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Frank to Continue Financial Reform Agenda

Committee to also complete work on Mortgage Reform/Anti-Predatory Lending and Credit Card Legislation

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Washington, DC, March 5, 2009 | comments

House Financial Services Committee Chairman Barney Frank (D-MA) today announced the committee will continue its work on financial reform that started in 2007, the first year of the Democratic majority, both in legislation and through committee oversight.  Hearings in March will focus on regulatory restructuring and the role of law enforcement in the current financial crisis and whether law enforcement agencies have the tools to pursue fraud and prosecute individuals.  Also in March, the committee will move legislation to the House floor that will curtail abusive mortgage lending practices and reform credit card and overdraft practices that are harmful to consumers.

“In 2007 and 2008, the first two years of the Democratic majority, the House adopted regulation of Fannie Mae and Freddie Mac, legislation to curtail subprime lending, FHA reform, a bill to give shareholders a voice on executive compensation, and credit card consumer protections.  Then in late September, with the session about to end, we were hit with this current financial crisis and the need to enact the TARP.  So we spent the last few weeks of the previous session and to date, working in cooperation with two administrations trying to stabilize the financial system and lessen the impact on the overall economy,” said Chairman Frank. 

“While we will continue to work with the Obama Administration on stabilization, it is now essential that we continue work on our reform agenda and address the need for financial regulatory restructuring to diminish systemic risk and to enhance market integrity.  We will also move this month on mortgage reform and anti-predatory lending legislation and a bill to curtail credit card practices that are harmful to consumers.  Perhaps most importantly, the American public has the right to know what enforcement actions are contemplated against those irresponsible and, in some cases, criminal actions that lead to the current situation.  Preventing a reoccurrence is very important.  One way to do that is to put in new rules--rules that are unenforced are of no value, so an equally important part is to pass rules that are enforced,” continued Frank.

Specifically, the Committee’s work this month will include:

  • Holding several hearings in March that will, in part, examine creating a strongly-empowered systemic risk regulator.  The committee’s hearings will also focus on enhancing the effectiveness and scope of prudential standards, streamlining front-line regulation, and strengthening both the substance and structure of consumer and investor protection. The Chairman has designated the following dates for regulatory restructuring hearings: March 17, March 20, March 24 and March 26. 
  • A March 20 hearing to examine if federal and state law enforcement agencies have all the tools and resources they need to aggressively pursue financial institutions and individuals that commit fraud, abuse their positions and violate the law.    
  • Legislation to reform the mortgage origination process and ban predatory lending, similar to a 2007 effort that passed the House, but failed in the Senate due to the narrow partisan majority.
  • Reporting legislation designed to protect consumers against abusive credit card and overdraft “protection” practices. 


Financial Regulation Restructuring:

            Chairman Frank has emphasized for several years that financial regulations have not kept pace with the innovation in the marketplace.  The role of government is not to hinder this innovation.  Rather, it is to write rules to keep pace with innovation to give investors access to information and prevent abuse to consumers and investors.  As Chairman Frank wrote in an op-ed piece in the Boston Globe in September 2007: “Our job is to understand the changes in the financial marketplace and consider what we must do to ensure that our regulatory system is able to keep up with those changes. Innovation is as important in financial markets as it is in product markets, but it would be foolish to act as if regulatory structures, designed for a different world, do not have to be as nimble and innovative as those they regulate.”

Continued Frank: “As capital markets continue to become more globally integrated and complex, we must modernize our own regulatory tools; but it is certain that a truly 21st-century regulatory structure must include sophisticated multilateral initiatives as well. We must join with other countries to craft oversight and regulatory responses that are as global as the financial marketplace. A new race to the bottom by firms seeking to escape national regulation would not be good for any of us. An innovative global financial economy requires internationally coordinated financial regulation.” [Boston Globe, September 14, 2007]

            Since becoming Chairman of the House Financial Services Committee, Frank has held several hearings on reforming financial regulations hearing ideas from both sides of the political aisle.  The hearings, transcripts and archived video can be found here:

