Top Panel Republican Backs Assignee Liability

The top Republican on the House Financial Services Committee supports the concept of making secondary-market investors accountable for the performance of subprime loans through an assignee liability provision that is modeled after a New Jersey anti-predatory-lending law.Rep. Spencer Bachus, R-Ala., said the New Jersey statute has been "shown to be effective, and it could be the starting point for national legislation." Nearly a month ago, Financial Services Committee Chairman Barney Frank, D- Mass., said he wants to include an assignee liability provision in predatory-lending legislation. "It is the best enforcement mechanism we could have," Rep. Frank said. Rep. Bachus clarified, in response to a news story, that he has not reached an agreement with Chairman Frank on an assignee liability provision. The ranking committee Republican also stressed that the New Jersey law allows borrowers a private right of action to press claims rather than a class-action lawsuit. He said he also supports the New Jersey law because investors in subprime securities can protect themselves from liability through due diligence.