March 24, 2010

WASHINGTON - House Financial Services Committee Ranking Member Spencer Bachus today released the following statement in response to comments made by Senate Banking Chairman Chris Dodd and Chairman Barney Frank on Democrat financial regulatory reform legislation.

"This morning, Chairman Frank reiterated that he still insists upon a ‘strong' consumer agency ‘that can't be over-ruled on policy grounds.'  If by that he means the separation of consumer protection from prudential regulation, most Republicans believe this is a serious mistake.  The separation of the consumer oriented mission of Fannie and Freddie from safety and soundness regulation was a significant contributor to their failure.  The pursuit of any social agenda, no matter how beneficial, to the exclusion of safety and soundness exposes the consumer to the most serious hazard of all - the failure of the institution on which they depend.

"Many Republicans believe the role of misguided government policy is a critical factor in the genesis of the financial crisis, and GSEs, as the chosen instrument of housing policy, are arguably at the center of the causation. Republicans contend there can be no lasting solution without meaningful restructuring of the GSEs and are highly critical of House and Senate legislation that ignores these gigantic financial operations.  Nearly two years after the conservatorship of Fannie and Freddie, the Administration does not have even an outline of a future sustainable GSE structure.  Republicans do, and they have laid out the principles they believe should guide the development of the government role in housing finance."