BOSTON (AP) – House Financial Services Chairman Barney Frank said Monday one positive outcome of the mortgage meltdown is that fewer unqualified buyers will have the ability to purchase a house.

The Newton Democrat told the Greater Boston Chamber of Commerce that “tens of millions” of people will instead be redirected toward rental and lower-cost housing.

Frank’s chairmanship put him at the center of negotiations between Congress, the Bush administration and the financial services sector over a Wall Street bailout package. It also made him the focus of criticism by Republicans who have argued Democrats helped create the housing crisis by pushing banks to make loans to those with low incomes.

Frank has rebuffed that criticism by noting that Congress was controlled by Republicans for 12 of the last 14 years.

The congressman told his business audience that his committee perch will put him astride efforts next year to regulate all aspects of securitization, much like the government already does with banking activity.

Regulating stock-type trading of mortgage contracts and other financial instruments created by investment institutions has left banks and other institutions taken over, sold for pennies on the dollar or bailed out by the government, Frank said.

One regulatory thrust, according to the congressman, must be ensuring companies engaging in such trading have the money necessary to back up any losses.

The congressman has said he would also favor a 25-percent cut in defense spending.

“I think we are not going to solve the deficit problem and be able to meet our requirements in Social Security and Medicaid unless we substantially reduce the military budget,” Frank told reporters after the breakfast.

Frank said there would be a smaller deficit and better domestic programs had the country not “wasted” $600-plus billion in Iraq.

“I think the time has come for America to take a role in the world in which we defend ourselves, and intervene in overwhelming humanitarian situations, but I think we are overextended militarily and the rest of the world has grown up now and doesn’t need us to police it as much,” he said.

More locally, the congressman says Massachusetts is helped in riding out the recession by the presence of its health care and educational institutions.

“One advantage that Massachusetts has is that people are still going to get sick,” said Frank. He argued that would boost medical instruments and health care sectors.


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