US Representative Barney Frank, one of the authors of a sweeping financial overhaul bill, warned banking executives this morning that mortgage lenders must not return to extending loans to risky home buyers.
Speaking to the Mortgage Regulatory Forum in Washington, Frank said that there a “revolt” under way against regulations intended to keep lenders from making risky loans to borrowers. Those regulations keep some of the financial risk for mortgages with the lenders who grant them, without which lenders will return to giving loans to those who can’t afford them, he said.
“I am disappointed at this revolt against risk retention that was so clearly at the center of this,” the Newton Democrat said. “All the other problems we had … they all centered on the system for selling to other people loans that shouldn’t have been made in the first place.”
Frank received a polite reception from his Washington audience, which also included regulators and public policy experts, but his pointed words aimed at industry executives before him was a clear rebuke to banks seeking to prevent or rollback the regulatory measures pass in the bill bearing his name. ...
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