Nov. 8 (Bloomberg) -- Representative Barney Frank, the liberal and quick-witted lawmaker expected to lead the House committee that sets federal policy for Wall Street, promises to scrutinize executive pay while going slow on hedge-fund restrictions.

Frank, 66, said he planned to steer the House Financial Services Committee in a more working-family and consumer- friendly direction, with a focus on creating more affordable housing and correcting economic inequalities.

With Democrats having gained at least 27 House seats, sealing control of the House in January, Frank is seeking to head the panel that oversees the Securities and Exchange Commission and the Federal Reserve and helps set policy for the banking, securities and mortgage industries.

Frank will replace retiring chairman Michael Oxley, an Ohio Republican best known for co-authoring the Sarbanes-Oxley corporate-governance law. Frank, a Massachusetts Democrat, would take a much more activist approach than his predecessor. One of the first items on his agenda: giving shareholders more say over soaring executive salaries.

``A handful of people are getting very wealthy, and a lot of people aren't getting anything,'' Frank said in a recent interview. ``And I think one of the most visible signs of that is runaway executive compensation unrelated to performance.''

Executive Pay

As chairman, Frank plans to revive executive-pay legislation that stalled this year. In May, Frank used a procedural maneuver to force Republicans to allow a committee hearing on the bill. Mostly Democrats showed up.

``We are saying this is something we think shareholders should be able to vote on,'' Frank said. ``I think the influence of institutional shareholders is generally pretty healthy.''

During campaign season, Republicans singled out Frank, who is gay, and several other potential chairmen to raise fears about Democrats running key committees.

Frank's speed-talking style can be a jolt for the bankers and regulators that come before him. Last year, when questioning former Treasury Secretary John Snow about the departure of White House economic adviser Gregory Mankiw, Frank said, ``He took 150,000 jobs a month with him, can we get them back?''

``As I recall, the job number comes out of the --,'' Snow began.

``Black box,'' Frank replied.

Hedge Funds

Frank said additional hearings on hedge funds wouldn't be one of his first priorities. In June, when a federal court threw out an SEC registration requirement, Frank introduced legislation that would have restored the agency's rules.

The hedge-fund industry expects Frank to have an open mind and to support a different bill that would require four federal agencies to conduct a study and recommend whether regulations are needed, said John Gaine, president of the Managed Funds Association, a Washington-based trade group.

``He's going to do a careful examination of the industry, working with his counterparts on the committee,'' Gaine said. Frank isn't ``a pro-regulatory hawk.''

Speaking of other priorities, Frank sounds more like a traditional Democrat. ``You've got a lot of American workers so angry because they don't see their wages going up when the GDP goes up,'' Frank said. ``It's in the interest of the business community to cooperate with some of us on the Democratic side to re-convince the average American that he or she's got a stake in economic growth.''

Business Relations

Still, business lobbyists expect a good working relationship with Frank, whose suburban district abuts Boston, host to Fidelity Investments -- the largest U.S. mutual-fund manager. They say Frank's constituency makes him more sensitive to the needs of financial-service companies.

Frank recognizes ``you can't hamstring the industry,'' said Gilbert Schwartz, a partner at Schwartz & Ballen LLP, a Washington-based firm specializing in financial services. ``I think he'll stand up for the industry, but with more of a consumer-advocate focus than the previous chairman.''

Frank, a self-described liberal, came to the House in 1981. Known for his biting wit and snappy one-liners, the Harvard- educated lawmaker is considered one of the most intelligent and colorful members of Congress. At committee hearings, he can go from offering comic relief to sharp rebukes of witnesses.

`Top-Notch Debater'

``He is an absolutely top-notch debater who does not suffer fools,'' said David John, a senior research fellow specializing in financial services at The Heritage Foundation, a Washington- based conservative policy think tank. ``He's also someone who, despite his image of a fierce partisan and a Massachusetts liberal, also works exceedingly well with people from the Republican Party.''

Frank said he supported several proposals to ease regulations for banks, including one that would give banks a break on filing anti-money laundering reports on their most loyal customers. He said he didn't like restrictions bank regulators have proposed on large concentrations in profitable commercial real estate loans.

Frank said he expected federal regulators to ease some of the costs of complying with the 2002 Sarbanes-Oxley corporate governance law, which set tougher civil and criminal standards for public company accounting.

Matching Greenspan

Frank gained notoriety by matching wits with former Federal Reserve Chairman Alan Greenspan during his biannual monetary policy briefings to the committee. The former prosecutor earned a reputation as an intellectual equal to the free-market conservative economist by repeatedly pressing him for answers.

Chris Rupkey, senior financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York, said Greenspan ``met his match'' with Frank.

``Former Chairman Greenspan was a master of politics,'' Rupkey said. Frank ``was very forceful in trying to get his point across and would ask repeated follow-up questions. He wouldn't allow the former Fed chairman to escape with a neutral answer.''

Democrats are expected to begin selecting committee chairmen in the coming weeks.

``I will be putting my name forward to become the next chairman now that we will have the majority,'' Frank said today in a statement. ``I look forward to working with my colleagues and will be asking for their vote as we organize the House Democratic caucus.''

Party Fund-Raiser

On his Web site, Frank says he had a hand in more than $1.4 million in contributions to candidates, including more than $511,000 in direct contributions to the Democratic Congressional Campaign Committee, the fund-raising arm for House Democrats.

One potential wrinkle could come in the form of Representative John Dingell, who may try to seize the committee's jurisdiction over securities and insurance issues. Dingell, a Michigan Democrat, is poised to retake the chairmanship of the House Energy and Commerce Committee, which lost the jurisdiction to the Financial Services Committee when Republicans reshuffled committee assignments in 2001. Dingell strongly opposed the shift.

``It was a shame when securities and insurance jurisdiction was removed from the Committee on Energy and Commerce, because we had the expertise and experience to handle those issues,'' Dingell said in a statement. He declined to say whether he would pursue the jurisdictional changes.

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

Last Updated: November 8, 2006 15:39 EST