Barney Frank Says Dodd-Frank Is “Holding Up Well”

Frank did concede, however, that House Republicans’ call for more cost-benefit analyses of Dodd-Frank rules are “reasonable.”

Frank also criticized House Republicans’ efforts to undermine progress on developing rules to regulate derivatives, noting legislation passed by Republicans to postpone any new derivatives regulation until October 2012.

There is also an “attack” on risk retention, Frank said, “which is the single most important piece of this” Dodd-Frank Act. “We now have no unregulated mortgage lenders. Risk retention is a market-based incentive—there needs to be a down payment requirement.” He went on to say that there were  “loans made without adequate assessment of risk,” and these bad loans “ricocheted all over the world.”

Dodd-Frank also created another “very important innovation,” Frank said, which is the Consumer Financial Protection Bureau (CFPB), which still lacks a director. Frank argued that there doesn’t need to be a Senate confirmation to appoint a CFPB director; rather, he said, “a recess appointment will do it.” The good news, he said, is that “we don’t have a lot of bad mortgages being made now because people are still shell shocked.” A “good director of the CFPB,” he continued, “will mean that a lot fewer bad mortgages will be issued, i.e., mortgages with a very low chance of repayment. And consumers will find they are treated much more fairly.” 

On the international front, Frank said that he believes “things are moving well.” America, he said, “is in the lead for pushing for an international set of standards that are better.” As the financial crisis was unfolding in 2008, Frank said it was likened to another Great Depression. He warned, however, that “I think it could have been worse than that…because now everything is interconnected.”