-
Dodd-Frank failed to cure key structural shortcomings of mortgage servicing that are still harming consumers, says Raj Date, the interim leader of the Consumer Financial Protection Bureau.
September 20 -
At a community banking panel at this year's American Banker Regulatory Symposium, the consensus held that regulation can't be a one-size-fits-all practice.
September 20 -
Executives tell symposium audience that Basel committee's surcharge on systemically important firms will impede economic growth.
September 19 -
Robert G. Wilmers, the head of M&T Bank, came to the nation's capital Monday with an unfavorable assessment of whether the Dodd-Frank Act will do what lawmakers intended.
September 19 -
Sen. Jack Reed, D-R.I., said Republicans were deliberately trying to prevent credible nominees from being confirmed to regulatory posts, and their legislative attempts to reform the new Consumer Financial Protection Bureau seem like moves meant to impede the bureau's progress.
September 19 -
OCC head tells American Banker regulatory symposium that banks could face restitution after complaint reviews. Gruenberg, meanwhile, announces FDIC community-bank initiatives.
September 19 -
In theory, nearly everyone thought it was a good idea to require issuers of mortgage securities to hold onto some of the risk. But in creating an exemption to those rules, lawmakers have virtually guaranteed it won't happen. The inside story of how it happened.
August 18
WASHINGTON — Rep. Barney Frank on Tuesday offered a stinging critique of efforts to weaken the requirement that banks hold on to some of the risk associated with the mortgage loans they securitize.
Frank made some of his strongest comments yet in a dispute over risk-retention rules with nonprofit groups that advocate for access to credit for the disadvantaged. He suggested that those groups' efforts to help low-income families may have the opposite effect.
"They are forgetting that a lot of the people they are advocating for were worse off, not better off, when they were allowed to get the loans," Frank said during a speech at American Banker's Regulatory Symposium.
The Massachusetts Democrat, who co-authored the 2010 law that established the 5% risk-retention requirement, is a lonely voice on the side of maintaining strict standards. Allied in the fight to carve out a larger exemption are banks and others in the mortgage industry, in addition to nonprofit groups traditionally allied with Democrats.
He also suggested that many Americans are simply not well-equipped to be home owners.
"I have spent much of my career fighting against excessive inequality," Frank said, citing his progressive bona fides. "But one way not to deal with inequality is to pretend it doesn't exist."
Later, in response to a question about the future of Fannie Mae and Freddie Mac, he further distanced himself from progressives who want the government to support homeownership for disadvantaged families.
"I would like all the loans made purely on a market basis," Frank said. "I don't want any social basis…"
Federal banking regulators have proposed rules that would spell out some of the details of the risk-retention mandate, including a definition of high-quality loans — known as qualified residential mortgages — that would be exempted. Among the proposed requirements is a 20% down payment.
The proposal sparked a sharp backlash. Though Frank agrees a 20% down payment requirement would be too high, he said that the much of the criticism boils down to the idea that regulators will stop bad loans from being made. That view places an unjustified level of faith in the regulators, Frank said.
"If you do not build into the lending process better incentives against making bad loans, all the regulators in the world are not going to clean up that business," he said.
Frank acknowledged that he made some past errors in the housing arena, saying that he was too late to see certain problems at Fannie Mae and Freddie Mac.
But Frank said that he was a longtime opponent of the mantra, championed by Fannie and Freddie, that every American should be able to own a home.
The risk-retention proposal would exempt loans made by Fannie and Freddie, as well as those made by the Federal Housing Administration. Those exclusions have drawn criticism from opponents of a strict risk-retention requirement.
Frank said that he believes that Fannie, Freddie and FHA loans should be covered by the risk-retention rules.
Later, in response to a question about reform of Fannie and Freddie, Frank blamed the current gridlock on House Republicans.
Some Republicans on the House Financial Services Committee believe that the government needs to turn over mortgage lending almost entirely to the private sector, while others agree with Democrats that there needs to be some form of government guarantee, he said.
"The Republicans in the House on our committee are torn between their ideology and reality," Frank said.
