By Peter Schroeder
Rep. Barney Frank (D-Mass.) said Thursday that a bank's bottom line should not be the concern of policymakers.
The ranking member of the House Financial Services Committee acknowledged at a Wall Street reform hearing that a bank's profitability is important to the bank itself, but maintained it "is not important to anyone but themselves."
"The fact that a financial institution may or may not be making a good profit is not a matter for public policy," he said.
Rather, he maintained that a bank's ability to make money only matters to the public insofar as it allows the bank to continue lending funds.
"Their role in the financial system is to help us gather enough capital in the system from a variety of sources and make it available to people to do things productively," he said. "It is a problem if it reaches a point where it interferes with our ability in capital formation."
His comments came as regulators are racing to write rules implementing the Dodd-Frank financial reform law. Several of the law's provisions place new restrictions on the types of activities banks can engage in and includes precautions they must take to ensure their stability.
The Wall Street overhaul also comes as regulators across the globe are working to establish new capital requirements for banks, in an attempt to ensure they are on solid footing.
However, banks are pushing back against some of those efforts, arguing that overzealous regulations could stifle economic growth.
Frank added that he did not want to see American companies put at a disadvantage, but made clear that his primary concern is not robust profits.