"There are a lot of banks that are like the walking dead. A lot of them need to be closed now," Shelby said on CBS' Face The Nation.
Asked whether banks should be allowed to fail, Frank said, "Oh, of course. And we have allowed some to fail," citing IndyMac and Wachovia as recent examples.
The two members of Congress disagreed, however, on the performance of the Treasury Secretary this week in laying out the expectations for the second phase of Treasury's "700 billion Troubled Asset Relief Program (or TARP) and the administration's stimulus package.
"I think Secretary Geithner got off to a bad start last week," Shelby said. "He was unprepared as far as details were concerned … He wasted about four hours of the Senate's time," during his appearance before Congress. "We didn't learn a lot."
Shelby said that if Geithner's plan is a "son of Paulson," then it is going to be a big mistake following the Bush administration's initial disbursement of TARP funds.
Frank came to the defense of the Treasury Scretary: "I think Tim Geithner is doing a wonderful job moving forward. Maybe they should have told people, 'Don't be expecting too much.'"
Later in the interview, Shelby said that he did not trust the Federal Reserve: "We've got an awesome task on our hands. But what troubles me about all of it is the role of the Fed. I think the Fed's in uncharted waters. I'm not sure that we have a lot of confidence in them right now."
Also of note, Frank said that the $50 billion allotted for foreclosures will not be enough. "If in fact, by the time we've used $50 billion, it turns out we can use more, then I believe the Congress would be responsive," he said.
More from Face The Nation (2.15.09):