WASHINGTON – The mortgage market needs “aggressive” new consumer-protection rules for lenders, U.S. Senate Banking Committee Chairman Christopher Dodd, D-Conn., told Bloomberg News.
Dodd, who is seeking his party’s nomination for the 2008 presidential election, is at odds with Federal Reserve Chairman Ben S. Bernanke over how to defend against abuse and fraud in the mortgage market. The Fed prefers voluntary guidelines and discreet guidance, while Dodd sees a need for “bright line” rules.
“I think they’re just assuming the market is going to take care of all of this,” Dodd said in an interview yesterday, and as a result, “We’re still out there without any clear rulemaking as to what’s tolerable and what’s intolerable.” Fed action would be quicker than attempting to get new rules through Congress, he added. But if its proposals are “anemic and weak,” then “I would certainly have to consider moving in,” drafting legislation to accomplish the same purpose.
The two remain far apart. “We must walk a fine line,” Bernanke said Tuesday in comments via satellite to a conference in Cape Town, South Africa, according to Bloomberg News. “We have an obligation to prevent fraud and abusive lending; at the same time, we must tread carefully so as not to suppress responsible lending or eliminate refinancing opportunities for subprime borrowers.”
