By Peter Schroeder - 07/11/11 03:31 PM EDT
Republicans aren't really interested in repealing the Dodd-Frank financial reform law despite rhetoric to the contrary, according to Rep. Barney Frank (D-Mass.).
“It is interesting that my Republican colleagues, unlike on climate change and healthcare, don’t want to take this one on head on, because it is still too popular," he said.
Although major efforts to repeal Dodd-Frank have failed to gain substantial traction in Congress, the ranking member of the House Financial Services Committee did warn on what he said were GOP efforts to undermine the law, primarily by cutting budgets to regulators implementing it.
"The notion that the ... $80 or $90 million can't be done for the CFTC because of the deficit ... is nonsense," Frank said.
While critical of GOP efforts to stymie it, he also offered critiques of fellow Democrats and the Obama administration as the financial reform law is put into place.
The sluggish pace of nominations from the White House to fill key financial regulatory spots, including several created by Dodd-Frank, has slowed its implementation, according to Frank.
"I have been disappointed in the pace of appointments from the Obama administration," he said, while noting strong GOP opposition that has scuttled several administration picks already.
He also pushed back against a bipartisan group of lawmakers that have recently critiqued what Frank called "the single most important part of this bill." The lawmakers have pushed regulators in recent weeks to loosen a mortgage rule they say will make it more costly to buy a home.
At issue is a provision of Dodd-Frank that requires financial firms to retain some of the risk they create when packaging mortgages into bonds for sale. Under a March proposal offered by regulators, firms would have to retain 5 percent of the risk on such asset-backed securities, as part of an effort to guard against the widespread creation and selling of risky securities that played a role in the financial crisis.
However, that retention requirement would not apply to securities made from "qualified residential mortgages" (QRM), which would be deemed safe enough to be exempted. In the regulators' proposal, a QRM would either have to be backed by the government or have a 20 percent down-payment requirement.
Critics of the proposal have suggested a down-payment requirement was not intended by the law and would make it harder for people to buy a home.
But Frank suggested Monday that the requirement was necessary, just perhaps not at the level originally suggested by regulators.
"There is a general notion that risk retention in mortgages is too burdensome," he said. "It’s going to be harder, it might cost us a little more ... It’s disruptive because we had to disrupt a rotten system."
He added that a down-payment requirement of 4 or 5 percent should be sufficient.