Jan. 6 (Bloomberg) -- U.S. House Financial Services Committee Chairman Barney Frank said the Securities and Exchange Commission, which has drawn fire for missing Bernard Madoff’s alleged $50 billion fraud, should be given additional resources.

The SEC and the Commodity Futures Trading Commission “both have to be beefed up as market integrity regulators and investor protectors,” Frank said in a Washington interview today. Frank, a Massachusetts Democrat, said the SEC and CFTC should focus on policing markets with a separate agency responsible for monitoring “systemic” threats to the economy.

Congress is considering overhauling financial regulation in response to the collapse of investment banks Bear Stearns Cos. and Lehman Brothers Holdings Inc. and the SEC’s failure to detect for at least a decade Madoff’s alleged Ponzi scheme. Some House lawmakers including Ron Paul, a Texas Republican, said at a hearing yesterday that the SEC’s failed oversight of Madoff shows it should be scaled back or eliminated.

Madoff, 70, was charged Dec. 11 with securities fraud after allegedly telling his sons his business was “one big lie.” Madoff hasn’t formally responded to the charges or entered a plea. His clients included banks, hedge funds, charities and wealthy individuals.

The SEC relinquished much of its role as a so-called systemic regulator by announcing in September that it would stop monitoring capital and liquidity at securities firms after the forced sales of Bear Stearns and Merrill Lynch & Co. and Lehman’s bankruptcy. Morgan Stanley and Goldman Sachs Group Inc., the two other companies monitored by the SEC, applied to became banks overseen by the Federal Reserve.

To contact the reporter on this story: Jesse Westbrook in Washington at jwestbrook1@bloomberg.net; Alison Vekshin in Washington at avekshin@bloomberg.net.

Last Updated: January 6, 2009 18:12 EST