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One-half of the Dodd-Frank financial reform law appeared at the National Press Club on Monday to defend the act’s far-reaching changes to the American financial system. Barney Frank, the bill’s co-sponsor-turned-beleaguered defender, blasted Congressional Republicans and banking industry leaders for trying to destroy rules he said will help everyone in the long run.

And he defended the bill against people who claim that it is causing too much havoc in the financial markets.

“Yes, it’s disruptive, because we had to disrupt a rotten system,” Frank said.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 covers everything from credit bureaus to mortgages to debit cards. It creates a new watchdog agency, called the Consumer Financial Protection Bureau, to protect consumers against poorly designed financial products much the way that the original Consumer Protection Bureau tests defective toys and toasters.

In the year since it was passed, however, Dodd-Frank has become the subject of titanic, expensive lobbying efforts by industry to delay or weaken different sections. One big fight involved the Durbin Amendment, which sought to cap debit card swipe fees. Another ongoing controversy concerns the CFPB. Congressional Republicans have introduced 11 different bills to limit the bureau’s budget and power.

[Related: The Elephants in the Room: The GOP’s War on Consumer Protection]

Frank criticized these efforts, calling them bad for consumers and the industry itself. A functioning bureau “will mean that a lot fewer bad mortgages will be issued, i.e., mortgages with a very low chance of repayment. And consumers will find they are treated much more fairly,” Frank said.

Frank used much of his time to discuss the building controversy over risk retention, specifically rules in Dodd-Frank requiring banks to keep ownership of 5% of all the mortgages they write except for “qualified” ones, defined as less-risky loans with 20% down-payments and buyers with low ratios of debt to income.

Much of the fight has been over the exempted mortgages. Banks and consumer advocates have criticized the proposed rules for shutting out too many people who can’t afford to put 20% down.

But Frank believes this is just a distraction from the law’s main purpose. If both sides can’t agree with the exemption, better to get rid of it altogether, he says.

“Loans made without risk retention should be an exception and not the rule,” Frank said. “I am for doing away with the exception, not the rule.”

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Image: Cliff, via Flickr

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