Frank Criticizes Efforts to Weaken Reform Law

Following his announced resignation two weeks ago, Rep. ""Barney Frank"":http://frank.house.gov/ (D-Massachusetts) showed few signs of slowing by denouncing provisions that made it into a proposal that recently cleared the ""House Financial Services Committee"":http://financialservices.house.gov/.

""For most Americans, the most threatening disease at this time of year is the flu,"" the retiring lawmaker began a statement by saying. ""But for my Republican colleagues the gravest danger is apparently amnesia.""

He referred prominently to a provision from the Private Mortgage Investment Act ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô drafted by Rep. ""Scott Garrett"":http://garrett.house.gov/

(R-New Jersey) and passed by the House Financial Services Committee 18-15 ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô that aims to repeal the risk-retention rule from the Dodd-Frank Act.

""The financial reform law had abolished the practice of transient institutions gathering up loans that had been made in a variety of ways, packing them into securities, and then selling them without any retention of the risk,"" he said.

Frank referred to works by authors Michael Lewis and Harry Markopolos, whose ideas he tied to the namesake financial reform law.

""Congressman Garrett's bill would repeal the provisions of the law which force financial institutions to retain some of the risk in these securities,"" he said. ""That is, Republicans want to remove a powerful disincentive for institutions to originate and package bad loans.""

If the Senate reconciles their version with Garrett's bill, it would eliminate the GSEs in steps, reroute mortgage servicing responsibilities to the ""Federal Housing Finance Agency"":http://www.fhfa.gov/, and consolidate assets from Fannie and Freddie into a Mortgage Finance Agency.