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Obama, Romney Spar over Dodd-Frank at First Debate

Neither ""Barack Obama"":http://www.barackobama.com/splash/choice nor ""Mitt Romney"":http://www.mittromney.com/ has seemed particularly enthusiastic about discussing housing on the national stage, but viewers of Wednesday's debates got to see a brief skirmish between the two candidates about regulation for Wall Street and the mortgage industry.

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Using the Dodd-Frank Act as an example, Governor Romney criticized the government's level of intervention in economic affairs, saying that he would seek to repeal the act and replace it with something less excessive.

""Dodd-Frank was passed, and it includes within it a number of provisions that I think has some unintended consequences that are harmful to the economy,"" Romney said. ""One is it designates a number of banks as ├â┬ó├óÔÇÜ┬¼├ï┼ôtoo big to fail,' and they're effectively guaranteed by the federal government. This is the biggest kiss that's been given to New York banks I've never seen.""

Romney went on to note that while the nation's biggest banks were protected, 122 community and small banks have closed since the passage of Dodd-Frank.

The former governor of Massachusetts has long encouraged less regulation in the housing market, stirring up controversy when he told the ""_Las Vegas Review Journal_"":http://www.lvrj.com/ in 2011 that he thought the market should be allowed to ""run its course and the bottom."" He has since clarified that while he while he believes the market should have more room to adjust itself, he would still seek to assist distressed homeowners.

President Obama fired back at the debate, saying the regulation was necessary to put an end to the behavior that caused the economic crisis.

""Now, it wasn't just on Wall Street. You had loan officers that were giving loans and mortgages that really shouldn't have been given because the folks didn't qualify,"" Obama said. ""You had people who were borrowing money to buy a house that they couldn't afford. You had credit agencies that were stamping these as A-1, great investments when they weren't. But you also had banks making money hand over first, churning out products that the bankers themselves didn't even understand, in order to make big profits but knowing that it made the entire system vulnerable.""

Before the topic moved on, the Republican candidate pointed out problems with Dodd-Frank's restrictions and ambiguity on the subject of qualified mortgages.

""It's been two years. We don't know what a qualified mortgage is yet,"" Romney said. ""So banks are reluctant to make loans, mortgages. Try and get a mortgage these days. It's hurt the housing market, because Dodd-Frank didn't anticipate putting in place the kinds of regulations you have to have. It's not that Dodd-Frank always was wrong with too much regulation. Sometimes they didn't come out with a clear regulation.""

The fleeting exchange on banking and mortgage regulation comes at an apt time, as New York attorney general Eric Schneiderman ""filed a lawsuit"":https://themreport.com/articles/government-task-force-files-suit-against-jpmorgan-2012-10-02 earlier in the week against JPMorgan Chase on behalf of the RMBS Working Group over mortgage-backed securities fraud committed by a former Bear Stearns unit. Schneiderman also said more litigation for other banks may be on the way.

While some viewers complained about debate's narrow focus, they were at least given reassurance that housing hasn't been eclipsed completely by other issues. As for what else the candidates may have to say, voters will have to wait for the next debate.

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