Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

Barney Frank still concerned about US mortgage market

Former US senator Barney Frank has raised concerns over the “continuing insufficient alignment of interest” within the US residential mortgage market.

Mr Frank, who co-sponsored the Financial Reform and Consumer Act of 2012 (the Dodd-Frank Act), gave a keynote speech at the second annual Structured Finance Industry Group’s (SFIG's) conference in Las Vegas last month in which he criticised regulators for removing risk retention requirements for certain mortgages and auto receivables.

According to the Australian Securitisation Forum (ASF), Mr Frank noted that securitisation transformed lending in the 1980s but regulation did not match the financial innovation.

Advertisement
Advertisement

He portrayed the Dodd-Frank Act as attempting to reconnect risk and responsibility, citing the example of AIG selling CDS on pre-2008 securitisations but in 2008 the firm could not provide the US Treasury with an estimate of its liability under the swap contracts, the ASF noted in a conference summary.

Mr Frank argued that securitisation weakens the economic incentives of lenders in the US where the focus is on quantity not quality.

He stated that the risk retention requirements of the Dodd-Frank Act were the least intrusive response the US government could introduce.

Approximately 6,250 securitisation professionals attended the conference in Las Vegas, held 8–11 February. 

Barney Frank still concerned about US mortgage market
mortgagebusiness

Latest News

The major bank has agreed to pay $49.5 million to settle a class action brought against it by Slater and Gordon in relation to consumer cred...

The central bank remains prepared to cut rates further, despite growing concerns that monetary policy has “lost its potency”. ...

The non-major bank has announced that it will welcome a new chief operating officer on 2 December, following the departure of its current CO...

FROM THE WEB
podcast

LATEST PODCAST: Vertical integration and the rise of neobanks

Do you think the mortgage market will see more consolidation this year?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.