The Future of Financial Services Regulation, Tuesday, October 21:

The Future of Financial Services: Exploring Solutions for the Market Crisis,

 Wednesday, September 24, 2008:

Systemic Risk and the Financial Markets, Thursday, July 24, 2008:

Systemic Risk and the Financial Markets, Thursday, July 10, 2008:

Systemic Risk:  Examining Regulators' Ability to React to Threats in the Financial System: Tuesday, October 2, 2007:

Hedge Funds and Systemic Risk:  Perspectives of The President’s Working Group on Financial Markets, Wednesday, July 11, 2007:


In March 2008, Chairman Frank delivered a major address and discussed a number of new policy options to help stabilize the housing market and address the current economic downturn during a speech to the Greater Boston Chamber of Commerce:


In January, 2008, Frank also wrote in the Financial Times: “The market did its job with great efficiency in exploiting the benefits of securitisation but government failed to make good on its responsibilities. The failure of regulation to keep pace with innovation left us with no replacement for the discipline provided by the lender-borrower relationship that securitisation dissolves. Increasing and large

“In response to the current crisis, it appears that the regulatory tide may, at long last, be turning.” [Financial Times, January 14 2008]


Mortgage Reform and Anti Predatory Lending Legislation:

After years of Congressional inaction to curtail abuses in the mortgage industry and reign in subprime lending, the House in 2007 approved legislation to reform the mortgage origination process and end predatory lending practices by a vote of 291 to 127. The “Mortgage Reform and Anti-Predatory Lending Act of 2007” established a national standard to rein in the abusive lending practices that significantly contributed to the current mortgage crisis.  The bill never moved forward in the Senate due to the narrow partisan divide in that Chamber.  In addition, the Bush administration never made mortgage reform a priority even after seeing the disastrous impact subprime lending has had in the marketplace.  Information about H.R. 3915 can be found here:


            In 2005, House Financial Services Committee Democrats Miller (D-NC), Watt (D-NC) and then-Ranking Member Frank introduced legislation to ban predatory lending.  Even some Republicans were concerned about the subprime market. In 2005 and 2006, Chairman Mike Oxley (R-OH) and Rep. Spencer Bachus (R-AL) began working with Reps. Frank, Miller, Watt and Kanjorski (D-PA) to craft a bipartisan bill to end abusive lending practices.  Their effort was eventually shut down by the Republican leadership led by former Rep. Tom DeLay.


Credit Card Reform:


Last September, the House passed Rep. Carolyn Maloney’s “Credit Card Bill of Rights” by an overwhelming vote of 312-112 but the effort died in the Senate. The bill would have banned many of the most unfair, deceptive and anti-competitive practices of the credit card industry including so called “universal” default, double-cycle billing, and retroactive rate hikes. In December, the Federal Reserve released final regulations that would ban many of these practices, but the new rule does not take effect until July 2010.


This year, Rep. Maloney re-introduced H.R. 627 “Credit Cardholders’ Bill of Rights Act of 2009” in the House, joining with Sens. Charles Schumer and Mark Udall who have sponsored companion legislation in the Senate. This comprehensive credit card reform legislation is aimed at leveling the playing field between credit card companies and consumers and abolishes industry abuses that have been described by regulators as “unfair,” “deceptive” and “anti-competitive.”  Specifically, the bill would:

·    Protect cardholders against arbitrary interest rate increases
·    Prevent cardholders who pay on time from being unfairly penalized 
·    Protect cardholders from due date gimmicks
·    Shield cardholders from misleading terms 
·    Empower cardholders to set limits on their credit
·    Require card companies to fairly credit and allocate payments 
·    Prohibit card companies from imposing excessive fees on cardholders
·    Prevent card companies from giving subprime credit cards to people who can’t afford them
·    Require Congress to provide better oversight of the credit card industry
·    Contain NO rate caps, fee setting, or price controls


For more information about the Rep. Maloney’s efforts, visit:

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