US, partners, must team up on bank rules: lawmaker

A top US lawmaker said Monday he would attend this week's World Economic Forum in Davos to press regulators from other major economic powers on a common strategy for reining in bank excesses.

Democratic Representative Barney Frank, chairman of the House Financial Services Committee, said he would make the case "to coordinate our efforts to update and modernize financial regulations."

"My major goal this week is to further our efforts at cooperation and work to prevent any national regulatory approaches that allow companies to dodge the kind of accountability and responsibility that is needed," said Frank.

Excessive risk taking by the banking industry has been cited as one of the causes of the recent financial and economic crisis and regulators have been tasked by top politicians to draw up new rules to rein the banks in.

Proponents would find an ally in US President Barack Obama, who announced plans on Thursday to prevent banks or financial firms in the United States from owning, investing in or sponsoring hedge fund or private equity funds.

The new rules would force firms to choose between activities such as trading in stocks and sometimes risky financial instruments for their own benefit -- and traditional activities, like making loans and collecting deposits.

In the US Congress, Obama's Republican foes have warned that imposing US rules will drive banking business abroad and hurt US institutions in favor of their overseas competitors.

"I believe this is wrong," said Frank, who added that he and other US officials had been working to avoid such an outcome and that Obama had put "a high priority" on coordinating with major economies.

"Combined with our coordination efforts with the European Union, United Kingdom, Japan, Canada, and other major economic powers, I am confident we can create a situation in which we can impose appropriate tough regulation, without fear of a loss of business to, or a destabilizing effect from, nations that will not join us," said Frank.