Davos, Switzerland (CNN) -- A powerful member of the United States Congress said countries that provide offshore havens for risky financial practices could face U.S. sanctions similar to Iran.
"We are then ready to say to smaller countries, including our host country right here, Switzerland, 'if you hold yourself out as an escape hatch, we will prohibit banks from your countries doing business in the U.S.'," said Rep. Barney Frank (D) of Massachusetts chairman of the influential Financial Services Committee.
"I would say it's not an idle threat. We have been imposing sanctions, for example, against Iran," Frank told CNN's Richard Quest in an interview at the World Economic Forum in Davos. "And if people think we can't impose those sanctions, I just made you an example."
Financial regulation has dominated discussions at Davos, a week after U.S. President Barack Obama announced plans for a far-ranging overhaul of the nation's banking system. [new sentence] The new regulations would prohibit banks from proprietary trading operations, as well as investing in hedge and private equity funds. The move could cause many of Wall Streets major players to restructure.
Frank said he was in Davos to help encourage other countries "make sure that we are moving in the general same direction," such as having higher capital standards and "risk retention" measures to avoid the packaging and selling of high-risk securities at the heart of the financial crisis.
"A big part of this problem has been people make loans and then sell the loans and don't care if anybody pays them," Frank said.
"We are determined to do much tougher, thoughtful regulation of the entire financial industry, not just the banks in the U.S.," Frank added. "Clearly, money is mobile. And if we were to have much tougher rules than some other countries, we could see business move (abroad)."
Frank also said that President Obama's proposal is in line with proposals in Europe. "If you look at Mervyn King, the governor of the Bank of England, he makes President Obama look like a toady of the banks. He's been even tougher. And the French are that way (too)."
HSBC chairman Stephen Green concedes it is time for banks to make important changes.
"Everyone I know recognizes the need for reform, the need to learn the lessons from the crisis," Green told CNN's Quest.
Green said a global consensus is emerging on bank reform. "We now need to translate that into detailed rules on capital adequacy requirements, detailed rules on leverage, detailed rules on liquidity and so forth ... and that's where the Devil is, if you will," Green said.
"That's where it is important to get it right rather than to do it quick."
But Green says he is against Obama's move to ban proprietary trading operations:
"The right way forward is to make sure the range of activities the banks do has a useful service to provide to the real economy ... and to make sure it's properly supported by the right amounts of capital," he said.