Barney Frank, the former Congressman from Massachusetts and co-author of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), keynoted SFIG and IMN’s ABS Vegas 2015 conference last week, and was well received. Mr. Frank spoke on numerous items, including his belief that the Dodd-Frank Act can be tweaked, as long as it is not “re-litigated.” He further stated that if arguments to change the law would both benefit the economy and fit within the framework of Dodd-Frank, then bipartisan reforms can be achieved.
Of further importance to the securitization industry, Mr. Frank gave his thoughts on the following issues:
- Housing Finance Reform: Any housing finance reform efforts must preserve the 30-year fixed rate mortgage.
- Final Qualified Residential Mortgage (“QRM”)/Qualified Mortgage (“QM”) Rules and Risk-Retention: The rules are too prescriptive towards underwriting. Mr. Frank would have preferred to see 5 percent blanket risk retention on “all” residential mortgage-backed security loans, and then allow financial institutions to make any loans they wanted.
- Ratings Agency Reform: Reform cannot occur through a buy-side model, due to the “free-rider” problem.
- Auto Dealers: He would have preferred that auto dealers fell under the purview of the Consumer Financial Protection Bureau.
- Derivatives: Putting derivatives onto exchanges would allow for price disclosure and capital to stand behind trades.
Finally, on a humorous note, Mr. Frank apologized for the too-similar initials for QM and QRM. “I was tired that day,” stated Mr. Frank.