Magazine article American Banker

Frank Lashes out at Opponents of Risk Retention

Magazine article American Banker

Frank Lashes out at Opponents of Risk Retention

Article excerpt

Byline: Kevin Wack

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 the 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.

Joined in the fight to carve out a larger exemption are banks and others in the mortgage industry, in addition to nonprofit groups usually 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. …

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