders and the troubled asset securitization system.

Major banks and Wall Street will have their hands full this year dealing with the wide-ranging legislative package that House Financial Services Committee Chairman Rep. Barney Frank said he wants to pull together by April.

The Massachusetts Democrat wants to create a federal systemic risk regulator and do more to protect investors battered by the crisis in the capital markets and a deepening recession.

Moving to seize political momentum won by Democrats in the November election, Frank told reporters at a news conference that the financial community needs to come to grips with "a deeply rooted anger on the part of the average American."

"They see a financial industry that helped cause these bad problems and they see themselves as the victims," he said.

"As I've said to a couple of bankers ... people really hate you and they're starting to hate us just for hanging out with you. You have to help us deal with that," he said. "You have to avoid being stupid -- with the airplanes, the bonuses."

He reiterated that Congress will probably give the Federal Reserve the new job of monitoring risk across the financial system. He said would also consider establishing an investor protection agency, but added he will put off until later any proposals to realign existing financial regulatory agencies.

He said it was unlikely that the new systemic risk regulator would be separated from bank supervision duties.