Commissioner Daniel M. Gallagher and Commissioner Michael S. Piwowar issued separate dissenting statements about their concerns regarding the re-proposed risk retention rules. Commissioner Gallagher stated that the re-proposed risk rules ensure that the vast majority of mortgages in the U.S. will be owned by the government. He explained that this introduces another “flawed government imprimatur of creditworthiness” into the markets, which creates disincentives for proper risk management and due diligence in the mortgage markets. Commissioner Gallagher also noted that the re-proposal abandons the definition of qualified residential mortgage (“QRM”), and instead adopts a “deeply flawed” definition of qualified mortgage set forth by the Consumer Financial Protection Bureau (CFPB)earlier this year.
Commissioner Piwowar stated that, although improvements were made to the original proposal in response to public comments, he did not support the re-proposal because it does not contain necessary economic analysis, nor does it adequately consider alternatives to credit risk retention requirements. Commissioner Piwowar said that regulatory agencies should make greater use of re-proposals because they offer regulators the opportunity to improve efficiency and effectiveness in the rulemaking processes, and provide the public with the regulatory transparency and accountability they deserve.